Has Microsoft Changed?

Although timeless adages highlighting the staying power of old habits or the slim chances of an old dog learning new tricks have historically been applied to human beings on an individual scale, collections of individuals on an enterprise scale succumb to these facts of life and many others just the same. Unlike individuals though, enterprises inherit the proclivities of their collective workforce, magnifying them and consequently become more reluctant to change as their workforce grows and matures. With this in mind though and despite being 43 years old with an average age of 51 and tenure of 21 years among their senior leadership, Microsoft’s billion-dollar PR department would like everyone to know that they have shed their old ways and evolved into a hip and woke gentle giant, but have they really?

There is currency in being viewed this way in the public eye and public relations department would like you to believe this about X company because of the trust it fosters. Further, it is also the job of any public relations team to distract us from such and many others that contradict said narrative. In PR and good ol’ fashion propaganda alike, such tactics are referred to as spin. And when a company such as Microsoft employs a former marine and Defense Information School alumni to spin their web, facilitate their social wetwork, and maintain dossiers on journalists (an act of intimidation), it may be wise to remain skeptical.

As such and rather than focusing on the ambiguous notion of change popularized by zealous employees raving in unison with fan sites shilled by PC ads masquerading as media outlets, it may be wise to highlight a few mainstay behaviors that Microsoft of old has been notorious for and see if they are existent today instead. From there, we can decide for ourselves whether Microsoft is truly the woke, edgy and reformed tech company that their PR and marketing departments would love everyone to believe or if they’re the same law firm with a software problem that they’ve always been with some minor aesthetic changes.

Software
Not all developers were writing applications in C for Windows back in the ‘90s. Some were already building for the web as we know it today and others were also writing for Java and other middleware APIs dependent on robust APIs within platforms such as Windows or what is now macOS in order make the same products as platform agnostic as they could. Unlike developers that leveraged the Windows API directly, middleware developers could develop applications that could easily be ported over to any platform that supported said middleware which made their solutions widely available and platform agnostic.

This naturally posed a strategic problem to Windows long-term. Microsoft feared that applications which were built around said middleware instead of being built directly on top of Windows could result in products and solutions that would be easily ported over to other non-Microsoft operating systems capable of running the same middleware. As a means of fending off the sort of competition that middleware posed and rather than trying to compete by simply writing the best software, Microsoft opted to develop their products in a manner that limited middleware and its developers by restricting the amount of access granted by the Windows API instead.

Microsoft took this a step further by also finding ways to increase the barrier for entry of their competition such as making it both lucrative and difficult for OEMs such as Dell, HP, and IBM to sell computers with non-Windows operating systems. However, they also began to write software in a quicksand style that made the barrier for exit much greater for customers wanting to move on to a different solution, entrenchment if you will, offsetting the benefits of migrating to a newer platform with the technical debt incurred during the migration and rendering customers stuck and dependent; but don’t take my word for it:

“The Windows API is so broad, so deep, and so functional that most Independent Software Vendors would be crazy not to use it. And it is so deeply embedded in the source code of many Windows apps that there is a huge switching cost to using a different operating system instead… It is this switching cost that has given the customers the patience to stick with Windows through all our mistakes, our buggy drivers, our high TCO (total cost of ownership), our lack of a sexy vision at times, and many other difficulties […] Customers constantly evaluate other desktop platforms, [but] it would be so much work to move over that they hope we just improve Windows rather than force them to move. In short, without this exclusive franchise called the Windows API, we would have been dead a long time ago.” -Aaron Contorer, Microsoft

Source: https://i.cdn.turner.com/money/images/ms-conclusions.pdf

These sorts of anti-competitive behaviors, among plenty of others, is ultimately what got Microsoft in trouble with the technology community and governing bodies around the world. In the US alone though, these proceedings culminated into initially being ordered to split at the beginning of the millennium by the federal government which happens to be a major stigma that they are still actively trying to address to this very day. Microsoft ultimately dodged the punishment of being split, but not the charges against them which have yet to be overturned.

