IBM

MSFT

Source: www.finviz.com

• This is “big” Windows, not yet another repackaging of Windows CE.  Remember Windows NT got its start supporting multiple CPU architectures.
• This has huge implications for Windows Phone’s future.  It makes no sense to have two separate operating systems and application ecosystems for increasingly overlapping touch devices (phones and tablets).  It sucks for customers, developers, OEMs and is terrible for Microsoft economically to have to build and support parallel operating systems.  And Windows Phone’s road is profitability is hard to imagine.  Even if you assumed a wild leap to 20% market share, at <=$10/unit, it isn’t going to pay for the 3,000+ people working on it, never mind the marketing spend and OEM “incentives”, any time soon.  Windows Phone 8 probably is a configuration of big Windows on ARM which lets that team focus on the phone experience and not have to build an operating system top to bottom.
• This also explains the demise of Courier – a third operating system in the mix would be exponentially worse.  Presumably the Courier application experience is being implemented on big Windows as the shell for Windows tablets.
• While iOS is Apple’s branded operating system for touch devices, it shares the same underlying kernel, tool chains, etc. with Mac OSX.  Microsoft aspires to have a single, modular operating system that can be factored appropriately for the increasing variety of form factors.  Better modularization will also help power efficiency from a software perspective.  Expect new configurations of big Windows for TVs, settop boxes, etc.
• In theory Windows apps can be recompiled for ARM, but in reality they all need new user interfaces for the touch world.  So much for the vaunted “applications barrier to entry”.
• Meanwhile, the modest traction Microsoft is making with application developers for Windows Phone 7 is at risk as it is not clear whether the Windows Phone application model will be supported in the future or whether something new will be introduced.  History suggests the big Windows team will have opinions on the application model.
• The ARM support won’t show up until Windows 8 (presumed to be 2012), which is an awfully long time to wait.  The incredibly late to materialize Windows 7-based tablets look like sacrificial offerings.  Meanwhile, analysts variously estimate Apple ships between 30 and 50 million iPads this year.  And we’ll see how whether Android 3.0 is as successful with tablets as it was with smartphones, with devices hitting the shelves shortly.  There is a huge difference between being number two and number three in  market (and I guess I should mention RIMM and WebOS for completeness and the possibility Microsoft could be number five in this market).  Microsoft might consider stopping spotting multiple competitors multi-year leads in some of these markets.  But maybe the company just likes a good challenge.
• Needless to say, Microsoft is in a tough position.  Getting to a single operating system and single application model is desirable for the long term, but the degree of difficulty to get there is incredibly high being a year or more from shipping product, having a full slate (yuck, yuck) of competitors in the market and potentially Osborning the current Windows Phone along the way.
• But it could be worse – you could be Intel.  Microsoft porting to ARM is a serious indictment of Intel’s power efficiency roadmap.  Historically, Intel-Microsoft executive meetings have had colorful moments and I’d pay to see video of some of the recent ones.  I do expect Microsoft to take the high road and throw Intel a conciliatory bone or two, deeming the next generation of Atom chips to be “pretty good (for you guys…)”.  And while client-focused, this move also improves Microsoft’s options for supporting ARM-based servers in the future, making this a double-barreled nightmare for Intel.  But at least they control their own destiny with that MeToo, er, MeeGo operating system.

Will be fun watching to see how Redmond plays this one.

Microsoft today is a sprawling software conglomerate spanning everything from ephemeral celebrity gossip to plumbing resident deep in the bowels of the enterprise.  There are cost efficiencies to having all that under a single roof, but there is less and less evidence of product synergies as the company struggles in multiple markets.  The company may simply be too big to coordinate and synchronize effectively across individual businesses (and has been for a long time).  The strategy tax burden grows with overall size.  For years teams have been trying to minimize any dependencies across the company.

Office would be all over the leading smartphones and the iPad if not joined at the hip to Windows.  Products like OneNote are a waste of time in this day and age without broad and ecumenical device support.  Windows and Windows Live are hampered from encroaching upon Office and Exchange, even as their competitors do so.  Azure’s operating system and programming model choices largely mirror Server and Tools’ offerings.  And Server and Tools would be both more multi-platform and get more credit for existing multi-platform support outside of the Windows orbit.  It has taken mobile over a decade, and it has required an existential crisis, to shake off the Windows desktop baggage.  The complexity of the business results in too much energy going into internal positioning and coordination as opposed to customer value.

