Apple continues to gain at the expense of Microsoft

A few years ago I blogged that I thought Apple had peaked.  I no longer feel that way.  The main reason I’ve changed my mind is that Steve Jobs is no longer at the company.  Yes, I know everyone who never worked for him thinks Steve Jobs was some kind of god (and all the sycophant know he was a god); but Job’s Achilles heel was always B2B. Strangely enough, for a man who created large businesses he didn’t get large companies and especially never got what drives IT organizations. More than that, he didn’t like doing what’s needed to sell into big business.  Now with Jobs is gone, Apple can move their products into the corporate environment.  A perfect example of what never would have happened if Jobs was alive is the deal Apple now has with IBM. 

Interestingly enough it’s just not Jobs being gone that has created this opportunity for Apple but it’s also a weak Microsoft letting this happen.  Which highlights my thinking, that is, Microsoft’s earnings do not yet show how much trouble they’re in.  Microsoft is turning into Yahoo – a past leader who lost touch with customers and technology and now is just hanging on.  Microsoft’s products are old and weak.  They’ve missed major trends, producing second rate solutions as a response e.g. search engines, smartphones, tablets, online office apps, cloud services, development environments … Their development organization is so internal focused that they forgot there are actually customers out there; resulting in the creation of subpar products that technologists hate using and are confusing for end users.  While Microsoft misses out on all the latest technology trends Google and Apple are poised to eat their lunch. 

A big indicator of what’s going to be hot in IT organizations in five years are the skills Silicon Valley companies are looking for in engineers today.  Ten to fifteen years ago sixty percent of Silicon Valley companies were looking for engineers who knew .net and other Microsoft centric skills.  Today less than 1% of engineering jobs in the valley are for Microsoft centric skills.  The top engineers are being drafted into solving big data issues – centered on technologies like Hadoop – a Google/Facebook developed open source technology.  Where the less math centric programmers are being hired to develop web apps, using Google and Apple developed open source technology.

Based on this, I see Apple and Google continuing to rise at the expense of Microsoft. The big question is, can Microsoft’s new chairman change their course and turn Microsoft around.

My story of Tiananmen Square

On June 4, 1989 I had just gotten back from traveling in China when the government killed the students in Tiananmen Square. I spent the next few days glued to CNN watching what enfolded; shocked since four days earlier I was there, in Tiananmen Square.

The question I had then that I still have today is, What happened in the other cities?  Back in 1989 I was touring China with my mother.  We started our trip at the beginning of May in Shanghai.  I was told that the building across the street from our hotel was a sports stadium.  There were a number of people in front of that building dressed in white carrying banners.  When we asked our tour guide what was going on, she told us it was a sports rally for a local team.  I remember thinking, those are the strangest sports fans I’d ever seen.  

As our trip progressed and we visited more cities, it became apparent that these people with banners were more than sports fans. About a week into our trip CNN started covering the student protest story. This was the first time we learned that the people with signs were part of a country wide uprising.  The first large protests we saw were in the city center of Suzhou. As our trip continued and we visited more cities, we found each progressively filled with citizens marching in solidarity with the students.  By the time we got to Xian there were tens of thousands of people marching in solidarity. Also, by the time we got to Xian all western broadcasts were blocked.  I remember watching Chinese TV, not understanding a word they said.  What I saw were a few young men being interviewed.  These young men were having a hard time remaining conscious during the interview.  A local Chinese person told me that the young people were protest leaders in Beijing.  They were being sleep deprived.  To this day I have no idea if that assessment was accurate.

In Xian our hotel was at the top of a large traffic circle, which was the center of the protests.  Since we no longer had access to any western news I went outside, found people who spoke English, and asked what was going on.  There were copies of hand written sheets of paper pasted up on walls.  Asking around, a man who spoke English politely told me it was underground news describing what was going on in Beijing.  Another English speaker asked me what I thought of their students.  When I replied, “They’re amazing” he smiled and said, "we all are so proud of our students."

Someone else explained that the students were demonstrating for freedom.  What I learned from the people in the street was their definition of freedom and democracy was different than how those words are used in America.  At that time in China each street had a representative who reported to an area representative, who reported to a town representative, this chain of representatives went all the way to the top.  If someone on a street needed a job, wanted to go to school, wanted to change jobs or had any other basic life choice they had to go to their street representative and ask for a favor. That the street representative had a lot of power over their lives and corruption was rampant.   I learned that people wanted an ability to make life choices, what schools to apply to, what jobs to apply to, and ability to leave a job and go to a different job without asking their street representative.  I was told the students were trying to change the system, so that the people had more control over their daily lives.  

