I was reading an article a few months ago entitled, “is Silicon Valley the next Detroit…”, and I found it very interesting.
It was a little backwater Newsweek article (you can read it here) and probably didn’t get much press. However sensational it was, it did reference one great industry titan that once dominated our culture, General Motors (among others as a testament to the size and scope of the Detroit Metro Area and the Auto Industry – much of this parallels Silicon Valley’s dominance in the Information Technology space).
I got to thinking, I wonder if there are some parallels to what is happening in the auto industry today and what is going to happen in IT.
I guess I got to thinking and concluded … Microsoft reminds me of GM.
GM Stock Trend from 1962
GM – a Consistent $40 Stock for over 60+ years
In 1978 (around there), General Motors was the largest company in the United States (employed well over 500,000 people). It was sitting on enormous cash reserves with ungodly collateral to fund expansion and development. It had about 60% of the car business in the WORLD. It’s a company that invented much of the automotive technology that you and I currently enjoy. You can always make the point that the Japanese “matured” these technologies, but it was American Engineers who came up with intermittent windshield wipers, airbags, electric vehicles (done in 1995), seatbelts, crush zones, cruise control, etc… Think about it, American auto industry DOMINATED, not just competed. Similar to how we dominate IT.
Let’s compare this to Microsoft… sitting on tons of cash (I think at last count they had 36 billion in cash and convertible assets), they have a seemingly invincible market share of over 95% of all installed operating systems using Windows, and the wind seems to be at their backs. They are not the biggest company in the world, but they are certainly the most relevant one now. They are the GM of the IT industry. They set all the standards that we deal with today. You could say that Windows was their ’57 Chevy … perfect for it’s time. I think of Windows today as more of Chevy Vega (for those old enough) or GM Minivan, it does what it does well, but it’s a minivan… nothing interesting or sexy there.
MSFT Stock Trend since 1986
Things are not what they seem, things look static huh? $30-40 Stock (looks like GM)
Microsoft is unwilling to see (or has ignored) that the world of computing is changing and changing rapidly. When I say rapid, I mean months, not years. The operating system is irrelevant, the computer is now the CLOUD – and do we care how the cloud is created? NO, I don’t care… I just want it available 99.999999% of the time.
Unless Microsoft can see this soon, they will probably end up on the dustbin of companies that have failed to see the light.
General Motors failed to see the light, in that smaller, more attractive, and reliable cars would dominate the American landscape in the early 80’s. It again missed the vision with pushing its very margin friendly SUV designs, while others car companies were focused on improving technology and maximizing gas mileage. GM failed in so many ways, that eventually their management couldn’t pay the bills anymore and the company went bankrupt; let’s remember, GM went BANKRUPT, the new company is not a public company at all, it’s a LLC that “plans” on an IPO in mid-2010, and we will see how the investment community reacts to GM 2.0. I frankly think the company is dead, and it will be eventually eaten up by another car company in the next 5 years.
I also think Microsoft’s fate is sealed, the market will react to the new cloud model with moving all of it’s data, applications and deployment to the cloud (FAST, not over some 20 years, this will happen in the next five). The operating systems that run these clouds will be free Linux, and not Windows. The apps developed in these clouds will be developed in frameworks that are free, such as Java. They will be focused on ONE thing, delivering consistent reliable services to it’s customers, if they can’t do that, the consumer will move to another service that is more reliable and rich. Companies and Consumers will make money on that “THINGIE” they deliver to you over the cloud. From area maps to restaurant reservations, it’s turning applications into what you “need to do (an action)” … from “how you do it” (environment or platform). It’s that simple.
Google has it right… I don’t think they’ve worked out all the privacy issues, but I’m also not naive and I respect Eric Schmidt saying that there “is no privacy” on the web and frankly, I don’t think he needs to clarify that further.
We are becoming a more interconnected society and transparent; I think transparency can be confused with lax privacy, at least this is something I’ve seen in the past. We are getting close to a “come to jesus” line where consumers (corporate and citizen) will just ignore Microsoft; since, like GM, consumers and corporate boards will be presented a range of options that won’t include Microsoft, and here’s the “rub”. You won’t even notice or care what your cloud service runs on, as long as you can get a map to your babysitter on your iPhone.
This is not your dad’s computer anymore. Kinda like they say, this is not your dad’s Chevy anymore.
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LogiGear Corporation provides global solutions for software testing, and offers public and corporate software-testing training programs worldwide through LogiGear University. LogiGear is a leader in the integration of test automation, offshore resources and US project management for fast and cost-effective results. Since 1994, LogiGear has worked with hundreds of companies from the Fortune 500 to early-stage startups, creating unique solutions to exactly meet their needs. With facilities in the US and Vietnam, LogiGear helps companies double their test coverage and improve software quality while reducing testing time and cutting costs. For more information, contact Joe Hughes + 01 650.572.1400