If you paint stripes on a horse, it doesn’t become a zebra. And the same is for companies. As a company, you develop a corporate DNA, which becomes so ingrained that it is hard to fight against your genetic programming. I had pointed this out in an earlier piece. It can become an albatross, or in some cases, it gives a good lens to navigate into the future.
There is some talk on the Internet that with the retail sector going through convulsions, it made perfect sense for Microsoft to shut down its 83 retail locations — that too at a considerable cost.
Fortune notes in its Datasheet newsletter:
Microsoft, at what almost any other company would call great expense, is closing its 83 retail stores, most of which are in the United States. It’ll cost Microsoft $450 million, or 5 cents per share in terms of earnings, to shutter the snazzy outlets. That Microsoft was willing to bite a half-a-billion-dollar bullet to rid itself of its stores speaks volumes to what money pits they were. (They closed during the pandemic.) The company “politely” declined to make executives available for an interview.
But it is more than cost savings or the COVID-19 related troubles in the retail sector. It is also more than this Apple-wannabe strategy. And you have to see it more than just one single event. For instance, a few days ago, Microsoft announced that it was shutting down Mixer, its gaming-focused streaming platform. In 2018, it bought GitHub.
It is about Microsoft’s ongoing bet to double down on its real core strengths. Microsoft was, and always will a developer and enterprise company. Hell, former Microsoft CEO Steve Ballmer, who is more known for his “developer developer developer” dance than his ownership of an NBA team, said it so himself.
Sure, Ballmer’s era Microsoft confused itself as a desktop operating system and apps company. However, if you peel away the pretense, all it did was create an ecosystem for developers to build applications and services that helped run businesses — small to large.
Sure it has made a great gaming system. It still makes wonderful accessories for computers. It even churns out envy-inspiring and quite snazzy laptops. Despite all that, its bread and butter business — and big profits come from developers and the corporate world. Microsoft CEO Satya Nadella since taking over has brought the company back on this most important track. And the success of Microsoft’s Azure Cloud is a testament to that renewed focus on developers and enterprises.
Microsoft’s biggest threat is Amazon — Amazon Web Services. AWS stack (generically speaking) is like the Microsoft’s OS stack — and has managed to attract a whole generation of developers, who are learning and building on AWS. This is no different than how Microsoft gave a new generation of developers an opportunity to expand beyond the earlier environments.
Microsoft has been a developer-focused company from the very first product we created to the platforms and tools we offer today. Building technology so that others can build technology is core to our mission to empower every person and every organization on the planet to achieve more
Satya Nadella – Chief Executive Officer, Microsoft
Cloud stack is the new OS — and Microsoft is basically putting all its resources behind Azure. And wooing developers. (And that means wooing startups, though that billion dollars won’t be enough to catch up with AWS and its penetration of the startup ecosystem.) Whether it is the embrace of open source, or becoming more friendly with erstwhile rivals such as Apple, it knows the biggest moat for any trillion-dollar company is not its cash hoard — but instead developers. This is why Satya didn’t hesitate to drop billions of dollars on GitHub.
Developers are the builders of this new era, writing the world’s code. And GitHub is their home. As every industry – from precision medicine to precision agriculture, from personalized education to personalized banking – is being impacted by technology, the developer community will only grow in numbers and importance.
Make no mistake — Microsoft vs AWS is as real a deathmatch as Facebook vs Google or Google vs Apple. It is really about the future of corporate spending — and anyone who controls the developers controls that future gusher of money. And the best for the cloud is yet to come. I was an early champion of the cloud back in 2005 and later with my Structure conference. And it is clear that we are still in the first couple of innings — of the cloudification of our world.
And that is why I think it is good that the company is removing all the distractions — and it is not as if the retail stores set the world on fire in their eleven-year existence.
To put it politely, they were a money pit. There are no two ways about it. They never turned into Apple-like retail success stories. They were not necessary. Also, what do they say — a penny saved is a penny earned — in the long run!