Why does Microsoft always return to the top of the wave?

Text | Sun Jing

01 "Cow is not like Microsoft"

On March 3, 2010, former Microsoft CEO Ballmer bolded his confidence in front of the media. "One day, Bing will surpass Google," he said.

This promise is added to a vague deadline: years, or a dozen years. At the time, Google's search market share in the United States was 65%, and Bing was only 11.3%.

13 years on, Google's global search market share exceeds 90%; Second place is Bing, which accounts for only about 3%. The gap is widening further.

But just this month, a new variable emerged — OpenAI's ChatGPT is sweeping the globe to demonstrate the disruptive potential of AI breakthroughs. As one of the investors in OpenAI, Microsoft is close to the water in the application landing. The new Bing, which integrates ChatGPT, has become a portal for the global user experience AI "violent aesthetics", and the limelight has overshadowed Google.

Riding this spring breeze, Microsoft threw out another king bomb, GPT-4 is fully integrated into Office family barrel, AI office assistant Microsoft 365 Copilot will reshape the productivity of 1.2 billion workers.

The glory of the AI navigator in Silicon Valley was transferred from Google to Microsoft.

"Cow's not like Microsoft... This completely changed my impression of Microsoft, and a 48-year-old company is rejuvenated again for the first time in history." Li Zhifei, a former Google scientist and founder of Mobvoi, shared his shock in the circle of friends.

A former Microsoft scientist mentioned in an exchange with "Noise Reduction NoNoise" that in the past 10 years of wrestling in the field of AI, Microsoft has actually been in the downside, attracting fewer top people than Google, and OpenAI experts are not willing to go to Microsoft, so Microsoft has to prevent falling behind too much by investing externally, "I can't think of a baby." He believes that if Microsoft already has a very strong department internally, it may not invest externally.

According to Fortune magazine, Microsoft once tried to hire a heavyweight AI scientist, but failed. A Google scientist who helped create AlphaGo bluntly said in 2016: "No one is going to work for Microsoft now because they give too little money and have low expectations of themselves." This somewhat confirms that Microsoft is not innovative enough and not attractive enough to top AI talents.

So how to explain that the 48-year-old Microsoft is once again on the top of the wave?

"It seems to be a cyclical law, the dominant party is easy to slack off and miss opportunities (such as Google), and the weaker side actively thinks and seizes opportunities (such as Microsoft)." The above respondents view this issue from the perspective of the competitive game.

One big-model entrepreneur joked, "Make the key decisions right." To be precise, the goddess of fate did not hide when she knocked on the door."

There is some truth to this. One of the original intentions of OpenAI was to counter Google's monopoly in the field of general AI. After Google invested in neural network startup DeepMind in 2015, OpenAI was founded.

There was really nothing going on with Microsoft at the time. Until 2018, OpenAI realized that large models needed to burn more money and need super computing power, and CEO Sam Altman flew to Seattle several times. OpenAI does not have many partners to choose from, and Sam Altman took the initiative to seek cooperation opportunities from Microsoft CEO Nadella.

And Nadella, he took that olive branch, or the scepter to the AI 2.0 era. The total cost was $13 billion.

For a tech giant with a net profit of more than $80 billion before taxes, the deal is particularly cost-effective, especially after comparing the failed $7.2 billion acquisition of Nokia's mobile phone and some patents.

However, it seems that it is difficult to explain the overall situation based on "luck" alone, such as how the decisions of those key nodes are made, and why Nadella in 2018 did not miss the opportunity - you must know that seizing the opportunity is not an easy task, otherwise Microsoft will not be left behind in the mobile Internet era; Why Microsoft can quickly throw off the king bomb in 2023 - insiders commented, "Microsoft's strength and speed in embracing GPT are remarkable."

There must be something that began to brew before the arrival of this AI Cambrian.

02 Don't look in the "rearview mirror"

Even without GPT, the two U.S. tech companies with a market capitalization of more than $2 trillion are still those two: Apple and Microsoft.

The two companies, one hard and one soft, represent two peaks in the U.S. tech community. The difference is that Apple has played as consistently consistently since 2007 and has always stood tall as a cool company; Microsoft is different, and was almost removed from the list of "Silicon Valley Lights" because of the long drop period.

The circumstances of different periods have shaped different faces of Microsoft. Needless to say, Microsoft's dominance is so strong that the U.S. Department of Justice wants to launch antitrust lawsuits against it. Outside of Windows' global domination, antitrust litigation testimony has exposed Microsoft's less glorious side as a tech giant: arrogant, aggressive, leaving no room for competitors to live, and making users love and hate.

2008 is a new milestone. A year earlier, the "nemesis" Apple released the first iPhone, announcing that smartphones would become a new generation of computing platforms, and Microsoft was still eating the old book. Under the leadership of sales genius and Bill Gates' successor, Ballmer, Office and Windows, two money-making machines, continue to sweep around.

By 2008, global PC shipment growth had stagnated, and Microsoft's revenue could no longer rise. The financial crisis has not yet begun to erupt, and Microsoft's stock price has plummeted.

