The software giant Microsoft is a mere corporate stripling. Yet around its formidable success lies an equally indomitable mystique. It is phenomenally successful. Few are bold enough to analyse how and why Bill Gates’ and Paul Allen’s bright idea turned into the corporate titan of our times. Until now.
Since its inception, Microsoft has consistently been underestimated by its competitors. Giants like AOL/ Time Warner, Palm and Sony have each had a run at Microsoft and failed. And companies like Nokia, Apple, Novell, Borland, WordPerfect, Lotus Development, Sun, IBM, Netscape, Oracle and SAP either disappeared or have lost market share in their battles with Microsoft.
In order to understand why Microsoft is so successful, there is no point in hiding behind accusations that it pursues monopolistic practices. To understand Microsoft’s success, we need to look elsewhere: at the new rules for the “experience” economy – where customers value products and services that can enhance the quality of their life experience – and at where the new “high ground” for business models in this experience economy is.
Let us start with the high ground, which defines the strategic position from which a company and its “value web” can capture the maximum share of value and customer spend from users for the least effort and resources. People are bombarded with information and new products every day and are motivated to simplify their lives through easy-to-use quality services, interfaces and content. The majority of customers do not care about technological infrastructure or the nature of the devices and software these services, information and content are offered on, just so long as they work and are user friendly.
So, what are the different routes to the high ground? As illustrated in Figure 1 overleaf, the high ground integrates digital infrastructure, products and services into experiences, delivered via appliances and interfaces, to communities of users. Every company that has attempted to claim this high ground has done so from their strengths in one or more of these areas. Each has underestimated the difficulty of making that integration work successfully.
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