The year was 1980. Apple, led by Steve Jobs, introduced the world to the miracle of personal computing. The PC revolution had started. IBM wanted in, but lacked lacked the essential software necessary to deliver a complete consumer product. Enter Microsoft. A young Bill Gates and Paul Allen promised the technology giant that their small start-up had the operating system necessary to power their go-to-market strategy. Minor problem -- they didn't have it.
With a pirate-like flair, the two managed to purchase DOS (disk operating system) from Tim Patterson for the bargain basement price of $50K. The software was quickly repackaged and delivered to IBM as MS-DOS. IBM went on to use the operating system to power their PC line. And the rest, they say, is history. That watershed event set Microsoft up as the de-facto operating system in the nascent PC market. Microsoft went public six years later and is now worth over $300B -- $100B+ more than IBM.
Microsoft's success was, in large part, a result of their relentless focus upon owning the essential platforms upon which software applications were developed and delivered. Using their leverage as a distribution channel for software, the company gained dominance in both the consumer and business application markets. During the dot-com explosion, Microsoft missed a number of plays. Much like today, they had their critics. But at the height of the boom, they leveraged their OS heft to move into the web in a big way. They bundled their newly minted Internet Explorer web browser with Windows -- for free. This move crushed the incumbent Netscape and solidified Microsoft's leadership position as the largest developer platform.
In recent years, it's clear that Microsoft has missed a great number of opportunities. Just as they did during the PC era, Microsoft has its critics. Unlike the PC era, however, the firm has not managed to successfully leverage their platform and resources to secure leadership positions in many key consumer web services such as search, e-commerce, etc. This may be in large part attributed to the massive regulatory hurdles they've faced. That said, Microsoft has managed to maintain their position as the ultimate distribution platform for software, the operating system. Until now.
The year was 2007. Apple, led by Steve Jobs, introduced the world to the miracle of mobile computing. The revolution had started. Hardware manufacturers wanted in, but lacked lacked the essential software necessary to deliver a complete consumer product. Sound familiar? Here's where the story takes a left turn. Enter Google. Taking a play from the Microsoft playbook, Google pushed the Android operating system as a free and open open source solution for hardware manufacturers to go-to-market faster against Apple. With the introduction of tablets and a similar ecosystem dynamic to mobile phones, Google is now on the verge of winning the coveted position that Microsoft has held for the last 30 years -- control of the modern computing platform. And here's the kicker. Just like Microsoft before them, Google didn't build their way to this envious position. They bought it. For how much you ask? $40M.
Had Microsoft become the mobile operating system, they could have potentially recovered from their lack of innovation in the consumer market in recent years. With that distribution channel in place, they would have had the largest reaching mobile app store, the default killer mobile applications like search, could have solidified Internet Explorer in the browser spot and more. Microsoft has since attempted to scramble to win (read: buy) a share of the operating system market. While I hesitate to call the game, it seems that the proverbial horse has left the barn.
Google is now the apex predator of the digital world. Much like the once unstoppable Microsoft, Google is using their platform dominance and vast resources to colonize the consumer and enterprise application stack. And it's working. From advertising to robots, Google is seeking to power all things digital. But, if history has taught us one thing, it's that no empire is safe. From Rome to Microsoft, everyone gets sacked.
Will Google be regulated like Microsoft? Will that provide the opening necessary for one of the newly minted platform giants like Facebook, Twitter, or Dropbox to take the crown? Will Microsoft, led by new chief Satya Nadella, pull a Hail Mary? Or is there another giant brewing in the primordial start-up stew?
Only time will tell. But one thing is for certain, this case will be a classic for MBA students filed under 'don't forget your core competency.'
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