You could get as many as six companies out of Microsoft, three of which would be over $10 billion in revenue, a fourth (Xbox) is about half that and the other two around a billion apiece.  So these aren’t tiny businesses that lack scale to stand on their own.  Forbes proposed just three companies (Windows, Office and Web) and Goldman is timidly raising the idea of a consumer business spin-out.  If I were doing it, I’d create six companies:

• Windows Corporation (Nasdaq: PCOS) – this is the first of the ten billion dollar plus behemoths and a cash-generating machine.  They need to focus on the tablet threat and decouple from the power-hungry Intel.  I’d put Windows Phone here to encourage efficiencies at the base operating system level and a coherent scalable Windows strategy.  Windows Live is the cloud services play.
• Office Corporation (Nasdaq: CLPY) – behemoth number two is also a cash spewing machine that gets the productivity suite plus Exchange and SharePoint.  BPOS and Office Live are the cloud services play.  They go device crazy.
• Server and Tools Corporation (Nasdaq: BOBS) – the third behemoth and one with increasingly healthy profits could be part of Windows Corp. but better to have a standalone enterprise company that can focus on competing with Oracle.  One key decision would be whether to put Dynamics here to help compete with Oracle or could be better off being application agnostic (this assumes you can find some enterprise application vendors Oracle hasn’t bought).  You also could buy or merge this company with SAP.  STB gets Azure for its online play.
• Xbox Corporation (Nasdaq: XBOX) – this is over a $5 billion business (there is some noise in the numbers from Zune and Windows Mobile/Embedded) but minimal to no profits.  Time to show it can stand on its own.  There is little technology synergy with the rest of the company.  Give this company a good chunk of cash to fund the next generation console (and Zune as a fabulous consolation prize).  The awesome Xbox Live is the service play and they can also go nuts across a broad variety of devices.
• Bing Corporation (Nasdaq: BING) – give Bing a few billion dollars as a buffer and lets see if sinks or swims.  This group is actually doing a great job executing.  Microsoft is now the clear number two and most markets like at least two players.  Plus Google doesn’t look like they will close this market out with the 80-90% share once expected.  With Yahoo’s distribution in hand, lets see if the losses start moving soon in the right direction.  The defensive rationale for Microsoft being in the search business is to keep Google’s profit pools from being used to drain Microsoft’s own profit pools like Windows and Office.  Google might worry less if there is no overarching Microsoft threat. 
• MSN Corporation (Nasdaq: ADHOC) – you could combine this with Bing to have a single online company, but I think it is better to have a standalone entity that is portable in the coming portal consolidation game with AOL and Yahoo.  Give up MSN for the search distribution.

The Baby Bills (Svelte Steves?) are welcome to do deals with each other reflecting both legacy and new relationships.  You don’t give each company a copy of all the source code as the DoJ had proposed, but both Windows Corp and STB Corp would get a snapshot of the Windows code (and maybe also the development tools).  The sales forces are largely segregated already except for the broad enterprise-facing field which serves multiple businesses today so will require some careful partition.  The company has multiple campuses already and hosters have proven it is easy to operate datacenters with multiple tenants (you could even spin the datacenters as their own company and get all that capital off the new balance sheets).  It would be a distraction for a year but I think the benefits of greater management focus, a strategy tax cut and a more motivated workforce would more than make up for it.

And for those whose reaction to this missive is to viscerally defend the status quo, do you think the whole of Microsoft is greater than the sum of the parts today and what is an alternative to restore confidence in the company’s future and move the needle on the stock price?  I’d love to see Microsoft recapture the energy, ambition and success of yore, but scale and complexity seem like some of the biggest impediments.  And maybe Mini-Microsoft can change to Multi-Microsoft.

This means great scrutiny for the upcoming Windows Phone 7 launch.  Microsoft is ramping the marketing machine (including a parade) and promising nine or ten figures of marketing spend.  There is never a good time to be flat on your back in the market, but Microsoft picked a particularly bad time as the Windows Phone 7 delivery woes have coincided with the phenomenal growth of both Android and iPhone, but they’re ready to reengage.

Perception-wise, just maintaining share will count as a loss for Microsoft, so it is going to take more than just a solid product launch.  Windows Phone 7 is going to have to light some people up with excitement to be successful.  There are four constituencies I’m watching for signs for giddiness.

