CONSTANT CONCESSIONS: I’m sure you know about Microsoft’s successor
to Internet Explorer: Microsoft Edge.
But, did you know that Edge is actually powered by Google.
And it’s not some sort of obscure connection either, the entirety of Edge is built on Chromium
which is the open source version of Chrome.
When Google released Chromium, they were primarily aiming to help small developers and to support
the open source community.
But, somehow, their biggest competitor has ended up adopting it themselves.
And this isn’t a temporary solution either.
In fact, Microsoft has already tried to compete against Google.
They of course had Internet explorer, but the original verison of Edge was also built
on Microsoft’s proprietary engine, EdgeHTML, and their Chakra Javascript engine.
But, this version of Edge got destroyed so badly in the marketplace that Microsoft finally
threw in the towel and announced that they too would switch to Chrome.
Since then, Microsoft has even gone as far as discontinuing the legacy version of Edge,
and that itself was 2 years ago.
So, it doesn’t seem like Microsoft will be returning to the browser engine space anytime
soon.
It’s not just the browser space that they conceded on either.
They also gave in on the backend side of things.
Back in 2015, Microsoft ditched Windows and started using Linux for their backend infrastructure.
Since then, Microsoft has even launched their own version of Linux.
These two are likely Microsoft’s most notable concessions, but this just scratches the surface.
They also conceded in the smartphone space, the music streaming space, the Windows 8 space,
the smart assistant space, and now, even the AI space.
Instead of trying to push an in-house version of ChatGPT, Microsoft has decided to embrace
ChatGPT itself from the getgo.
Clearly, Microsoft has done a lot of conceding and losing over the past decade, so is this
the end of Microsoft’s mega monopoly?
Are they going to end up as the next Cisco or Intel?
The answer is absolutely not.
Microsoft has been doing a lot of public conceding, but internally, they are the strongest tech
company in the world, and here’s why.
HARD HEADED: While Microsoft’s approach may seem weak
and pathetic at first glance, they’re actually making all of the right choices.
Here’s the thing, over the past 20 to 30 years, companies have gotten into this mindset
that they have to be present in every aspect of your lives.
Do you need to wake up early?
You should be using an Apple Alarm on your Apple iPhone.
Do you need to workout?
You should be using an Apple Watch to track your workout, and Airpods to power your workout.
Do you need to text your friends?
You should be using iMessage.
Do you need to video call your family?
You should be using Facetime.
Do you need to just sleep?
Well, you should be using an Apple Watch to track your sleep.
This trend is not just apparent on the front end either.
These companies want to control the entire backend process as well.
If you’re building a service, you should be using Google’s servers, Google’s compute
engines, Google’s virtual machines, Google’s cloud functions, Google’s databases, Google’s
clouds NATs, Google’s VPC networks, and all of this needs to go through Google Fiber.
Basically, if a product or service has any association with tech at all, these companies
want to a part of it.
And you can’t really blame them.
They want to constantly grow bigger and bigger, so they’re trying to control every industry
they can think of from semi conductor design to thermostats.
But, here’s the ironic part of it.
To truly continue growing indefinitely, the key is not isolation.
The key is collaboration, and this is precisely what Microsoft has come to realize.
You see, it wasn’t that long ago that Microsoft also had this same mindset of conquering everything.
By 2000, they had hit 2 products out of the park: Windows and Microsoft Office.
These products revolutionized not just the computer space or even the tech industry.
These products revolutionized the entire world permanently, and this gave Microsoft such
a massive ego.
They felt that they could conquer anything and everything, and to some degree this was
true.
They could put out crappy products like Internet Explorer and end up controlling 95% of the
market simply because of their influence and control.
This false sense of superiority led them to the email space, the search space, the messaging
space, the video conferencing space, the gaming space, the music space, and who knows what
else.
But, eventually, Microsoft reached an impasse.
They kept throwing crap at the wall but nothing was sticking.
In fact, the crap that stuck earlier was starting to fall down as well.
Chrome was destroying Internet Explorer, Gmail was obliterating Hotmail, the iPod was humiliating
the Zune, the playstation was killing the Xbox, and MSN Messenger, well that was going
full on extinct.
For the first time in their history, Microsoft felt that people didn’t actually want their
new products.
But, maybe, that was just bad luck.
So, they continued pushing.
They bought Skype, they launched Bing, and they entered the smartphone space, but once
again, they got annihiliated.
Their stock had stagnated for 17 years, their CEO, while a nice guy, was also a meme and
hated by shareholders, and public sentiment against Microsoft was worse than ever.
Microsoft needed change and they needed it desperately.
Enter Satya Nadella.
BE HUMBLE: If you were asked if you want to be the CEO
of Microsoft, what would you say?
For those of you who want the job, you’d probably be selling your butt off.
Even those of you who don’t want the job would probably be selling you butt off.
After all, you only need this job for like 60 days and you’d be set for life.
But, Satya didn’t even try to sell himself to the board.
When they asked him if he wanted to be CEO, he replied quote “Only if you want me to
be CEO.”
Most boards would decipher this as a lack of enthusiasm and move onto the next candidate,
but somehow, Satya would end up getting the job, and he would spread this humble mentality
across all of Microsoft.
His first order of business was scrapping off all of the crap on the floor.
He shutdown dozens of sectors like their smartphone business, he replaced the worst OS of all
time, Windows 8, and he replaced Internet Explorer with Edge.
But, all of this was to just cut the fat on the consumer side.
Really, he didn’t even want to pursue the consumer side.
