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Analysis: Microsoft Internal Memos Highlight Google Scare, Leadership Gap

Analysis: Microsoft Internal Memos Highlight Google Scare

Lest there be any doubt, Bill Gates is still calling the shots at Microsoft. In an October email memo to the company, obtained by Windows IT Pro and other news outlets, Gates sets the direction of the company once again, harkening back to classic memos such as 1995's "The Internet Tidal Wave," in which he reorganized Microsoft to take on the Internet threat.

There's just one difference. Today, Gates is not the CEO of Microsoft. He is the company's chairman and, vaguely, chief software architect. But rather than drift into retirement, Gates is clearly still setting the agenda at the software colossus he created. Curiously, CEO Steve Ballmer's name never comes up in the recent memo.

"We will build our strategies around Internet services and we will provide a broad set of service APIs and use them in all of our key applications," Gates directs the troops in the memo. "This coming 'services wave' will be very disruptive. We have competitors who will seize on these approaches and challenge us--still, the opportunity for us to lead is very clear. More than any other company, we have the vision, assets, experience, and aspirations to deliver experiences and solutions across the entire range of digital workstyle \[sic\] & digital lifestyle scenarios, and to do so at scale, reaching users, developers and businesses across all markets ... the next sea change is upon us."

As with most perceived threats to the company that have emerged over the past decade, Gates sees the "services wave" as a result of grassroots technology--in this case, from Google and Linux. In a separate memo, Microsoft CTO Ray Ozzie, who much earlier grasped the migration to network-based services during his years at Groove Networks, writes that Microsoft's topmost business units will have to figure out strategies for online services. Two examples, announced last week, are Internet-based software for Windows and Microsoft Office, called Windows Live and Office Live, respectively.

Ozzie's language is pure Microsoft, highlighting how well he fits in at the company. "It's clear that if we fail to do so, our business as we know it is at risk," Ozzie writes. "We must respond quickly and decisively." Unlike Gates, Ozzie specifically discusses Google and notes that Google is more focused than Microsoft. "Google might ultimately grow to substantially challenge our offerings," he concludes.

So what are we to make of this? Microsoft's reaction to the Google threat is both predictable and suspiciously similar to past "turn-the-ship-around" incidents. Gates seems to have latched on to the notion that he must lead his company on a new crusade every 5 years to keep employees motivated. And Microsoft's self-critical stance is as manipulative now as it was 10 years ago. Increasingly, companies such as Google, Skype, and Yahoo! are determining the direction of communications and computing. That Microsoft needs to move more quickly and begin innovating should be obvious. What I want to know is why we see such a consistent failure of leadership and direction at this company. Does Microsoft really need to be rebooted every 5 years to stay competitive?

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