January 15, 2006
@ 08:08 PM

Dave Winer made the following insightful observation in a recent blog post

Jeremy Zawodny, who works at Yahoo, says that Google is Yahoo 2.0. Very clever, and there's a lot of truth to it, but watch out, that's not a very good place to be. That's how Microsoft came to dominate the PC software industry. By shipping (following the analogy) WordPerfect 2.0 (and WordStar, MacWrite and Multimate) and dBASE 2.0 (by acquiring FoxBase) and Lotus 2.0 (also known as Excel). It's better to produce your own 2.0s, as Microsoft's vanquished competitors would likely tell you.

Microsoft's corporate culture is very much about looking at an established market leader then building a competing product which is (i) integrated with a family of Microsoft products and (ii) fixes some of the weakneses in the competitors offerings. The company even came up with the buzzword Integrated Innovation to describe some of these aspects of its corporate strategy. 

Going further, one could argue that when Microsoft does try to push disruptive new ideas the lack of a competitor to focus on leads to floundering by the product teams involved. Projects such as WinFS, Netdocs and even Hailstorm can be cited as examples of projects that floundered due to the lack of a competitive focus.

New employees to Microsoft are sometimes frustrated by this aspect of Microsoft's culture. For some it's hard to acknowledge that working at Microsoft isn't about building cool, new stuff but about building cooler versions of products offered by our competitors which integrate well with other Microsoft products. This ethos not only brought us Microsoft Office which Dave mentions in his post but also newer examples including XBox (a better Playstation), C# (a better Java) and MSN Spaces (a better TypePad/Blogger/LiveJournal). 

The main reason I'm writing this is so I don't have to keep explaining it to people, I can just give them a link to this blog post next time it comes up.


Sunday, January 15, 2006 8:58:22 PM (GMT Standard Time, UTC+00:00)
I am very interested to watch how the Microsoft strategy of Integrated Innovation that you describe will survive in this modern age of software patent law.

Software patents were not a real legal option until key court decisions of the 1990's, so it was nearly impossible for innovative companies to patent stategic intellectual property in web browsers, office software, and operating systems. Thus, Microsoft was historically able to copy the best ideas from its competitors without any cost.

Today, however, software is clearly patentable subject matter, so every facet of innovative software applications are rushed to the patent office. Soon, every software company will have to navigate a dense minefield of patents in order to copy any competitor's product. Microsoft is especially vulnerable when it is placed before a jury of 'peers' during an infringement suit (e.g. Eolas).

Looking forward, the best Microsoft strategy would be to anticipate where competition is heading, and rapidly build a patent portfolio in that area without necessarilly commercializing the innovation. Probably, Netdocs and Hailstorm fit into this category. Therefore, I think Integrated Innovation should be just half of the Microsoft Way. The company also needs a strong and innovative R&D effort to place Microsoft first in the patent office.
Sunday, January 15, 2006 9:27:59 PM (GMT Standard Time, UTC+00:00)
Hey Dare,

NetDocs: NetDocs did have a major competitor: Microsoft Office. NetDocs would have totally confused our dealing with customers regarding when to buy Office and when to subscribe to NetDocs (aka, Invo, one of the dorkier product names we've paid to be produced, no doubt). NetDocs did have a great basis, though: go after the small and medium size businesses that don't have the IT know-how to run their software infrastructure.

Between the sales confusion and Office's SteveSi's determination, NetDocs was blown away, leaving nothing behind but a sliver of code that was turned into InfoPath - a part of Office 2003, interestingly enough.

If you look at invention and innovation and creating new markets so that you can walk away from your saturated markets, NetDocs was a good strategy. I hate to think how much money went into it just to end up with a little XML (buzz, buzz) form editor that no one even knows exists.

Now Office Live, run under a NetDocs veteran, is basically NetDocs 2.0 - although this time under the Office banner and using the spirit of the Office platform as a basis. This is incremental innovation, which is safe, but usually not the next big leap required to conquer new markets and make boat-loads of cash.

Let's see how it goes. Cheers.
Gray Beard
Friday, January 27, 2006 8:51:04 PM (GMT Standard Time, UTC+00:00)
I was just about to say the same thing as Gray Beard, who said it better than I would have done.

The competitive culture around NetDocs was a strange one, especially because it was two-way - Office was picking off clever ideas from NetDocs, and as NetDocs floundered, clever people (especially designers) as well. (The task pane, for example, started in NetDocs design.) Then the MSN client came along, with a few of the same customer experience ideas (no big surprise, since that client came from the Neptune folks, who worked with NetDocs on design) and a much faster time-to-market, and suddenly the lack of home for the product was made plain.

As far as the investment - the sad part was that it could have stayed relatively lean. NetDocs started to bloat as it ate up teams from across the company - teams that hadn't drunk the same kool-aid, that had different goals, etc. We probably still would have screwed those teams over, but it would have taken longer.
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