Tuesday, June 19, 2012

Microsoft Swimming to Red Oceans

It is quite surprising to me that Microsoft, a company whose groundbreaking software development and customer lock-in efforts helped shape modern day strategic thinking, seems to have lost its Blue Ocean initiatives in the recent years. In “Blue Ocean Strategy”, Kim and Mauborgne describe examples of various companies achieving a sustained advantage through their relentless search for valuable “blue oceans” in market spaces where the notion of competition does not presently exist. The writers urge companies not to merely think of ways to “beat the competition” or “exploit existing demand”, but rather “create uncontested market space” in markets where “competition is irrelevant”. Microsoft is a company that comes to mind when I think of an organization that has not heeded this strategic advice, especially in a few lucrative areas such as the smartphone and tablet spaces. Recently, the company has been trying to play catch-up, and its announced entrance into the tablet market is perhaps too late as those oceans are already red with bloody competition.

Microsoft just announced its upcoming release of its new tablet, the Surface, in order to break into the high growth market. This announcement is just another example of a missed opportunity by Microsoft to venture into businesses that it turned its back on years ago. The company is now entering what Kim and Mauborgne proclaim are “red oceans”, which are dominated by fierce competition. These companies have already begun to stake their claim on the market and have most likely gained an edge from learning effects. Apple was able to find its blue ocean in the smartphone and tablet space because it was a “game-changer” in that ocean, as a writer for forbes.com claims in “Microsoft Win8 Tablet is NOT a Game Changer”. Motorola invented the smartphone but later halted its development because it only saw the product as a cell phone which was not as powerful as a PC. However, Apple anticipated the future value from a growing mobile market and delivered an experience that was better than that of a PC. Apple’s blue ocean is now only slowly turning red. Microsoft’s thought that its popular PC software experience would be good enough to attract the masses to its smartphone, but its smartphone partner Nokia is now realizing the trouble with that fallacy.

Didn’t Microsoft have the capabilities, strategic resources, and innovative dexterity to swim to blue oceans at the same time companies like Apple and Google Android were attempting to claim their respective markets? Why was the company so slow in realizing the need to be aggressive in these markets on the front end instead of 2012? It might be too late for Microsoft to carve out a piece of the tablet market, but I am definitely anticipating the results and reviews from the Surface tablet release. Perhaps the accompanying Windows 8 software experience will be so wonderful and unique that the company silences its critics and reclaims its identity as a strategic role model. For now, I look forward to reading about it on my iPad.

Evan Morrison

References:
HBR article “Blue Ocean Strategy” by Kim and Mauborgne

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