What I’ve never understood about critics of Microsoft’s Internet strategy is what you expect Microsoft to do instead: just give up, and pretend the Internet doesn’t exist?
A more realistic strategy may be to give ground on the Web, but not the Internet. This after all, is what Apple has done, with iPhone and iTunes, with proprietary applications instead of HTML5. It has worked out just fine for Apple.
And this is what I like about Microsoft’s acquisition of Skype. Microsoft has demonstrated that it is fundamentally better at building software applications than websites. And Skype is an application, not a website.
Why not re-invent Office, Windows and X-Box to use the Internet for multi-media communications, with Skype as the backbone? The true threat to Microsoft’s business isn’t Google’s search engine, it’s Google Docs, which includes chat and video-calling functions that Skype can counter. Microsoft needs to give the world a reason not to buy the new Chrome notebooks that will start showing up in Best Buy next month.
Of course, the deal may well blow up. Any time you pay $8.5 billion for a company losing $7 million per year, it’s hard to call that financially savvy. And in general, it’s easy these days to be skeptical about any Microsoft acquisition, or any Microsoft Internet strategy, especially when acquiring a European a company that has been consumed and disgorged once already.
But I respect Microsoft for putting its chips in play. For years, the company’s corporate development strategy has been so quiescent that it seemed to be ceding the Internet to its competitors. No longer. It’s easy to criticize Steve Ballmer for doing nothing, or for doing anything; harder to say what you would do in his place. I’d try to win.