Every evening we were in Xian I could look outside of our hotel window and see tens of thousands of people walking down the street in solidarity.  This went on for hours.  This was not a small group of people walking in a circle, it was tens of thousands of people who joined in the protest. Whole families were part of it, dads pedaling a bike, moms balancing on the back and a child balancing on the handlebars. They were joined by large groups of people carrying a company banner singing their company song.  

When we finally got to Beijing, the protests and the energy was amazing.  The streets down town were impassable by bus.  We got out of our tour bus about ten blocks away and walked to Tiananmen Square.  The atmosphere was casual, lots of people with banners, whole families out showing their solidarity.  

Also in Beijing we visited the parents of a friend of my mothers.  His father spoke English and told us how worried they were for the students; that the Chinese government does not like instability.  He kept on saying this will end in disaster.  Looking back, it was the first sign of troubles to come.

Microsoft’s real problem

Ten to fifteen years ago in Silicon Valley when a software developer was looking for a new they found that roughly sixty percent of the companies were looking for people fluent in Microsoft technologies like .Net, C#, VC++, or MFC.  Fast forward to today, the skills that companies are asking for in Silicon Valley are either app development or big data, all of which use open source programming languages like C++, PHP, Java, or Python.  I estimate only one to two percent of the available jobs are for people with Microsoft centric skills.

What Silicon Valley does now, IT departments do in five years.  This is a fact that has been true for a long time.  Microsoft’s bottom line still looks strong, but if virtually all the new development is in areas other than Microsoft, then Microsoft will be then next Yahoo -- A big company that once had a leadership role and is now fighting for relevance.

Why Apple bought Beats

I think it’s an encouraging sign that Apple bought Beat.  Now let’s see if they can integrate Beat’s leaders with their culture.

Why do I think it’s encouraging?  As everyone knows Steve Jobs was the visionary at Apple.  That is he could look at something and had an unbelievable ability to see if it was cool.  But more than that, he had focus and energy to look at lots of cool things and pluck out what was really cool, drive people to create something cooler, or move mountains to make technologies he thought he needed for cool to come about.

What he didn’t do is hire competing executives.  He hired complementary executives.  That is he surrounded himself with guys who could execute what they know Steve would like, or find cool things for Steve to choose from.  But the final decision was always Steve.  With him gone the decision maker for cool is gone.  Apple’s problem is now who decides what’s cool?  And for a company like Apple, that’s the difference of remaining on top or just becoming another Silicon Valley technology company.

So Beat, the guys at Beat are cool, know what cool is, and can project ahead what consumers will buy because it’s cool.  Which is what Steve Job’s did.  By buying Beat, Apple has now bought executives that hopefully can fill the shoes Steve Jobs left empty.

Googles Achilles Heel

Google has an Achilles heel that I have yet to see written about and that's Ad Words.  Ninety five percent of their revenue comes from this service.  All other Google technologies do not need to generate any revenue as long as they potentially can give Google advertising or market knowledge reach. 

The Sherman Antitrust act plays an important roll for large companies.  Not in the way most people think.  When the US government goes after a company for antitrust - because they've gotten too big - many people think the government is over reaching.  I think the government is the canary in the coal mine.  The government is telling a company it's time to divest since the company has gotten too big to be managed effectively.  It's important to note that divestiture does not negatively effect stock holders, employees, or customers.  The only person who looses is the President and CEO of the divesting company since they no longer have as large  an empire to rule over.

Just look at the high tech history of antitrust.

Back in the 1980's IBM won their antitrust suit.  The government wanted to break them into two - a large computer and a small computer company.  To fight possible divestiture IBM licensed an operating system for PC's instead of using one they had already developed - thus creating the Microsoft juggernaut. Instead of of using an internally created processor for PC's they used a third party one - thus creating the Intel juggernaut.  By the 1990's IBM realized that small computers and printers were hobbling them, selling these business units.  For the stake holder a more advantages solution would have been to have their stock split into a small computer company - think Lenovo, Microsoft, and Intel as one company, and what's currently left of IBM - a large computer solutions company.

