MSFTextrememakeover

Friday, November 24, 2006

Is this really the best you can do?

I mentioned in a recent post that ZUNE was a topic unto itself. Since that time, I've been keeping tabs on customer reviews and media reports including this one, which caught my attention today. In particular, this comment:

I think this is a decent first effort by Microsoft and am sure that software updates will improve the functionality of the device and Zune software, but there are a few things they could have done at launch to greatly improve the buzz around the device.

A "decent first effort" - and this from an article that's trying to restore balance given the overwhelmingly negative press to date.

Now, consider the backdrop. According to Ballmer, MSFT wanted to do a ZUNE-like product years ago but couldn't because the only executives capable of leading the charge were too busy losing money on Xbox. Let's leave aside why the "the strongest management team in MSFT's history" (as Ballmer recently referred to them), with over 900 senior managers, has to wait on 2-3 to come free in order to move forward in this area. Instead, let's cut him some slack and say it's because the competitive challenge is so formidable, the stakes so high, and the perceived solution so analogous to MSFT's gaming "success". After all, the Ipod isn't just a product, it's a cultural icon that has bested all comers to date (including MSFT and all its partners) to grab some 80-90% market share. It also comes from a company with a reputation for zealous customer loyalty, leading design/ergonomic prowess, and who has arguably forgotten more about marketing than MSFT knows. Most importantly, Apple's dominance in this area is a direct threat to MSFT's aspirations for the overall home and entertainment market, which is already large and expected to only get more so.

What approach does the creme de la creme of MSFT's "strongest ever" management team select? Why a derivative product based on the Toshiba Gigabeat (which maybe makes sense from a cost/time-to-market perspective but doesn't exactly scream "innovative"), that in some ways is better (larger screen, wireless, native FM radio), but in many ways is worse (bigger, same resolution as the smaller screen Ipod, less battery life especially with wifi active, less titles available for download, etc.), and then rush it to market before the software has apparently been fully baked, resulting in widespread reports of disappointment in the initial feature set and numerous reports of bugs/difficulty installing even that. People are actually having to write hacks just to run the device as a hard drive or on Vista - not to mention trying to get around its restrictive DRM.

So Ballmer et al have been thinking about this for several years, had their very best executives working on it heads down for presumably the past 6-12 mths at least, and this is the best they can do? And what's the result? Like the Origami before it (remember that one?), tons of advance buzz has largely given way to generally negative reviews and seemingly underwhelming sales. For example, having debuted at #5 on Amazon's list of top-selling MP3 players, the ZUNE fell to #9 by day two, and now stands at #21. What's going to happen as a result? Well, expect whatever losses had orginally been forecast, and resulting payback timeframes estimated, to get doubled as they fix the current shortcomings and then work to overcome the negative perception that's been left by this less-than-stellar debut. As the saying goes, "you only get one chance to make a first impression". That's especially true in this day and age of the web and blogs where, within hours, your initial success or failure gets communicated to literally millions. Why does MSFT consistently ignore this?

To me, the answer is found in MSFT's long-standing approach of getting something "okay" out to market, gathering feedback and then eventually incorporating that into a better subsequent product. It's a model that has worked well for them in the past, albeit that it has also resulted in a widely-held perception that first releases, and even subsequent ones, are a work-in-progress and therefore imminently skipable (the old "wait for the service pack" or "they'll get it right by version 3" problem). To be clear, I'm not arguing that gathering customer feedback and then incorporating that into subsequent products is a bad idea - it's obviously critical. The question is whether you do enough work up front to ensure that you begin with an already strong product. In other words, aiming for what Apple's Steve Jobs calls "insanely great" out of the box, versus being content to ship "okay", figuring you can always fix and/or improve it over time. In my opinion, that latter approach too often characterizes MSFT's efforts and it needs to change. Today, markets are moving much faster, competitors (armed with different business models) are much more aggressive, consumers have far more options for their scarce $, and the willingness to pay at all, far less pay to effectively be a beta tester, is fading fast. So in my view, the minimum success bar moving forward is likely going to be "insanely great" not merely "decent". With insanely great, people want to buy your product and tell others about it - versus you having to pour $B's into marketing budgets to try and sell them on it (or god forbid force them to buy contractually). When your products are insanely great, you don't have to hide behind excuses like "our biggest problem in the installed base is the good enough factor". To me, when a customer says that what they have is "good enough", what they're really telling you is that your new product isn't sufficiently compelling and/or you've failed to adequately explain why it is.