Smartphone OEMs

There are a decent number of OEMs committed to shipping phones running Windows Phone 7.  HTC, LG, Samsung and Sony-Ericsson amongst the traditional mobile phone manufacturers as well as more aspiring vendors like Dell, Garmin-ASUS, HP, Toshiba and Qualcomm (whose product plans are a lot fuzzier than the traditional guys).  Key questions to gauge excitement amongst OEMs:

• Where is the Windows Phone 7 device in the OEM’s portfolio?  Hardware-centric mobile guys are pretty pantheistic, especially the Koreans who do one of everything.  Will Windows Phone be anyone’s lead device?  All the major mobile OEMs also do Android devices. 
• How much hardware flexibility does Windows Phone give OEMs?  What hardware support got cut to get it out the door?  How many chassis (evidently that is the plural too) does it support? Can OEMs leverage their investment across a family of devices and differentiate themselves?  Obviously things like CDMA support have been pushed from the initial release.
• Are the OEMs content to lose the ability to differentiate themselves with their own shells? (e.g. the HTC Sense UI).  Are there enough other opportunities for OEMs to believe they are differentiating themselves with Windows Phone 7?
• Do OEMs see Windows Phone giving them more leverage with Google on the Android side or does it put their access at risk?
• Will we see any surprise new OEM announcements?  e.g. Motorola, Nokia or RIMM?
• Will OEMs get excited about paying for an OS again after a taste of Android?  Or is the license now just for patents rather than code?  There is a scenario where Microsoft makes more per Android phone than Google (who have own revenue challenges) via patent licenses.  The whole smartphone market is becoming a patent free-fire zone.

Mobile Operators

The operators are less important and have less control than ever before thanks to Apple’s trailblazing work but they can still mess up a launch with pricing, promotion (or lack thereof – think Kin or Palm) and the inevitable but self-defeating initiatives that get dreamed up in the name of not being a “dumb pipe”.  The operators are worse than PC OEMs when it comes to self-destructive and misguided “differentiation”.  Discerning operator giddiness is similar to the OEMs in terms of seeing where it fits in their overall portfolios, but they also have some unique attributes:

• How many Windows Phones are in their portfolios and what kind of pricing and promotion do they get?
• What’s up with the big operators and will any of them get behind Windows Phone the way AT&T rode iPhone or Verizon pushed Android?  Verizon has already announced they won’t do Windows Phone at launch.  Partly this is due to the lack of a CDMA-capable phone but you can also imagine if they get iPhone as rumored in the coming months, it is hard to see how Windows Phone doesn’t take a serious backseat while Verizon busily scoops up millions of AT&T customers.  But the flip side of this is AT&T is probably more interested in Windows Phone if they need to fill the hole the loss of the iPhone exclusive will create, though they bring a sullied network reputation to the Windows Phone camp.
• Beyond the phone itself, there is also a battle being waged for who will control mobile services on the smartphone.  Will the operators accept Microsoft’s various services that are integrated with Windows Phone?  Microsoft is following right through the doors Apple and Google have opened but operators historically have thought of these services as their birthright.  Maybe Microsoft has placated the operators or perhaps they are ready to accept their “dumb pipe” fate (or maybe not).  Google can offer operators more search revenue share than Microsoft, at least based on the underlying economics.

Mobile Application Developers

Windows Mobile historically had a huge developer community and tens of thousands of applications.  But breaking backwards compatibility and the long delays in shipping make developer support for Windows Phone 7 much more tenuous at a time when there are alternatives with huge installed bases to target: 

• When will the most popular existing mobile apps show up on Windows Phone 7?  Android still hasn’t gotten all my favorite iPhone apps.
• Will we see breakthrough applications unique to the platform from Microsoft or anyone else?  How compelling are the mobile Office apps?
• Will we see organic investments by developers or is Microsoft having to pay for apps?  Historically, Microsoft viewed any platform that had to pay developers to write code for it as doomed.
• Can Microsoft thread the needle and avoid both the totalitarianism of the Apple App Store and the fragmentation and low value add of the Google Market?
• Will confusion about Microsoft’s commitment to Silverlight after the IE9 HTML5 festivities affect developer investment?  Does Silverlight go forward or has the company quietly dumped it for HTML5?  Or will Microsoft have one programming model for mobile and another for PCs and tablets?
• Can they get custom enterprise applications, historically a real strength of Windows Mobile and something that plays to Microsoft’s strengths?  This should be a slam dunk although the dynamics of your employer choosing your phone have deteriorated.

