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    Stumbling giants

    By
    Eric Lundquist
    -
    December 13, 2006
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      I wrote this last spring, good call if I do say so myself

      Stumbling giants. Consider this: Microsoft recently said they are going to dip into their 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 to react against the inroads of AMD. And this: even Dell is finding itself spending more and enjoying it less as it has witnessed market share erosion. And also remember that in those three cases it is not a case of, “It’s the economy, stupid,” as the U.S. economy continues to percolate and the stock market reaches for record highs.

      So, what’s up? I’d 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 information technology infrastructure and they are willing to make some bets on new vendors and products to find the right mix for computing performance. In some cases that mix is replacing old servers with more energy efficient offerings, in some cases it is ensuring compatibility between new boxes and previous generations and in some 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 who once seemed invulnerable has been in three areas: (1) spending the money to cover all bets, (2) rearranging the chairs, and (3) forgetting the company’s motto.

      Microsoft is in the lead of covering all bets. When you’ve got billions of dollars in bank, it is easy to think that you buy or build your way to success. Want to be in games? Build an X-box. Want to stay in 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 deciding to focus on the things you do really well, doing those things really well and enjoying the fruits of monopoly from your success. Trying to span the world from game boxes to enterprise computing to search-based advertising engines is, in my opinion, a bridge too far sure to drain the coffers of even the mightiest among us.

      Intel is rearranging the chairs. Intel is a complex company which 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. 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 that are preceded by security, high utilization and lower energy consumption? AMD is the current leader in setting the microprocessor agenda because it had to for survial. When the company realized it could not find success by living under Intel’s shadow, AMD figured it might as well ask customers what they wanted. What they found first of all was compatibility with past generations is important. The next agenda items will be processor utilization and energy consumption. Those items should also be Intel’s agenda after their chair shuffling is complete.

      Dell has always said it will respond to its customer needs. The company 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. Dell’s customers are demanding more and the company needs to be offering more.

      A stumble, even a giant’s stumble, can be corrected in time. Focus, 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.

      Eric Lundquist
      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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