It was 1995 when Bill Gates wrote his famous “The Internal Tidal Wave” memo, where he called Microsoft to pay heed to the emerging importance of the Internet. A decade later Gates and new Chief Technology Officer Ray Ozzie are making a similar call to arms, citing the recent threats to Microsoft’s long-standing leadership position in the market.
Memos written by Gates and Ozzie to Microsoft executives during the last week of October were leaked onto the Web during the first week of November. In Gates’ memo, he acknowledges the increasing number of threats facing Microsoft, all of whom have become highly adept at delivering services over the Internet. He cites that “This coming “services wave” will be very disruptive. We have competitors who will seize on these approaches and challenge us.”
Gates’ memo was complemented by a more specific and grave note sent by Ozzie, who stated that “While we continue to make good progress on many fronts, a set of very strong and determined competitors is laser-focused on Internet services and service-enabled software. Google is obviously the most visible here, although given the hype level it is difficult to ascertain which of their myriad initiatives are simply adjuncts intended to drive scale for their advertising business, or which might ultimately grow to substantively challenge our offerings.”
Ozzie also said that Microsoft has fallen behind in recognizing and acting upon industry trends, including Web searching. “But for all our great progress, our efforts have not always led to the degree that perhaps they could have… We knew search would be important, but through Google’s focus they’ve gained a tremendously strong position.”
In response to the myriad number of menacing competitors facing the software giant, Microsoft announced last week that it would offer some of the fundamental features of Windows and Office over the Internet, allowing users to avoid the hassle of installing and updating software on computer hard drives. As a result, Ozzie was given the responsibility of overseeing Microsoft’s efforts of distribute software services over the Internet.
The leaked memos reveal a soft and very vulnerable underbelly to the juggernaut that is Microsoft, and indicates key shifts in their strategy. Surely much to the amusement of industry watchers, the memos also reiterate the ongoing tension between Google and Microsoft. However, Gates does not appear to be overly impressed with his company’s newfound nemesis.
In an interview with British publication “Computing,” Gates conceded that Google was “a fine company, a serious competitor,” before going on to say, “Which Google products are you talking about? Seriously? Other than search, which are you talking about? Google Talk? Wow. A total “me too” product. Even Gmail – what is the unique thing?”
Regardless of how dismissive Gates may appear, a swelling flame is undoubtedly lit underneath Microsoft. Dave Winer, a Microsoft pundit, says that Ozzie has a difficult task ahead of him. “Turning Microsoft in 2005 is going to be much harder than turning it in 1995. The company is much larger, and more set in its ways.”
After Gates’ “The Internal Tidal Wave” memo in 1995, Microsoft went on to make great strides in developing the Internet Explorer browser, which went on to oust the market leader at the time, Netscape. The question is now whether or not Gates and his newly appointed help in the form of Ozzie can evoke a similar response.
Sources:
http://informationweek.com/story/showArticle.jhtml;jsessionid=3RD3DW5SDTNLYQSNDBGCKHSCJUMEKJVN?articleID=173601151&pgno=1
http://www.scripting.com/disruption/ozzie/TheInternetServicesDisruptio.htm
http://www.scripting.com/disruption/mail.html
http://news.ft.com/cms/s/43b170c4-50e0-11da-ac3b-0000779e2340.html
http://today.reuters.com/business/newsArticle.aspx?type=media&storyID=nN094702
http://www.webpronews.com/insiderreports/searchinsider/wpn-49-20051103GatesDismissiveOfGoogle.html
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