AT&T fought the US government for years finally succumbing to divestiture in the mid 1980's.   They found that divestiture gave them a much better way to manage their company.  AT&T was way too far flung of an empire.  They continued to divest even after the government no longer required them to. 

In the 1990's Microsoft was in the cross hairs of the US government over the Sherman Antitrust act. Microsoft won.  But look at Microsoft today.  They are struggling, mostly because they have gotten too big to manage.  Individual product groups don't make the best decision for their customers or their product since they are being forced to make the best decision for the company.  If they had broken up back in the 1990's I'm sure each of the new entities would be having a much better time flexibly reacting to the changes in technology.

Now back to Google.  Google's issue is that technologically they are into everything and tend to be a Juggernaut in each of these fields - think search, maps, mobile OS ...  The problem is none of these provide revenue since Advertising is how Google makes money.  All of Google's technologies are just  platform for them to present advertising.  So how do you break that up?

Many of us are already Leaning In

Sheryl Sandberg notes that young women come up to her and ask her about home life issues while men ask her business questions.  I find it interesting that her conclusion is that because young women ask her these questions they are not as serious about business as men.  I would guess these same women would ask a man business questions and never think about asking about home/life issues.  Nor would these young women ask Carly Fiorina, Meg Whitman, Ginni Rometty, Hillary Clinton, or Nancy Pelosi about home/life issues. These high profile women either don’t have children or their children are grown.  The young women asking Sheryl Sandberg are trying to understand what it takes to be high profile and balance work/ life issues.

The new class of young, high profile, C level women, with children have a great deal of support available to them as a professional and a parent; Support that is not available to the overriding majority of women.  Sheryl Sandberg talks about leaving work at 5:30 so she can have dinner with her family. In almost every situation  I know of, an individual contributor or middle management women (or man) who leaves the office at 5:30 every day to have dinner with their family has excluded themselves from promotion (we call that mommy track).  Mellisa Mayer has famously stated that her baby is easy.  Any baby is easy when you have 24 x 7 nanny care, someone who cleans your house, does your laundry, grocery shopping, makes your meals, and your company builds a nursery next to your office. 

The real answer to work/life is that there are very few women who can have it all, if it all is a C level job and being an active parent.  If a woman really wants to be a C level executive and have time for her children she has to become a star first; since she will need to dedicate 60 to 70 hours a week to her job before becoming a star.  Once a star she can negotiate leaving early or having a nursery next to her office.  As a star she will have a salary that covers two to three nanny’s at a cost of $50K a nanny.  The rest of us intelligent, educated, career focused women who are already leaning in, need to make choices and set priorities.  Choices on who to marry – will he truly partner in raising the kids; Choices on how we run our households – do you have the money to outsource all the homemaking and child rearing tasks; Choices on raising your children – are you OK missing school events, eating a family dinner, reading to your child, making sure they have completed their homework. 

Many women get off the “C” train because after having a child the sacrifices to a job are just not worth the sacrifices necessary for their family.  Yes, of course as the children get older it is much easier to manage a family from a cell phone.  But, then again that is why you see so few C level mothers with young children and most C level women with older children, grown children, or no children at all.

Feminism Today

This is the best time and we are living in the best place to be women.  Women have more opportunities, more choices today then any time leading up to today.  That said; there still changes we need to make in our culture so that women have equal protection and equal access.  I relate with Melisa Mayer when she says she is not a feminist.  Women in the 1960 did not relate to being a suffragette.  The issues of the 1910’s -- 50 years prior -- were not relevant to the women of the 1960.  Today’s women does not relate to the label “feminist” because the issues of 50 years ago do not relate to their life today.   When I think of feminism I think of burn the bra, anger, and driving for access and having a voice; Access to education, access to women’s health care, and access to jobs.  Today’s issues are different.  The feminism of 50 years ago gave women access to education, child care, medical care, and job availability.  Feminism of 50 years ago changed men.  Today’s man has a very different attitude compared to men of the 1960’s.  Most workplaces today have women at many levels within the organization.  Married men today are much more involved with their children and take on many more chores then the men of the 1960.  This doesn’t mean that for many women and men their work and home life is equal.  The bar has moved, it still needs to move farther. What we need today, is to come out with a new label that helps us to better describe today’s women’s issues without the baggage of the old label feminism.