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What's the matter with Microsoft?

Experts search for meaning in three Microsoft U-turns

June 25, 2013 11:38 AM ET

Computerworld - Microsoft's had a tough year, and it's not even half over.

The software giant has retreated from flubs in licensing, the design of its flagship Windows operating system and most recently, innovations it wanted to bake into its new game console, the Xbox One.

On Wednesday, in fact, the highlight of the BUILD developers conference opening keynote will certainly be Windows 8.1, an upgrade that Microsoft casts as a customer feedback-driven refresh, but that some outsiders see as a reversal, even a repudiation, of its first-pass design.

What's going on? Is the company's decision-making suddenly fundamentally flawed? As the PC industry goes through its largest-ever slump, is it so desperate that it's trying to milk revenue wherever it can by forcing change -- even when it knows customers will rebel? Has it taken to hauling up the white flag at the first sign of resistance rather than toughing it out, as the old Microsoft might have?

Companies make mistakes all the time, sometimes crippling ones that drag them under. But if the organization is large enough, robust enough, it survives, learns. Ford weathered the Edsel, Coca-Cola New Coke, Netflix its Quikster, Apple the 1985 ousting of Steve Jobs, 2010's Antennagate and last year's Maps fiasco. But the pace of Microsoft's missteps and the resulting turnarounds -- three in the span of four months -- is unusual.

In March, Microsoft retreated from a sweeping change in its licensing for retail copies of Office 2013, giving way after customers complained that they'd be labeled lawbreakers for trying to move the software from one machine to another. In late May, Microsoft revealed some of the changes slated in Windows 8.1, including the restoration of something very close to the iconic Start button. And last week, Microsoft quickly backed off Xbox One plans that would have nixed sales of used games and required the console to "phone home" daily to Redmond's servers.

Too focused on money?

Industry analysts and other experts had all kinds of answers for the questions raised by Microsoft's miscalculations. Some saw a company blinded by a desire to squeeze the last dollar out of customers, or one that thought aping Apple would be a winning strategy. Others faulted it for not anticipating what, in hindsight at least, was guaranteed blowback.

"People don't like revocations of the physical rights they assign to property, even when we're talking about software licenses, not software ownership," said Wes Miller, an analyst with Directions on Microsoft, of the Office 2013 and Xbox One used-game errors. "We have an essence of tangibility, a feeling of ownership, when we buy a floppy disk or buy a CD, or even download a file."



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