Is the ZUNE insanely great? Was MSFT even shooting for that? Was anything less even remotely likely to make a dent in the Ipod? Should the hugely compensated creme de la creme of MSFT's strongest management team ever, have been able to figure that out and if they didn't, are they really the best? More importantly, is insanely great the focus for MSFT and their products generally? Is IE7, for example, great or just a "decent" attempt to catch up? What about Vista? Was it one of the exceptions that actually began as an attempt to be insanely great and then proved too difficult and time consuming (always a concern when you swing for the fence)? Based on what I've read, it will likely be good but fall far short of insanely great. Now to be fair, I think there's increasing evidence that several groups are starting to get it and at least trying to make each release a stellar event. But overall, I think the answer is still no, that is not the defining hallmark of MSFT. Too often, they seem to be content with simply shipping their best yet, versus the best yet. Again, in my view that needs to change and ASAP. Unfortunately, I think the concept is orthogonal to much of what Gates/Ballmer and other senior leaders hold dear based on past success. As a result, it's going to be that much more difficult to instill it as part of the company's DNA. But do so they must.

Update: Interesting article on MSFT and particularly executive J. Allard, which touches on the development and thinking process that went into ZUNE:

Update #2: Another interesting article, this time with suggestions on what MSFT really needs to do in order to win:

7 Comments:

  • Zune does make a few genuine advances over previous media players. Connecting media players by wireless is a big deal. A lot of good work went into Zune, but as a whole it missed the boat (for the short term).
    The important things (for the long term) about Zune are:
    • They got WiFi power consumption down to a tractable level.
    • IP based peer to peer networking works.
    • They did security correctly. Nobody has noticed that Zune transfers are secure.
    If Zune were an open platform, anybody could take advantage of the well understood interface to IP and could write all sorts of file sharing and social networking applications just as they have done on the internet.
    Microsoft has not done well making ‘product’, but has made a lot of money in ‘platforms’. By platform I mean something others can take and extend. Unfortunately Zune is closed.
    On the other hand Vista comes with built in secure WiFi ad hoc networking and is an open platform. Unfortunately Zune doesn’t talk to Vista except through a proprietary link. Perhaps someone can hack Zune hardware and build an ecology where wireless serves the needs of the customers. I don’t expect to see this from the current Zune management. J Allard & company are great at fighting Microsoft turf wars, but this rarely results in great product.
    Just as his team was on the right side of the internet vs. desktop culture war, they recognize the inevitable trend to smaller battery powered devices capable of high-bandwidth wireless communication where the latest music, video, news and information can be ‘at your fingertips’ all on a weekly battery charge.
    The reviewers who belittle Zune’s inept ‘squirting’ of DRM encumbered music are missing the greater point that sharing media over high speed wireless based on IP is a major step forward even if the product that delivered it sucks.
    I’d hope that somebody can do better. Microsoft, Sony and Apple all have the resources to pull it off, but all three have flaws that keep them from greatness.

    By Anonymous Anonymous, at 1:43 PM  

  • Good insights - thx!

    By Blogger MSFTextrememakeover, at 3:19 PM  

  • I'm not sure I agree with all of your points.

    You make it sound like it is free and easy to make insanely good software, yet at the same time you complain about the cost of the products, and lack of marketing.

    I think for most products it's ok to ship early to catch up, instead of waiting to have the best. IE 7 clearly needed to ship right away to give an alternative to Firefox.

