How long will it take Microsoft to admit defeat?
At the end of 2006, Microsoft launched an MP3 player called Zune that was a direct competitor to Apple’s iPod, which had been launched in 2001 and completely redefined what was already a mature market filled with innumerable players operating with tight margins. Between its launch and September 2012, Apple sold more than 350 million of its devices.
Zune endured a lonely existence for five years, until in October 2011, it was withdrawn from the market, and in June of 2012, all services related to it ended. Measure it how you like, but this was a stone cold failure, an attempt to “redefine what somebody else has already redefined,” a belief that another product could be improved on by… by what exactly? There is little to be learned from Zune’s sorry tale, and I can’t imagine Microsoft putting the same resources into developing and launching this product; in any event, it was one heck of a loss, the fruit of a perfect storm of wrong decisions.
Several years on, in an impressive display of humankind’s refusal to learn from its mistakes, Microsoft attempted to unseat the iPad, which as readers will remember redefined the tablet market when it was launched in April 2010, selling more than 200 million devices since, and providing Apple with a significant part of its profits. Microsoft’s answer was Surface, which supposedly included several features that improved on the Apple experience. Launched in October 2012, more than two years after the iPad, it too failed to gain traction. Every effort, including price cuts and attractive sales options, failed to make any impact on a public that only wanted to buy iPads, and when it bought Android systems, they weren’t the Surface. So far, total sales are around 1.5 million devices.
Some estimates suggest that the design, launch, and marketing of the Surface cost something like $1.7 billion, a figure which even for a company like Microsoft is not to be sniffed at. I didn’t like the Surface: it seemed to me to be well designed from a hardware point of view, but weighed too much; and the software was poorly designed, forcing the user to learn too many new skills. Being an academic I should have been able to witness the spread of this device, but I never saw more than one or two in my classes, and of course a few in the hands of Microsoft executives. In short, despite Microsoft’s best efforts, a company with considerable resources, nobody wanted to buy the Surface. The market had spoken. Again.
The problem now is defining the line between investment and loss. In reality, Surface belongs to the past: launched by a board that also belongs to the past, the new directors at Microsoft can relegate it to the “mistakes others made” category and move on. Or at least that’s what you’d think. But in May of this year, Microsoft had the chutzpah to release the Surface Pro 3, with a bigger processor, better support, and… a pencil. One can only wonder how much more time, money and resources the company will have to spend to accept a defeat that undiscovered peoples living in the hidden valleys of Papua New Guinea sit around the campfire at night shaking their heads over.
How long does it take a company to accept that it got something badly wrong and take the necessary measures? What can be learned at the corporate level from such an experience, with so many things in common with Zune?
In strategic terms, what can be made of the inability to make any inroads into the tablet market, used by such a wide cross-section of the public, but where Microsoft’s absence is spectacularly conspicuous? Are its smartphones headed in the same direction, or will they become the exception that proves the rule, the only market in which, after entering in the wake of Apple’s redefinition, it has managed to establish a significant presence?
(En español, aquí)
