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 Channel Futures

Channel Programs


Microsoft Memos: Ballmer Cloud vs. Gates Internet Tidal Wave

  • Written by The VAR Guy 1
  • March 4, 2010

What a difference a decade or two makes. Back in 1995, Bill Gates wrote the famed Internet Tidal Wave memo to help turn Microsoft toward the Web. Fast forward to the present, and current Microsoft CEO Steve Ballmer is trying to recapture some of that old memo magic, this time saying Microsoft is going “all in” with cloud computing. Translation: Ballmer in 2009 sounds a lot like Gates in 1995. But here’s the problem: The VAR Guy knows Bill Gates. And Steve Ballmer is no Bill Gates. Here’s why.

First, The VAR Guy must point out that he respects both Gates and Ballmer. Our resident blogger interviewed Gates multiple times in the 1990s, allegedly for InformationWeek. And yes, The VAR Guy has also met Ballmer multiple times. Both are sharp. But here’s the difference.

1995: Bill Gates – The Internet Tidal Wave

Gates woke up to the Internet threat just in time in 1995. At the time, Microsoft had $5.9 billion in annual sales and 17,801 employees. Windows 95 was nearing launch and most of the world was focused on client-server computing and swapping out Windows 3.X systems. But Gates was deeply concerned about Netscape, web browsing and e-commerce. In a famed May 1995 memo, Gates wrote about an Internet Tidal Wave.

Microsoft rallied to the Internet cause, crushed Netscape, won the browser wars, and remained relevant through the dot-com boom and bust.

2009: Steve Ballmer – Moving At Cloud Speed

Fast forward to the present. Microsoft has $58 billion in annual revenues and 93,000 employees. Earlier today, Microsoft CEO Steve Ballmer gave a speech at the University of Washington where he said that the company was going “all in” with its strategy to move Microsoft products to the cloud, notes TechCrunch.

Ballmer also sent an email to Microsoft’s staff about the cloud’s importance. Wow. Was that Ballmer writing in 2009 about cloud? Or was it Gates writing in 1995 about the Internet?

Either way, it doesn’t matter.

Not even Bill Gates could help Microsoft dominate cloud computing. The economics are all different now. Channel partners eagerly helped Microsoft to dismantle mainframes and minicomputers two decades ago. This time around, cloud computing is dismantling Microsoft’s monopolies, and some of Microsoft’s own cloud efforts will compete with channel partners.

And let The VAR Guy repeat the financial stats:

  • In 1995, Microsoft had $5.9 billion in annual sales and 17,801 employees, according to multiple historical web sites. The company was nimble enough to change and didn’t have a big installed base of legacy products under attack.
  • Today, Microsoft has $58 billion in annual revenues and 93,000 employees, according to Wikipedia. And Microsoft’s massive installed base is under attack on multiple fronts.

Is Microsoft doomed? Certainly not. Microsoft Windows Azure seems like a wildly promising cloud platform. Move a few thousand Windows Server ISVs over to Windows Azure, and Microsoft is going to have a cloud hit on its hands. The VAR Guy practically guarantees Azure will succeed.

Still, this isn’t 1995 — when Microsoft was relatively nimble, and rallied to destroy Netscape. Today, Microsoft is massive, and must fend off open source, social media platforms, early SaaS leaders (Salesforce.com, Google), and cloud platforms (Amazon Web Services, etc.).

At this point, not even Bill Gates could push Microsoft back into the center of the computing universe.

Tags: Cloud Service Providers Digital Service Providers MSPs VARs/SIs Channel Programs Cloud

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10 comments

  1. Avatar Stuart Crawford March 5, 2010 @ 1:13 am
    Reply

    JP, I would love to see Microsoft do more on the cloud, however this once avid Microsoft flag waver and still supporter of Microsoft sees the writing on the wall. Google owns the Internet and IT firms are also starting to move forward with their own offerings. Just like Microsoft once ruled the LAN, they don’t see to have it together in the online world. I just can’t see Microsoft recovering enough to pose a threat to what has developed. Too big and too clunky of a machine.

    Let’s not forget about Google. Did they miss the boat with social media like Microsoft missed the boat on the Internet?

    Stuart Crawford
    ULISTIC Inc.
    403.775.2205

  2. Avatar The VAR Guy March 5, 2010 @ 5:13 am
    Reply

    Stuart: The VAR Guy thinks MSFT is still a serious player in cloud — just not the dominant player. Regarding Google missing the social media boat… perhaps Google did, but is anybody really making a ton of money from social media???
    -TVG

  3. Avatar Stuart Crawford March 5, 2010 @ 5:18 am
    Reply

    I think Facebook is making money with their Facebook Ads. Also I think Twitter will offer ads this year or have a professional version which you pay $10 and get Twitter without ads. Also, consultants are making money with Social Media. 🙂

  4. Avatar The VAR Guy March 5, 2010 @ 3:11 pm
    Reply

    Stuart: Fair points all around. And for the record: The VAR Guy would be willing to pay for Twitter. No joke.
    -TVG

  5. Avatar NookSurfer March 5, 2010 @ 5:29 pm
    Reply

    I’m definitely excited to see what kind of advancements Microsoft has in store. Although Google has done an excellent job with Chrome, I believe Microsoft will be the one to take the concept to new levels.

  6. Avatar The VAR Guy March 5, 2010 @ 7:23 pm
    Reply

    NookSurfer: The VAR Guy has learned to never under estimate Microsoft… never.
    -TVG

  7. Avatar Daniel Jefferies March 5, 2010 @ 7:39 pm
    Reply

    I agree that Microsoft should not be under estimated. Talented people, cash, and installed base are powerful.

    For them to reverse recent trends would require changes in deep cultural beliefs in my opinion. Simplicity vs. Complexity is one. Currently MSFT is on the complexity side. Top down engineering vs. bottom up innovate and iterate. Currently they are still very top down despite what the very smart “my idea” ad campaigns would lead you to believe.

    Still, far to early in the game to count them out.

  8. Avatar The VAR Guy March 6, 2010 @ 4:17 pm
    Reply

    Daniel: Thanks for taking the time to offer some balanced perspectives (pros and cons). The VAR Guy is particularly interested to see how Microsoft Windows Azure takes hold… …
    -TVG

  9. Avatar Matt Kukowski March 8, 2010 @ 6:10 pm
    Reply

    One serious issue with Microsoft Server technology is it’s inability to halt botnets and internet ( networked ) attacked.

    Microsoft is going to have to pull an Apple and redesign a BSD or create a new kernel OS, because as it stands, one of the main reasons MS products are not ‘Cloud’ worthly as commpared to Linux offerings is that Networking and security was tacted on MS products as an after thought.

    So, Microsoft need to rethink security before companies are going to put their sensitive company trade secrets on a Windows server just ripe for hackers to exploit and attaack via the Cloud.

  10. Avatar The VAR Guy March 9, 2010 @ 2:56 pm
    Reply

    Matt: Instead of redesigning the Windows Server kernel, The VAR Guy has another suggestion for Microsoft … buy Novell (or at least the SUSE Linux business) and port Exchange Server, SharePoint and other applications to SUSE Linux.
    -TVG

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