    Windows and Office took years before they overtook the market leaders. I can blame MSFT all day for not being more innovative, but I won't blame them for not leapfrogging the competition on the first attempt. That's just not realistic.

    I can't comment much on the Zune but I question if it was ready, and the right product. And I'm not sure the marketing I've seen is effective for a new brand and product.

    By Anonymous Brian, at 10:58 AM  

  • "You make it sound like it is free and easy to make insanely good software, yet at the same time you complain about the cost of the products, and lack of marketing."

    Sorry, that wasn't my intent. I think it's extremely difficult and often more expensive than creating mediocre stuff. I also don't have a problem with the cost of the products per se if the end-result is stellar, and my point about marketing costs are that great products don't require as many $ to be pushed. However, I do believe that insanely great is the minimum bar moving forward, especially where the goal is to take share from others vs defend it. And I think it should be well within the capability of the largest, richest and supposedly one of the best-led companies in the industry to not only do it, but do so consistently (vs almost never). WRT IE7, MSFT should never have allowed itself to get so far behind in the first place. That, having done so, it made sense to ship IE7 even though it's just decent vs great, I actually agree with you - but it's not ideal, better (earlier) should have been imminently doable had the company focused, and again, the installed base is more forgiving than new business (though FF's success should be a wake-up call to MSFT's leadership that even that is changing).

    By Blogger MSFTextrememakeover, at 2:08 PM  

  • “Culture” typically includes multiple facets that are mutually reinforcing. In Microsoft’s case, this is at the heart of the problem you identified. At least three fundamental aspects of Microsoft’s culture make for the Version 3 syndrome. Collectively you could call them three views of the Hero Culture: team execution is subordinate to individual excellence, aggressiveness is promoted even if it encourages recklessness over responsibility, and executive management dismisses bad news by assuming those who bring it are underperforming weaklings.

    There are people inside Microsoft who want to move the company away from a Hero Culture and towards an Engineering Culture, and their hearts are in the right place. But they do not understand that the Hero Culture is a direct result of the existing rewards system they still champion. Until they realize that, their prospects of success are, shall we say, limited.

    The most likely improvement will be to stop shooting messengers, and that will lead to some good, but team execution will elude them until they start paying for it, and recklessness will continue until they start punishing it.

    By Anonymous Anonymous, at 5:23 PM  

  • TO use football analogy: I don't believe Zune v1 was about winning. This is not a 'Hail Mary' effort to go to no 1, but rather an effort to score and just get on the board. Nothing more, nothing less. And MS will build on that. Apple is at v5.1 and it will take some time to catch up to the level of services and h/w excellence. Having said that, if MS can;t do it, who can??? No one as evindenced by the current market. Prediction: 5 years from now: MS will have beat out Sony and Apple and have the best console and digital music device/service. Question is at what cost will that come - both in terms of $$ and in terms of distraction from core business.... Will lightening strike 3 times (current two include Office and Windows)? Who know, but you gotta try. What growth business do you think they should get into?

    By Anonymous Anonymous, at 9:35 PM  

  • "What growth business do you think they should get into?"

    Good question - not sure I can answer it. Perhaps a good topic for a future blog post. For now, I'd say it isn't that they're not in the right ones (the big current ones being obvious to all). The main issue there is execution - which is generally below-market almost across the board (minus gaming). However, there's also an interesting question of whether the "go where everyone thinks is big" or even the "go big" strategy is the only one. For example, is it clear that fostering multiple smaller opportunities might not have developed some huge new market and or been more effective than current while still collectively resulted in a material contribution to even MSFT's bottom line? Finally, there's the issue of whether diversification makes you stronger or weaker - what Peter Lynch called the "deworsification" factor. Would Windows/Office/Server all be stronger today competitively if not for the "emerging" business distraction and massive investment? I'll noodle it some more...

    By Blogger MSFTextrememakeover, at 3:46 PM  

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