But if your products are streamlined for anti-competition and lock-in as Microsoft’s products have historically been, it’s not as if you can flip a switch and strip the naughty bits out of the code. Such components tend to be deeply ingrained and systemic while necessitating a steep financial burden to refactor such behavior. Even the methods necessary to produce sticky products are inherently sticky and difficult to curb operationally because of the revenue that can be made with “dark arts” such as this while few are the wiser. Because of this and in order to be a changed company as sold, a good argument can be made that Microsoft would need entirely different suites of software generating revenue for them that also exhibit less financial overhead to migrate away from.

New icons though.

Some may say that Microsoft has accomplished this with Azure and Office 365 at the forefront but their cloud infrastructure appears to be generating its revenue largely by maximizing licensing compliance of the same legacy software and server products that Microsoft has always had. On top of this, said products aren’t exactly easy to migrate into or out of by any means and tend to be nothing short of a nightmare for admins and users.

Microsoft certainly has new services within these platforms such as Teams and Yammer, but without Office, Exchange, Windows, Windows Server, SQL, Active Directory, and the usual legacy suspects, there would be little to no incentive to embrace Azure, Office 365, or any other ancillary services within them; similar to a phone line from Comcast. It is much easier to enforce licensing compliance in the cloud in comparison to the honor and audit system they’re still depending on modernly.

Microsoft’s dependency on their legacy solutions is increasingly evident in their own financial reporting where revenue for their cloud services are bundled with their legacy solutions sold through them, referring to it as their intelligent cloud, which prevents their services from being evaluated on their individual merits. Even the recourse that Microsoft offers to businesses that are found to be out of licensing compliance eludes to this reality as those found to be in violation are offered leniency in exchange for migrating their services into Microsoft’s cloud.

Despite all the lipstick, Microsoft’s legacy solutions appear to be just as much of a lynchpin as they have always been while Office 365 and Azure may just be little more than a new way of scraping the same old barrel. This is not to say that Microsoft’s more recent product offerings aren’t compelling to some. However, they are still ancillary in comparison to their legacy tools still in play and cannot bear the financial burden posed by their hypothetical absence.

Partners

As a consequence of Microsoft’s core software remaining virtually untouched since the late ’90s, little seems to have changed with regard to how their products are sold, distributed, deployed, and managed. Much like Amway or Rodan Fields, Microsoft saw the supermajority of its commercial revenue from its partner network of resellers, consultants, and managed services providers. Unlike the aforementioned multi-level marketing schemes though, Microsoft partners as a whole see $9 in revenue for every $1 that Microsoft sees in revenue which has risen over the years from $8.70 back in 2009 making Microsoft partnership a trillion dollar industry in itself.

When looking at how they market to their partners and how much said partners are directly benefited by the lock-in nature and confusing licensing of Microsoft’s products, it is clear that Microsoft products still foster a conflict of interest that benefits their partners and themselves greatly. This is why most comparative analyses revolve around how IT firms can profit off of Microsoft, not how they’re the best or most cost-effective solution for the problem at hand.

As trusted advisors of businesses, these partners, often IT consultants, should be steering their clients towards the best solution, period. But the resale margins along with the long-term recurring revenue from offering incidental and long-term management for their solutions ensure that Microsoft products and services often get to the front of the line; regardless of where they stand merit-wise and especially in situations when no one is the wiser.

On top of engineering their own products to foster lock-in, Microsoft is even advising its partners to deploy their services in a “sticky” manner that further entrenches their solutions, increases switching costs, and engineers their own necessity. When considering this dynamic and the revenue that they represent, Microsoft partners still appear to be the true customer and focus of Microsoft as it has always been while the businesses trusting them are little more than marks.

