Tech Giants Are Stumbling

 
 
By Eric Lundquist  |  Posted 2006-05-17 Email Print this article Print
 
 
 
 
 
 
 

Opinion: Microsoft, Intel and Dell grapple with users' changing needs.

Consider this: Microsoft recently said it is going to dip into its massive savings to put an extra $2 billion or so into the fight against Google. And this: Intel is going to revamp the entire company in large part in response to the inroads made by Advanced Micro Devices. And this: Even Dell is finding itself spending more and enjoying it less as its market share has eroded. And remember that in each example, it is not a case of "Its the economy, stupid," as the U.S. economy continues to percolate and the stock market reaches for record highs.

So, whats up? Id say, what is up is what is down—down in the server room. After years of chasing higher speed and faster processors, I think users are thinking about what is the right configuration for their IT infrastructure, and they are willing to make some bets on new vendors and products to find the right mix for computing performance.

The Microsoft-Google browser war doubles down. Click here to read more.
In some cases, that mix is replacing old servers with more energy-efficient offerings or ensuring compatibility between new boxes and previous generations. In other cases, it is taking that larger—"virtualized," if you will—look at the boxes and networks upon which a company is built. The response of the giants that once seemed invulnerable has been in three areas: (1) spending the money to cover all bets, (2) rearranging the chairs and (3) forgetting the companys motto.

Microsoft is in the lead when it comes to covering all bets. When youve got billions of dollars in the bank, its easy to think that you buy or build your way to success. Want to be in games? Build an Xbox. Want to stay on top of the operating systems race? Create the equivalent of a race-to-the-moon project with the actual moonshot always being pushed out a year or so. And the latest: If Google is, essentially, an advertising media company, then that is what Microsoft will also become.

Whatever happened to focusing on the things you do really well and enjoying the fruits of monopoly from your success? Trying to span the world with products ranging from game boxes to enterprise computing to search-based advertising engines is, in my opinion, a bridge too far that is sure to drain the coffers of even the mightiest among us.

Intel is rearranging the chairs. Its a complex company that enjoyed a monopoly position built around creating ever-faster processors. But the internal drivers of equating faster with success propelled the company to look at success from solely that one vantage point. If fast is good, then faster is better, and fastest is best of all. But what happens when your customers put faster way down on the list of needs, preceded by security, high utilization and lower energy consumption?

Click here to read about Intels broad self-review that could result in it getting out of certain businesses. AMD is the current leader in setting the microprocessor agenda because it had to for survival. When the company realized it could not find success by living under Intels shadow, AMD figured it might as well ask customers what they wanted. What AMD found, first of all, was that compatibility with past generations is important. The next agenda items will be processor utilization and energy consumption. Those items should also be on Intels agenda after the companys chair shuffling is complete.

Dell has always said it will respond to its customer needs. It built its success on the primary need of delivering a computing box on time, filled with standard components and at a price to make even the most dour CFO crack a smile. But Dell has stuck with Intel when a clear chunk of customers want an AMD alternative. Dell has stayed true to Microsoft when a clear chunk of customers have also wanted Linux or an open-source alternative. Dell has stayed aligned with the direct model as channel companies have finally learned how to compete with the direct vendors. Dells customers are de-manding more, and Dell needs to be offering more.

A stumble, even a giants stumble, can be corrected in time. Focusing on the things you do really well, adhering to your customers agendas and aligning yourself with customer needs would be three good ways for Microsoft, Intel and Dell to correct their gait.

Editorial Director Eric Lundquist can be reached at eric_lundquist@ziffdavis.com.

Check out eWEEK.coms for the latest news, reviews and analysis about productivity and business solutions.
 
 
 
 
Since 1996, Eric Lundquist has been Editor in Chief of eWEEK, which includes domestic, international and online editions. As eWEEK's EIC, Lundquist oversees a staff of nearly 40 editors, reporters and Labs analysts covering product, services and companies in the high-technology community. He is a frequent speaker at industry gatherings and user events and sits on numerous advisory boards. Eric writes the popular weekly column, 'Up Front,' and he is a confidant of eWEEK's Spencer F. Katt gossip columnist.
 
 
 
 
 
 
 

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