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Following Microsoft’s acquisitions and “partnership,” palm greasing is getting more exciting by the hour.
The headlines have been coming fast since the end of Q3 11: $8.5b Skype acquisition. $250m quarterly infusion to Nokia. $24m in subsidies for Windows Mobile app developers. $1b Aol patent grab – now flipped to Facebook for $500m. Vague, behind the scenes dealing with Comcast. And now this: a $300m investment in Barnes & Nobles’ Nook division.
Something is up.
It isn’t hard to figure out why Microsoft is moving like a steely-eyed aristocrat on the eve of a revolution: the company failed miserably with it’s own tablets, music players, and phones, and if it doesn't get their OS on the next generation of digital devices, it will not be on the next generation of digital devices.
This lockout is already beginning to happen. Microsoft's mobile OS marketplace penetration in the US is a meager 3.9%. The Nokia deal was made to prevent total hardware manufacturer abandonment of Windows Mobile. The Nook deal guarantees a place for Microsoft in the next round of tablets – but will it matter? Is there a larger strategy being executed here? Can all these different pieces be integrated?
My guess is – and remains – “no.” Many of Microsoft’s partners are second-stringers for a reason: lack of innovation, and weak positioning. Microsoft's other friends are the carriers, cable companies, and big content studios that are conspiring to set the clock back to some imagined pre-millennial glory days. While it’s entirely possible that all the old powers aligned against Apple and Google can upset the present orbits, the marketplace is currently being driven by more innovative players – and will continue to be so.
Disruption can come from anywhere, and Microsoft is struggling to position itself successfully in a world that is already moving into the past. Speculators have suggested for years that both Apple and Google will square off against wireless carriers. The software-product startup tide is high in the US and will remain so into the near future – and its effects on hardware are unpredictable. (For example, few would have predicated that Kickstarter could emerge as a radical alternative to traditional financing for device designers). There are also enormous electronics manufacturers with skunk works in Korea, China, and Japan whose success is very much in the interest of their respective governments.
Microsoft is paying to stay in the running, but the compromises the company will likely need to make in order to get all of it's partners on board could mean the preclusion of vibrancy and originality. Even younger, hipper companies make this mistake: last week the New York Times television critic Mike Hale said of YouTube's new, original channels that "the harder they try to resemble television, the less interesting they are."
Brilliant anarchy - the kind that gives both nation states and corporate giants alike the chills. It's the beating heart of 4chan and reddit meme-culture, and is what Gawker has cleverly aimed at capturing with it's redesigned comments section.
Is somebody, somewhere, at Microsoft aware of all these problems? Undoubtably. But that doesn't mean they'll be able to respond to the upcoming challenges effectively. The market is changing, and their hand is being forced.