Marketing

Source: https://www.statista.com/statistics/506534/microsoft-sales-marketing-expenditure/

Microsoft was also notorious for relying heavily on advertising and sales to supplement the quality of their products and garner a rate of adoption that their products could not merit alone. Relative to their competition, the best products tend to be the easiest to sell while also generating the least amount of controversy and necessitating the least amount of ad-spend and sales overhead. This is why Apple can open their own stores and sell its own products while spending a tiny fraction relative to revenue on marketing and advertising in comparison to Microsoft. As software is built to higher quality standards rather than being streamlined for entrenchment and partner margin, their associated marketing costs should diminish as a result which has not happened for Microsoft when viewed as a ratio relative to revenue or raw spend.

Given that the opposing narrative of propaganda tends to be true, the absence of any real intrinsic change could easily explain why Microsoft’s PR and marketing departments are shoehorning the notion of change and growth so much in the first place. If Microsoft had truly changed for the better, then you should expect to see the ratio between their revenue and sales/marketing efforts to diminish in proportion to revenue. Instead, the growth of Microsoft’s marketing and sales expenditures is quite linear, much like their revenue growth, and seems as if they still rely on marketing as one of several crutches to compensate the merit that their products cannot foster on their own. However, Microsoft doesn’t need businesses to love their products, just need them to use their products long enough to become entrenched and dependent on them, addicted if you will.

Legal

“Microsoft proved, time and time again, to be inaccurate, misleading, evasive, and transparently false . . . Microsoft is a company with an institutional disdain for both the truth and for rules of law that lesser entities must respect. It is also a company whose senior management is not averse to offering specious testimony to support spurious defenses to claims of its wrongdoing.” -Thomas Penfield Jackson

Hi Brad.

It often goes overlooked, but legal departments can carry as much or more weight than the office of the CEO and this is certainly not an exception for a company founded by the son of a prominent attorney. However, it’s also overlooked how much lawyers generally suck at change; go work for a few law firms if you doubt this. That said and despite Microsoft’s hip new CEO, Brad Smith, one of the largest individual shareholders of Microsoft, has been working within their office of the general counsel since the ‘90s, was named their general counsel towards the conclusion of their embarrassing anti-trust case with the US, and is now their Chief Legal Officer. As a consequence of their legal victories and the billions in revenue made possible through Brad Smith’s leadership, it is almost irrational to think that Microsoft’s legal department has changed as they have no incentive to do this.

When considering Brad Smith’s clear specialty in the realms of damage control and anti-competition, even approached by Facebook recently, it is difficult to say whether Microsoft has changed much or if they just have the best (dirtiest?) lawyer in the room. After all and just as you tend to stop having to call your traffic attorney as much when you slow down and stop speeding, Microsoft wouldn’t need the Jose Baez of anti-competition on their payroll if they weren’t up to the same antics that got them in trouble in the first place.

As a result of this, Microsoft Licensing, still overseen by the aforementioned Brad Smith, is still a complex, ever-changing labyrinth that is streamlined to ensnare businesses and add cost at every interchange. Even Azure, the lynchpin of their future, is a licensing hellscape of sorts that appears to borrow heavily from these same practices.

Although Microsoft claims to be an equal opportunity company that is in the court of women now, 99% of sexual harassment and gender discrimination claims made by highly educated and accomplished women with everything to lose have been found to be meritless and are snuffed out by their HR and employee relations investigations team (ERIT) which Brad Smith also oversees. For what it’s worth, Kathleen Hogan, VP of HR at Microsoft, would like you to know that only 10% of discrimination and 50% of harassment claims are found to be hogwash, which is still garbage.

Employees
If Microsoft didn’t foster a zealous and loyalist culture among its employees, then they would be the only technology company not doing this today. Combined with walls slathered with company propaganda, lax drinking policies, one of the wealthiest men alive running the show, and the occasional pep rally, technology companies tend to foster an irrational affection from their employees which ensures that they will tow the company line and look past just about any atrocity like a proper catholic. Needless to say, technology companies like Facebook, Google, and Microsoft can add more benefit to the lives of their employees than any religion can lay claim and receive a significant amount of reverence and grace from them in return.