End Users

Last but not least are actual customers as the other three will follow if Mikey likes it.  Some key questions:

• Who is Windows Phone 7 for?  The positioning to date seems all over the place.  The alternating emphasis on Xbox Live, Zune and Office doesn’t exactly scream focus.  All things to all people is a tough sell.  Competing across the board with Android and Apple seems like a mistake for this release.  Far better to be laser focused in this release on Blackberry who just happen to be in freefall anyway plus the enterprise positioning plays to Microsoft’s strengths.  The iPhone hearses in the release parade don’t suggest that kind of focus.
• Why will a new smartphone buyer want a Windows Phone as opposed to the cool iPhone or a geek-chic Android device?
• Will new user interface find fans?  Microsoft can’t be accused of just copying the competition as the Windows Phone 7 UI is unlike anything else out there.  I think the live “glanceable” home screen is better than the competition, but the “pan-and-scan” navigation model underneath it feels clunky and disjoint (admittedly I have only played with it briefly).

The smartphone market is a huge and rapidly growing market and there is room for multiple players as the majority of cellphones turn into smartphones.  But to be successful, some of the constituencies above are going to have to get really stoked about Windows Phone 7 for Microsoft to move up from the number five position behind Symbian (ok, that share is up for grabs), Android, iPhone and Blackberry.

And even if Microsoft moves serious volumes, there still are business model questions about a mobile operating system business in a highly fragmented market.  You have to sell a boatload of units at or below $10 a pop to make the billions in development and marketing expenditures pay.  And related services revenue, beyond search, is still more dream than reality at this point.

It will be fun to watch over the next couple months.

“IBM is fully entitled to enforce its intellectual property rights and protect the investments we have made in our technologies. Competition and intellectual property laws are complementary and designed to promote competition and innovation, and IBM fully supports these policies. But IBM will not allow the fruits of its innovation and investment to be pirated by its competition through baseless allegations.”

So where are the Windows-based tablets to go toe-to-toe with iPad?  Lets survey the OEMs:

• OEM #1 HP just plunked down $1.2 billion for Palm and are saying they will use it for “multiple connected devices”.  Concurrent rumors of HP killing the Windows-based Slate tablet that Steve Ballmer waved around at CES may be premature, but no one has more experience with Windows touchscreen devices than HP.  They don’t seem on board.
• OEM #2 Dell appears exclusively committed to Android for tablets.
• Taiwan Inc. (aka Acer and ASUS) is strangely silent, although there are many rumors they are doing ARM/Android smartbooks.
• Lenovo (who ironically I think build the world’s best keyboard) has a weird hybrid notebook with a removable tablet where the notebook runs Windows but the tablet runs Linux.
• French consumer electronics powerhouse (?) Archos actually has a Windows 7 tablet, but they bury it on their site relative to the Android-powered tablets (they do atone slightly and prominently recommend Windows 7 on the page with the Android devices!).
• Intel, who normally play a key role in helping OEMs get to market, seems to be busy downplaying tablets and spending their time with 20th century mobile (and rubber boot) powerhouse Nokia on the MeToo, er, MeeGo operating system (the Wikipedia entry is worth a read).  Atom seems to be getting smoked by ARM for anything below the netbook.

Tablets are not exactly a new form factor for Microsoft, so what is the problem?  No dedicated multi-touch shell? (Microsoft is shipping a Touch Pack of accessories).  A lack of hardware reference designs?  Battery life challenges? (is it time to dig out the HAL documentation and port big Windows to ARM?)  Secret patent threats from Apple?  OEMs waiting for OneNote 2010 with touch support to ship?  Microsoft playing hardball on royalties (i.e. above netbook levels) while Android is free and offering search TAC kickbacks? (the OEMs not surprisingly like this model where they get paid to use an OS).  Did Courier got shot because it was scaring off OEMs who assumed Microsoft was going to build its own hardware a la Xbox or Zune?

Whatever the case, having no essentially presence in the hottest category de jour despite investing in this space for years has to be a big disappointment in Redmond, especially when they could have beaten Apple to market.  Android and its economic model is a real and strategic threat to the Windows franchise and the tablet door appears to be wide open.  What has happened to Microsoft’s once lauded, once-feared OEM organization?

We did three Entertainment Packs for Windows soon after Windows 3.0 came out (tagline: “Not the most fun you can have with Windows, the only fun”).  Each had about eight games.  Some like Minesweeper and FreeCell got bundled with subsequent versions of Windows, but I never would have guessed SkiFree would continue to have a cult following nearly two decades later.  There are SkiFree updates, ports, exhaustive overviews, numerous videos, cheat codes, fan mail and even fan fiction.  The Wikipedia entry has even dug into the philosophical underpinnings of the game (though inexplicably provides no scatological discussions of the sources of and scoring for yellow snow in the game).

