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First Evening at Microsoft's SAS: Aha!

By - May 07, 2007

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Tonight I got into SEATAC, pretended not to see Hasselhoff while heading toward the cab line, and checked into the Seattle Sheraton, site of Microsoft’s annual Strategic Account Summit.

After checking email and the like, I made my way to the opening reception, held at the Benaroya Hall, home of the Seattle Symphony.

It’s a beautiful space, and Microsoft does know how to throw a party. There was a 16-piece band, tons of happy people, plenty of good food, and in general a festive and upbeat mood. I saw a lot of colleagues and met a lot of new ones, and to a one, they had one question for me: What do you make of the rumors about Yahoo and Microsoft hooking up?

Well, after you discuss that one with five or six folks, the standard back and forth starts to get old. And then, BOOM, it hit me. It’s time for Microsoft to step out of its skin. Get out of its box. Quit the fight with Google, but don’t lose it. Instead, redefine the game.

In short, it’s time for Microsoft to stop being just a technology company, and start being….General Electric.

This is how I came to this admittedly ill informed and entirely speculative conclusion: I was talking to a senior person in Microsoft’s sales organization, and he/she (preserving anonymity) asked an important question: do you think it’d even be possible to merge Yahoo and Microsoft’s radically distinct cultures?

I thought about that for a moment. He/she had a point: Getting the two companies to play well together would be a monumental task. But then it hit me: This just might be the wrong question! Why does Microsoft have to be a technology company? Why can’t, instead, it be General Electric?

Imagine a Microsoft that commits to the media business the way that GE has – it bought NBC. Microsoft can buy Yahoo, and simply claim that its media play is, well, called Yahoo! Now, Terry Semel may not like that, but I sense Bob Wright got over it, just as Terry was OK with Warner Studios being part of Time Warner. The central question vexing Microsoft as it competes with Google, the ultimate technology-driven company, is whether Google is supplanting Microsoft as …. the ultimate technology driven company.

Well, that fight can continue, under the leadership of Ray Ozzie in Microsoft’s Software division, which makes Windows, Office, Live, and all that.

But Microsoft has twice the market cap and four times the cash of Google, and right now, it can step into a far larger role than Google can – the role of multinational conglomerate. But if it keeps trying to win the game at the level of its current foe, it might not be able to win.

After all, GE started with the light bulb, and went from there. Microsoft started with DOS….

In short, it strikes me that to win, Microsoft might need to become bigger than the industry it helped create. There are new markets – and old – to conquer in turbines, appliances, and lord knows what else. I wonder what the market would make of such a move?

Just a late night JAM thought. What do you think?

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  • Simon Chen

    John, I totally agree but I still think that Microsoft need to spin off the search business as well. Give them a absolute boatload of cash, tell them to come back in a year with some solid results, sell or licence what they’re learning from MS Labs and AdCenter and try, try as hard as they can to poach, buy, steal the very best talent they can. Microsoft need to be the Six Sigma players in the total space. They’ve been sitting on the fence for too long. As the poster said at Web 2.0. “Microsoft, Change The World, Or Go Home”. And they should.

  • rej

    John, I wonder why you are so hopeful to help the dying evil to live?

  • Jackie Shervington

    Thanks John – why not I ask?

    As an ex Microsoft employee over 10 years ago I remember a staff presentation by Bill Gates where he pitched the vision “Information at your fingertips”. This was powerful stuff and inspired a sense that we must innovate and lead in all things “information”. If you are still caught under this spell then I can see why you just have to crack search – how else can you live up to this vision. You can’t possibly admit you don’t have “the information at your fingertips”.

    Or can you? I see the new mission for Microsoft is “We are committed long term to the mission of helping our customers realize their full potential. Just as we constantly update and improve our products, we want to continually evolve our company to be in the best position to accelerate new technologies as they emerge and to better serve our customers”. Maybe under this you can just buy Yahoo and offer that as a solution to “better serve” your customers. After all Microsoft has a strong track record of partnerships with solution providers – as you say “why not just buy Yahoo and offer Yahoo to “serve your customers”.

  • Perry

    Hey John, fascinating analogy…I picked up the same thread in my blog post, with the following related rumination on the “mother ship”…

    “There may be more interesting scenarios on the white boards these days. I am intrigued with a deep alliance/venture between at&t and Yahoo. Yahoo has managed to show some serious life in mobile. at&t has a killer mobile asset base and in yellow pages and 411 – these can combine to pose a really serious threat to Google’s intentions. mobile + social feels like a much more formidable combination from which to battle and differentiate. On the MS-YHOO front, the notion of breaking up Microsoft, and reforming a more powerful online media company w/Yahoo with deep distribution relationship to the mother ship also may have merit.”

  • John

    Why Microsoft can’t be GE: Bad Management.

    They need a new playbook. New management, from outside the organization, to help them transition the company from its current state.

    The current team has done an incredible job of building a cash generating behemoth. Its a remarkable story, but now it is time for them to find the courage to go get outside help. This is a big sick animal and its going to take a helluva lot more than just Ray Ozzie to turn this puppy around.

  • Anthony

    I find it interesting that you seem to really believe that Microsoft can’t beat Google. I for one think this race is long from being called.

  • John Battelle

    Anthony – I did not say I thought MSFT can’t beat Google. I said it might not….

  • Gay Ludlow

    Careful John, they’ll be offering you the job of VP in charge of derring do.

  • YahooSoftie

    John, as someone who has worked at both companies, I find the potential for an acquisition or partnership between these two absolutely intriguing, though I’m not sure the GE analogy works here. I don’t think GE bought many companies that had so much overlap with the “Mother Ship.” A Yahoo!-MSFT merger would mean the combined entity would have to decide which search platform to go with, which search advertising platform to go with, which display advertising platform to go with, which sales force takes the lead with which clients, which email and IM to offer, etc. etc. etc. It could work if MSFT just ceded all of the online services and brand to Yahoo!, but that would mean a lot of “redundancies” in Redmond. Not sure what the appetite is for that kind of bloodletting.

  • nmw

    a federation of mini micro media (why not add 3M?) yabetta! ask us (w/intel, too ;) — and get Bob Dylan to sing (he’s got a million friends, right?) that they’ll be “talkin’ ta’ you” at their GRAND OPENING EVENT !!!

    ;D nmw

  • Mike

    One of the most insightful, thought-provoking blog posts that has ever crossed my reader.