To no surprise and as a pioneer in the information technology field, Microsoft is a lot like a religion for many and this seems to be especially true for those dependent on the PC ecosystem for a living; i.e. their employees and their partners. Because of this and even though technology companies and governments around the world had proven otherwise, Microsoft employees don’t seem to shudder in the face of convictions from the department of justice or the EU and were known for not even dignifying the charges made against their company.

With this in mind and given that the charges against Microsoft have not been stricken from the record as of yet, one might think that Microsoft employees have moved past this stance. However, it’s still an uneasy conversation when diving into what exactly inspired Microsoft to change with their employees, partners, and the like, as few seem to have even acknowledged these problems to begin with.

This appears to be especially true about the monopolistic practices that landed them in hot water for decades and seemingly anything that questions the viability of Microsoft for that matter; much like they did decades ago during the trials. Rather than acknowledging any initial fault or partaking in a civil discussion on the matter, said employees and affiliates often seem to become petulant and defensive, sometimes even resorting to other primitive forms of rhetoric, similar to a zealot refusing to reproach their religion. That said, it can be an entertaining way to get blocked on twitter.

Some may not find this concerning, but enterprise change is a reflection of the individuals that have either changed or been replaced, and this zealously closed-minded attitude is near identical to how Microsoft employees acted in the face of anti-trust accusations throughout the ‘90s and ‘00s all the way through to their iPhone funeral. Unfortunately, it’s difficult to change when you’re in the delusional stages of denial. In order for the company to change as drastically as they would like everyone to believe, their employees would also have to be in a place where they are capable of acknowledging the errors of their past better than they seem to be doing at present or replaced entirely.

Although they make great strides to appear hip, this zeal may be due in part to the fact that many of the people that said nothing and towed the company line while cashing a hefty paycheck when Microsoft was at its worst are still working there to this very day; especially throughout their leadership. Regardless of how many employees they layoff, with an average tenure of 20 years and age of 51 (approximately) among their highest ranks along with the same major shareholders that they’ve always had, it is difficult to expect much operational change. Sadly, expecting change from such people is almost like expecting 15 old dogs to stop begging at the dinner table by virtue of feeding them table scraps.

It almost goes without saying, but having the same leadership in place is by no means a correlate of the sort of change that Microsoft is suggesting as their employees would have to be capable of acknowledging such faults, a requisite of change. Seeing as only 50 employees took issue with the government using the Hololens to train soldiers to kill, a use case that few people signed up for initially, it seems as if Microsoft employees at-large today are willing to look past just about any ethical dilemma in favor of a paycheck just as they did in the ‘90s.

Conclusion

“There is credible evidence in the record to suggest that Microsoft, convinced of its innocence, continues to do business as it has in the past and may yet do to other markets what it has already done in the PC operating system and browser markets.” -Thomas Penfield Jackson

Aesthetically speaking, Microsoft is a completely different company since the ‘90s. Embracing Linux, buying into GitHub, and joining OIN are all good moves in my opinion. But even these sorts of changes are nothing extreme in the tech community, if not the status quo, nor do they offset the damage that Microsoft has done and is seemingly still doing to the technology industry as a whole in present day.

Despite their layoffs, aesthetic changes, and acquisitions though, Microsoft still appears to be employing the same people that they always have, especially within their highest ranks. In turn, these same people appear to be employing the same sort of employee required to build the same core suite of products that necessitate the same partner distribution network, the same marketing ploys, the same lock-in nature, and the same legal clout that they have been dependent on for decades to make this all possible, leaving little else to be changed beyond the paint on the walls.

Obviously, you’re welcome to believe all of the hype that you wish though. Microsoft is a master of hype after all and I can’t exactly fault anyone when there are billions being spent to ensure that they think this way.

Engineer, Farmer, and Hellion

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Mitchel Lewis

Mitchel Lewis

Engineer, Farmer, and Hellion

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