The funniest part is (if I recall correctly), the origin of the Abominable Snowman was the game had a stack overflow bug and instead of fixing the bug (hey, we were on Internet time way way before it was popular, cranking these things out in a couple months), the Snowman was introduced as a way to sidestep the bug by devouring the player with a small loophole that if you outran him in a specific way (appreciate the annotated video and opportunity to buy the soundtrack…), you’d start again.

I assume it is just a matter of time before the Snowman gets a movie deal.  Every other comic character with any nostalgic appeal already seems to have one.

Starter Edition seems to be dead on arrival (in fact, to go back to a stock soundbite, you can’t spell Starter Edition without the letters D, O and A…), but they can always keep offering the immortal Windows XP if necessary.

Since then, Starter Edition has gone back to the drawing board and XP has gotten yet another life extension.

But wait, no stone is being left unturned in this campaign:

Microsoft at Computex has said it wants PC builders to avoid using the term “netbook” in the future.

Microsoft now plans to call them “low cost small notebook PCs”

As the kids say, good luck with that.  So what if the category name is too big to fit on the packaging of most netbooks.  Suggested official pronunciation: “lick-snips” (handy mnemonic: put your tongue in a weed-whacker).  I for one am heartened that the oft-criticized but much misunderstood Microsoft naming department survived the recent layoffs.

Some suggest it is more than just another step in a relentless quest for terminological precision:

While ostensibly claiming it’s primarily a definition, Microsoft is believed to be using the new label to better let it force system makers into using more expensive versions of Windows 7 on certain computers. Vendors have already been told that they can only install Windows 7 Starter Edition on notebooks with no more than a 10-inch screen, 1GB of memory, a 250GB hard drive and a single-core 2GHz processor. By exempting systems that don’t quite fit into the category even if their characteristics are similar, Microsoft could require that they pay for the significantly costlier Windows 7 Home Premium.

In other news today:

• Microsoft also said it wants Internet users to avoid using the term “Google” in the future, particularly if they are anywhere near a browser address bar.
• IBM spokesman Lou Canute reminded PC users to be sure to regularly save files they are working on to their “hard file”, or they could risk losing data.
• Descendants of Claudius Ptolemaeus issued a statement commemorating the 675,000th successful orbit of the Sun around the Earth since the publication of their ancestor’s earthshaking astronomical work Almagest.
• Larry Ellison suggested Soracle might build netbooks (Ok, this is real).  Soracle officials say they have what it takes to compete in low-cost, high volume consumer markets as evidenced by this clamshell-style prototype developed in Sun’s labs which can be seen below:

always keep offering the immortal Windows XP if necessary.

And just like that, the edict came down from upon high.  This suggests the OEMs aren’t falling for Windows 7 Starter Edition and Home Premium will be priced at too high a premium for netbooks.

Is it too early to start a pool on XP’s market share in 2021, when it will be twenty years old?

A few observations on the super heavyweight, no-holds-barred, ultimate cage match between Google and Microsoft.  Some of these have been rattling around in my head for a while so please excuse my inability to embrace the real-time “what are you thinking (or eating) this instant” Twitter aesthetic.

Google’s Soft Landing

Google’s Q4 and Q1 performance was brilliant.  Amidst an imploding economy, they managed to ramp revenue and cut costs.  They increased monetization (let no screen space go without an ad…), slashed capex, deferred datacenter build-outs, slowed headcount growth to almost nothing, trimmed employee perks (while repricing options) and whacked a bunch of services that were going nowhere (all but killing the 20% time myth in the process).

There was always a question about Google’s management chops and how they would perform when push came to shove.  The question appears to have been answered and the new CFO seems to be getting most of the credit.

Microsoft spent the better part of a decade on its odyssey from shrimp to weenies, slowly squeezing costs as growth slowed, and still had a lot to clean up after the dot com implosion.  Doing this kind of deceleration in less than a year is very impressive.  While the claim that search advertising is immune from macroeconomics has been put to a rest, Google will outperform amidst the ongoing (and likely protracted) “global economic crisis”.

Microsoft Windows Live MSN Kumo Yahoo Search

While Google shows it has knobs that do in fact go beyond 10, Microsoft continues to play rope-a-dope in search, with an ever diminishing quantity of rope.  (Microsoft watchers should understand that When We Were Kings is a SteveB favorite).

