*Editor’s Note: Don’t forget, I own Microsoft stock.*
It was [announced today] that Microsoft would acquire Nokia. ((Finally.)) There’s only one point that I want to touch on in this “acquisition” and that is: Microsoft isn’t buying the brand or patents — instead Microsoft just gets to *use* the brand “Nokia” and the patents in the form of a license.
Read into that what you will, but that is certainly a less than ideal situation for Microsoft and its shareholders. Microsoft will now be saddled with tens of thousands of additional employees with only a (roughly) ten year license to the Nokia name (the patents look to have been granted in a license that will renew in perpetuity). ((I assume this is why it was a “substantially acquire” wording that is clumsy and confusing.))
There are red flags all over this deal, but I want to focus on what I will call ‘Microsoft’s Illusion’. Before I dive into what that means, first let’s take a quick peek at what *made* Microsoft so dominant for so very long.
##### The Microsoft Dominance
I believe (contrary to others) that there exist but two important factors to the Microsoft dominance of yore:
1. The `.doc(x)`, `.xls(x)`, and `.ppt(x)` file formats.
2. The near universal support of application developers (called ‘programs’ back then).
Many people argue that Microsoft’s true lock-in was the Office suite, but I believe that’s a slight misdirection. The true lock-in is the file formats *created* by Office. At one time there is no doubt that Office itself was the lock-in, but it’s the above mentioned file formats that there is no escaping.
You can use whatever office suites you want now, but if you don’t save to those formats, then no one will know what to do with your files. I’d even argue that `.doc` is more well known in offices than `.txt`.
Secondary to all of this is that it used to be a near universal statement that *all* software was made for Windows. Mac user? Wait three years, only to then have the developer tell you it’s not coming after all. That’s not some bitter exaggeration, it *was* the truth. Everything was made first and foremost for Windows and then maybe, *just maybe*, for Mac OS.
Today, I think both of the above factors are changing. Yes, the Office file formats are still demanded and pervasive in the business world, but the developer focus certainly feels more split. Sometimes even feeling like Mac apps are made first, and then Windows.
Think about it like this: most crappy electronics you buy, like bluetooth headsets, come with software for both Mac and Windows. That *never* used to be the case.
So where you used to have lock-in with Office and with developers only creating for your platform. You now middy have lock-in with Office and are *losing* the developer support — which is important to note that I mean not just “Windows first”, but that I mean “Windows only”.
##### So, Microsoft’s Illusion Then
What you will notice about the (admittedly biased) two reasons for dominance above, is that neither focus on design, or software development prowess. There is no doubt that Microsoft has done some really great software work, and continues to do so, but it’s no longer overly compelling work (as evident by the user revolt to Windows 8, the lack of Windows Phone adoption, and the general ‘meh’ reviews from geeks). Microsoft’s business was largely shored up by Office lock-in which is now waning and by developers *only* developing for Windows — which is certainly circling the drain.
So, naturally, Microsoft goes and buys a hardware company to try and be more… Apple-y?
The thing is, to buy Nokia and assume it will help you leap forward as a company, is to also assume that you have a strength in software. Software strength just doesn’t exist at Microsoft right now. It *could* exist there, but Microsoft would have to let go of the idea that they might irritate entrenched users by removing things like the Start menu.
The illusion that Microsoft holds for themselves is that they are a ‘fantastic software company’ that has been beaten down by shitty hardware providers. That’s an illusion that couldn’t be further from the truth.
Microsoft, I would argue, is a mediocre software company with fleetingly good software ideas, saddled with corporate ineptitude. To change that they will be adding tens of thousands of *hardware* employees to compete in a market saturated with high-quality hardware and high-quality software — where they already offer their software on high-quality hardware (e.g. Nokia, HP, etc).
Microsoft is trying to fix their internal illusion, that they make some of the best software on the market, by selling hardware themselves. The better idea would have been to just double down on making the tough software decision to move their software forward. Instead they now have to try and make hardware *and* software at a high quality level.