The reality was that Google, Facebook, Apple, and Amazon had destroyed them in this market,
and unlike Microsoft, people actually liked these companies at least at the time.
So, Satya decided to give consumers a break from Microsoft.
He basically made Windows and Office free for end users and got out of their way.
In the meantime, Satya decided to attack an up and coming market: cloud infrastructure.
At the time, AWS was really the only player on the market, and while they were excellent,
they were also as expensive as iPhones.
So, Satya decided to focus his efforts on the budget cloud market.
And today, Azure blows AWS out of the water in terms of cost.
In fact, Azure is up to 5 times cheaper than AWS.
Satya also put aside Microsoft’s pride and started offering Linux options because that’s
what enterprise customers wanted.
For many companies, this was simply an offer they couldn’t refuse.
A cloud platform from a reputable company that ran Linux and was substantially cheaper
than AWS was a no brainer.
But, the cloud was just the beginning, Satya was intent on tailoring Microsoft’s products
to the needs of enterprises.
A great example of this is Microsoft’s acquisition of LinkedIn.
LinkedIn has become the go to place for recruiters and hiring managers.
Satya also made the decision to ditch Skype and build a new video conferencing solution
just for enterprises: Microsoft Teams.
And today, Teams is looking to overtake Zoom.
At this point, Microsoft is no longer a consumer business.
In fact, consumer based revenue accounts for the smallest portion of Microsoft’s revenue.
Last quarter, for example, Microsoft made $16.5 billion from Productivity and Business
Processes, $20.3 billion from Intelligent Cloud, and only $13.3 billion from Personal
Computing.
And that includes Windows, Bing, Surface Tablets, and the Xbox.
In other words, Microsoft can shut down their consumer business and they would still be
a trillion dollar company.
But, that doesn’t mean that Microsoft is giving up on or exiting the consumer space
by any means.
In fact, it’s quite the opposite.
COMEBACK: Now that Microsoft is no longer reliant on
revenue from consumers, they can hit the consumer space harder than ever before, but Microsoft
can’t just revert to their old strategy though.
If they do, it won’t be long before they’re in the same position that they were in 10
years ago.
See, the key isn’t to try to replicate the success of the iPhone or Chrome or Facebook.
The key is to build upon these hits and make them better.
In fact, you could argue that this is what made these products themselves successful
in the first place.
The iPhone made cell phones better, Chrome made browsers better, and Facebook made social
media better.
The problem with companies trying to expand to everything by themselves is that they rarely
make said industries better.
The Zune did not make mp3 players better and the Windows phone did not make smartphones
better.
These products were simply alternatives that companies assumed that people would buy just
because it’s associated with a given brand and ecosystem.
This is basically the definition of what Google and Apple are doing right now.
But, as Microsoft found, this strategy doesn’t work forever, and that’s why they’re not
making the same mistake again.
Instead of trying to create yet another browser and convincing developers and users to switch,
Microsoft embraced Chrome and addressed its painpoints.
They made the browser more efficient and slashed its atrocious ram usage.
With 60 tabs open, Chrome gobbles up 3.7 GB of ram and FireFox gobbles up 3.9 GB of ram,
but Edge only uses 2.9 GB.
Microsoft isn’t hell bent on trying get you to use Bing either.
You can switch your default search engine to Google within a matter of 7 seconds.
You also get the power of the Chrome webstore while not giving up the power of Microsoft’s
classic products like the Office suite and Outlook, so you get the best of both worlds.
Microsoft is using this same approach when it comes to Bing as well.
Instead of trying to force Cortana down people’s throats, they decided to partner with something
that’s already working: ChatGPT.
And by the looks of it, people are excited for a Microsoft product for the first time
in a long time.
The new Bing was able to get 1 million people onto the waiting list within just 48 hours.
And it’s just a matter of time until these collaborative moves start hitting the bottom
line.
At the end of 2021, Microsoft was able to overtake Apple and become the world’s largest
company, but you probably didn’t even hear about this because Microsoft didn’t do anything
particularly cool.
And I think this is really the story of the new Microsoft: the background juggernaut.
TIME IN THE MARKET In the end, Microsoft is no longer trying
to constantly score winners product after product because that’s a losers game.
Consumer sentiment changes all the time, and it’s impossible to always be the most desirable
company with the most desirable products.
But, what is sustainable though is associating yourself with up and coming winners and just
trying to get a small portion of that pie for yourself.
This strategy will never yield in slam dunks because the main product whether it be ChatGPT
or Linux will always outshine what you’re doing.
But, at the same time, you also won’t end up like Yahoo or Aol.
If ChatGPT’s time in the limelight is over, no worries, you have hundreds of other winners
that you also bet on.
There’s a saying in the stock market: Time in the market beats timing the market.
Most companies are trying to time the market.
Meta, for example is trying to hit the next Gamestop short squeeze with the Metaverse.
Apple is busy chasing after the AR, VR, and EV markets.
And Google thinks that they can hold their ground against thousands of new AI options.
Meanwhile, Microsoft is just investing into the S&P 500.
It’s not flashy or particularly interesting, but over the long term, not even Warren Buffett
is able to hold up against it.
And that’s why I think Microsoft is the strongest tech company in the world.
Flashy products from Meta and Apple may excite the press, but in terms of long term sustainable
growth, Microsoft is the real winners.
But, that’s just what I think.
Did you realize just how well Microsoft was doing?
Comment that down below.
Also, drop a like if you wish more companies gave up their ego, at least partly.
And of course, consider checking out our discord community to suggest future video ideas and
consider subscribing to see more questions logically answered.