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Not Backing Down – Windows 8 and the future of Microsoft: My Exclusive Interview with Adam Hartung Part 1

Yeah but isn’t that more affected by the fact that people are still moving from XP to Windows 7 and it’s a little bit early to say …
Adam: That’s the argument that I make. The argument I make is this issue of not upgrading goes all the way back to XP. You have 40% of users still using XP. There are 40% of users who didn’t go to Vista and didn’t go to Windows 7. And now you have Windows 8.

Now the question becomes why didn’t they do that? How could they have not upgraded? Why do you have 40% of your base that’s using this very aged software?

So let’s reach in to some of the academic writings and my favorite is a guy named Clayton Christensen who wrote “The Innovator’s Dilemma” and a lot of other books since then as well. He’s a mentor of mine. He’s an innovation guru right, and one of the things he points out is that companies that have a solution will tend to keep trying to improve that solution until they overshoot user needs.

Onuora: OK.
Adam: And then what happens is that they’re now coming out with new revisions and new upgrades but the users of their products are sitting there saying “I don’t really know if I need that product. I don’t really know that I want that upgrade.”

Onuora: OK.
Adam: And in those markets what happens is user base d doesn’t upgrade and then what you see is some sort of an alternative will come along that meets needs in a new way. And then people start buying the new thing. I’m not just sitting here talking about computers, we saw this happen, for example, in xerography where people were running printing presses.

They kept coming up with better printing presses and then what happens is Xerox comes out with a Xerox machine and then all different kinds of Xerox machines come out and then over the course of a decade we pretty much quit having printing presses in the basements of companies and everything was replaced with a Xerox machine.

You see so xerography and the technology replaces the old technology and the printing press is out. Sure there are plenty of printing presses out there today, you didn’t get rid of all of them but you got rid of enough of them that you put out of business all of the printing press manufacturers and most of the printing plate manufacturers and you get down to 3 or 4 companies in the whole world that are making that equipment.

That’s just an example that’s outside of tech. Now come back to tech when you’ve got an installed base, like a PC installed base and that base has been getting larger over about 6 years.

Onuora: OK.
Adam: And we start saying OK people are not upgrading. What you’re looking at is a classic problem of the user out there isn’t saying “I want to upgrade” and Microsoft saying “I’m giving you an upgrade and you should do the upgrade” and then in fact you can read lots of articles of people saying “I would never leave XP if you didn’t force me to leave XP because I’m perfectly happy with what I have here”.

Now those people are saying ‘I’m happy with a PC at this level and don’t want a bigger faster PC. I don’t need a bigger faster operating system. I don’t need bigger faster Office tools, I don’t really need that. I’m really happy and content with what I have…”

Onuora: Sure.
Adam: So now comes something new like the tablets and smartphones and people say “Oh wow I like this, it gives me more mobility, it lets me do a lot of stuff in a way that’s different and I find it to be quite a bit handier than my PC.

I like the size, the format, the build, the look, the interface, I like not having data on the device in case I lose it” – those are some of the reasons they say they like it. Then they start buying them and they starting buying them in huge quantities.

This is the classic market shift, the textbook example of a market that is shifting. The user isn’t saying “Hey my PC is crap”. They don’t’ say that. What they say is “I got a PC and I’m using the PC but I’ve noticed that this month I don’t use my PC nearly as much as I used it 6 months ago and I didn’t know that 6 months ago or a year ago I would never have walked around the halls or gone to a meeting without my laptop but now I find I never carry my laptop.

You know I only boot my laptop up every 2-3 days and now I do most of my work on this other thing”.

Onuora: Well, I mean there’s no dispute that consumers are gravitating towards tablets and mobile devices, that’s not even up for dispute. I guess what’s a little bit more murky to me is the rate at which that’s happening in the corporate world.

In the Enterprise which is Microsoft’s stronghold, they are taking steps to combat that trend. They’re coming out with the Surface, they’re coming out with a bunch of mobile devices as well, Windows Storm 8, the Ecosystem, so it’s not exactly as if Microsoft is doing nothing.
Adam: I absolutely agree it’s not as if Microsoft is doing nothing. So now we get into the issue of leadership and management because…

Onuora: OK.
Adam: What a really adaptive, clever leadership would do is say “Hey you know what – we’re gonna keep these PCs running as long as we can but we’re going to realize that market doesn’t have a lot of growth left in it”.

Onuora: OK.
Adam: “What we gotta do is keep those users running as long as we can as long as possible for us but we have to be ready to be part of the cannibalization of our own environment. We have to be ready to make these changes and we need to get a product out there”. And you know that Microsoft had the first tablet right?

Onuora: Sure, sure.
Adam: Then in 2010 Ballmer stepped up and wanted to get a tablet out this year but didn’t get it out until 2012. What you see is a company that was very, very late to market.

Onuora: That’s correct.
Adam: Yeah, by being so late to market they allowed the competition to build its very own large installed base. Now installed base tends to build on installed base. Once Microsoft started to whip Apple’s butt (going back two decades ago), you saw that the installed base of Microsoft users kept growing as people switched from one platform to the other.

So you now have an installed base of Android, Kindle, iOS, iPad users and that begets more buyers because people look around and most people don’t say “Oh I’m going to do a spec analysis to compare products” that’s not what they say. They say “Hey this is what most people are using” and they use it and they like it and once they use it and like it they don’t like to change.

To come along and say OK I’ve got a product that I think is better and we’ll say that product is Surface and you hand it to them and they say “Well you know it might be better but I’m very happy with what I have. I like it and how it works and I don’t like the idea of having to go use this other interface and another shape”. You say it’s better and they say “I don’t know why you say it’s better” and that’s actually how people do behave.

Written by Onuora Amobi

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My Interview with Adam Hartung – Introduction

Not Backing Down – Windows 8 and the future of Microsoft: My Exclusive Interview with Adam Hartung Part 2