Steve Ballmer had some not-so-good things to say about IBM in a recent interview with The New York Times.
“IBM is the company that is notable for going the other direction,” Ballmer apparently told the paper. “IBM’s footprint is more narrow today than it was when I started. I am not sure that has been to the long-term benefit of their shareholders.”
A lot of online commentary has focused on how, despite Ballmer’s statement, IBM’s fiscal performance over the last decade has remained suitably impressive–its stock is up 39 percent since 1999. Over the same period, Microsoft has apparently seen its own stock value decline by 30 percent.
We’ll leave that for the Business page, though. What’s interesting about Ballmer’s statement is how it reflects on Microsoft’s recent strategy: pepper a particular market with every possible variation of a product line, see what sticks, repeat.
Take the mobile OS market, of which Microsoft currently owns around 9 percent.
Historically, the way that many companies, finding their backs against the wall, have managed to come back from the brink is by consolidating their product lines down to a manageable number and crafting a simple new corporate theme. Apple pulled that trick when Steve Jobs returned to the then-flailing company in 1997: cancel underperforming projects, craft a simplified product pipeline, and deploy a new ad campaign. It worked.
Microsoft is trying a different approach. Not only is it deploying Windows Mobile 6.5 (to be followed, by the end of 2010, by Mobile 7) onto as many third-party manufacturers’ phones as possible, but it also ported much of its productivity functionality onto Nokia’s Symbian platform–and new rumors abound that Redmond plans to produce a handful of branded devices on its own.
It has retail stores, and likely a new tablet PC, rolling out to aggressively compete with Apple’s offerings–despite Microsoft executives’ repeated (public) assertions that Apple is a niche player with limited effect on Redmond’s overall market-share. There’s the Xbox, and the Zune HD, and (soon) the choice between a (free) cloud-based, stripped-down Office or a (priced) traditional desktop version.
Some of these initiatives will succeed, while others will likely die on the vine. But, when combined with Ballmer’s statement about IBM, it seems like the Microsoft philosophy is to build as big a product footprint as possible–no matter if certain product lines eat into others–and hope the market-share follows.
It may not be the best strategy when a company is also trying to save money in the face of declining revenues. Most of all, I suspect, it may very well put the last nails in the coffin of Windows Mobile, as confused consumers jump for another mobile OS.
None of this is to say that IBM is above criticism–this year has seen the company unleash a devastating series of layoffs, and Oracle CEO and founder Larry Ellison has made it very clear that he’s figuring out ways to eat into Big Blue’s market-share in the systems arena. But a narrower footprint does have financial benefits, and contains lessons from which even Microsoft could benefit.
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