The days of Whine and Roses

Just read an article about how unrelevant Microsoft has become.  I thought the article made some good points.  I certainly understand what the author experienced.  I saw that kind of thing first hand when I worked at Digital Equipment Corp. in the early 80s.  That that time DEC (as we called it then) was the number two computer company in the world.  Eventually it was bought by Compaq a company that did not even exist until about 1982 and which is now part of HP which is the only company that managed the transition from Mini Computers to Personal Computers.

I could not help but to think of those years when Microsoft and Intel were king of the hill.  For many years I attended the quarterly meeting of the top executives of both companies.  We certainly thought we were masters of the universe (well at least the CEO’s did) . Of course there was the senior Master (Microsoft) and the Junior Master (Intel).

But there was a big problem in the relationship and that is what is now playing out for Microsoft.  Since Microsoft was in the software business it, it could make much more money by upgrading its installed base.  But that meant making sure things were compatible over a number of generations of hardware products.  The skill the Microsoft developed was how to keep people locked in and forcing them to upgrade. They generated amazing profits with this strategy.

Apple did the same thing but also was able to innovate.  But since they were also in the hardware business they had an incenstive to make customers upgrade the hardware and the software which let them move forward.  They also have very different CEOs.   One company had a CEO that wanted to create  insanely great products and make money doing that.  The other had a CEO that wanted to make insanely great money and make products doing that.

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