Despite new management at Yahoo, the company still seems infected with Paralysis Yahoois, so the inevitable combination of Microsoft and Yahoo search drags on and on.

Hopefully Microsoft has more in the cupboard here than just a new name.

Windows 7

I have only played with the public beta, but it looks very good.  It even runs nicely on my much-despised Sony laptop, which was unusable with Sony’s craplets and Vista. 

And it should be good, given three years to put Vista on a diet and add some user interface chrome (all for the better, especially fixing the wireless UI which I find to be the single most annoying aspect of Vista).  In many ways, Windows 7 is Vista Service Pack 7.  The biggest competitor for Windows is always the previous version of Windows, so the recent “Vistaster” will be a boon.

In the last month I’ve heard from people seeing more recent builds there are still a fair number of bugs to fix, but it is going out hell or high water.  Microsoft is very anxious to put Vista behind them.  Figure a street date two months after it releases to manufacturing, so it could be in stores on new PCs as soon as July.

I think the product will be an unambiguous critical success from a product perspective.  But the big question is not the product but its impact on the business.  Microsoft has a very tough pricing decision ahead of it for Windows 7 on netbooks which are the only bright spot in an otherwise dismal PC market.

A great example of unintended consequences, netbooks started out as the Taiwanese PC industry’s response to the $100 One Laptop Per Child initiative.  But instead of being sold to kids in developing markets, consumers in developed markets are buying them as cheap second or third PCs.  And all the protestations you hear that they aren’t cannibalizing more expensive PCs are a sure sign they are cannibalizing more expensive PCs.

Moore’s Law has powered the industry for decades: you get twice the processing power for the same price you paid 18 months ago.  But there is a flip side to Moore’s Law (and one Intel in particular has feared for years): you also can have the same processing power as the last generation for half the price.  This is the dynamic driving netbooks which are now 10% of the PC market and the ramp is unbelievable.  Basically 0 million units in 2007, 15 million units in 2008 and a projects 30 million units this year.

Netbooks have had a bigger impact on the Wintel business franchise than all the anti-PC children’s crusades of the last 20 years combined.  Average selling prices of PCs have dropped by about a third due to netbooks.  Both Intel and Microsoft have chosen to eat their own young rather than let someone else do it, but it has come at a cost.  Intel’s CY-Q4 revenue was down 20% and you really see it in Microsoft’s CY-Q4 and CY-Q1 results.  Windows revenue doesn’t usually decline, much less faster than PC units.  The drop in the premium mix is even more precipitous (double digit hits in both of the last two quarters).  This is an ominous sign of declining pricing power.

Microsoft got its share back in the netbook space in 2008, but did it with sub-$20 copies of Windows XP Home.  So will they price Windows 7 to keep that share or protect revenue?  Starter Edition seems to be dead on arrival (in fact, to go back to a stock soundbite, you can’t spell Starter Edition without the letters D, O and A…), but they can always keep offering the immortal Windows XP if necessary.  Home Premium will protect the revenue, but it is likely to be too expensive for $300 PCs that are on a trajectory to a $100 BOM cost and will face a bunch of even cheaper Linux and Android-based competitors this year.  So the big question is will Microsoft go for units or dollars with Windows 7?

Google and the Enterprise

Google is just not serious here.  The outages and privacy-breaching data spills don’t help.  The economic situation means they have the tailwinds behind them and the shift to the cloud in general, but they just don’t seem to be serious about this business.  Is it a cultural thing where they’re just not willing to do what it takes?  It took Microsoft over 15 years to be able to say they got the enterprise with a lot of motivating/de-motivating beatings along the way.

A possible by-product of the soft landing is that the great Google land grab may be coming to an end.  Google’s window to throw new stuff at the wall and see what sticks could be over.  My guess is we’re seeing a cultural shift that can’t be reversed.  It is tough to dream big dreams and pursue ruthless efficiency.  Google has staked out a very lucrative and high growth franchise that they can very successfully milk for the next decade, but I think we’re less likely to see radical and disruptive thinking from them in the future as they optimize what they’ve got.

Microsoft
certainly benefited from having a long time window and multiple product cycles to invest in new businesses like the enterprise and entertainment.  Google’s window may have been much shorter (and in general I believe Google has followed the Microsoft arc albeit much more compressed.  To prepare for their next act I suggest they “lawyer-up”).  They have a great franchise, but they didn’t build any new franchises during the land grab.  So they’re still fundamentally a one-trick pony.