Microsoft, which missed the Internet and mobile Internet, has a face full of haste, confusion and helplessness. Ballmer led the company to catch up from three lines: launching Bing in the search sector and facing Google; On the mobile hardware side, it acquired Nokia mobile phones and grabbed the market through Windows Phone and tablet Surface; Explore the cloud business and catch up with Amazon's AWS. At the time, AWS was already generating billions of dollars in annual revenue, while Microsoft was only a few million dollars.

This transformation seems to be an all-round bet and a multi-way catch-up, but it is actually a scattered focus. In the final analysis, the spiritual totem of the Ballmer period is still the entrance to the operating system, that is, to guard "Windows", thus ignoring that AI and cloud computing are the greater wave of technology in the future.

The frustration and shock caused by the transformation of keeping an eye on the "rearview mirror" is long-lasting. Public opinion gave judgments before Wall Street: voices such as "Lian Po is old" and "Microsoft is dead" echoed in Silicon Valley and Wall Street.

Of course, it's like "Will the next one to fall be **?" is almost suitable for all tech giants who have fallen into the trough. History proves time and again that the more fanatical the pursuit and creation of gods at the highlight moment, the more turbulent the stampede in the trough period.

For the insiders, no one wants to stand in frustration on the deck of a sinking giant ship. What awaits Microsoft is continuous "blood loss" - a large number of engineering and technical talents, and many artificial intelligence experts have also left. Finally, Ballmer's abdication and departure.

A former Microsoft engineer said bluntly on his blog: Ballmer's departure is his best legacy for Microsoft's future.

When Nadella took over as Microsoft's CEO in 2014, the company was worth less than $300 billion. Since then, in the "mobile-first, cloud-first" strategic promotion, Windows was marginalized, the Nokia team was cut, the Bing Maps division was packaged and sold to Uber, and Office365 and Microsoft Cloud Azure became the twin engines of growth.

With Microsoft's market value hitting a $2 trillion high, Azure's market share jumped to the second place in the world, and the outside world saw a Microsoft that reached the peak for the second time.

The transformation led by Nadella is a plot that everyone expects to see and can encourage themselves at the same time: chasing the previous bus is not important, catching the next bus is the key.

Because of this, Nadella's "Refresh", which combed through Microsoft's transformation process, became a bestseller. Many CEOs of technology companies in China are trying to find insights from the book, especially those facing similar situations.

A Lenovo insider once revealed that CEO Yang Yuanqing is one of the fans of "Refresh", and he once strongly recommended this book within Lenovo.

In fact, there are several foreshadowings in "Refresh", such as how Microsoft intends to invest in the future. Nadella shared his thinking: First, the three directions to focus on: mixed reality, artificial intelligence, quantum computing. Specific to artificial intelligence, Nadella made it clear that Microsoft wants to use artificial intelligence to redefine all of Microsoft's businesses. For example, artificial intelligence for all Office products.

You see, compared to the geeky style of the cool company Google, the big brother Microsoft has always been a realistic business style.

Before Office Family Bucket was connected to GPT, Microsoft had added automatic translation and automatic illustration of pictures in Powerpoint; Word adds machine reading, and Microsoft Translator translates international conference presentations in real time; In 2018, Cortana, a personal assistant, was transferred to the Office product department and became an auxiliary tool in the Office series.

In addition, Microsoft also has its own intelligent chatbot, the Chinese version is called Xiaoice, and the American version is called Zo.

From the perspective of these technical route layouts, ChatGPT and GPT-4 not only fit Microsoft's technical ideas, but also help Microsoft consolidate its leading position in the field of office collaboration through productivity improvement.

Now looking back at a speech by Shen Xiangyang, former senior vice president of Microsoft, in 2021, you will find that it is meaningful. Traditional fields such as marketing, human resources and account management, he said, will soon be impacted by AI and will need to respond.

This is the eve of the success of ChatGPT's "alchemy".

In the view of the above-mentioned respondents, "startups outside large companies have better vitality and flexibility than internal departments of large companies if they can get enough money and have enough talent."

This may also explain Google's very different choices from Microsoft. Google's conservatism or caution about the security of AI technology has made its equally powerful chatbot Bard and search business competition passive; Microsoft used "external forces" to avoid the embarrassment of innovators and get a ticket to the era of general AI.

Nadella made it clear in 2015 that he would complement Microsoft's AI layout by investing in cutting-edge technologies and projects that could represent the future direction of AI development. Considering that Microsoft's appeal in the field of artificial intelligence technology is far inferior to Google's, this line of thinking is not difficult to understand.

It can only be said that the investment in OpenAI is a continuation of this line of thinking.

After watching the Microsoft Office 356 conference, some developers said on social media: All the ideas that individual developers think of they have thought of, and they actually found them more perfectly, which is scary.

In Nadella's first public speech as CEO, he asked the question: What makes Microsoft different? If Microsoft disappears, what will the world lose?

This question has an even more exciting answer in 2023.

03 Stamina

Silicon Valley has never been a place of seniority. Seniority and market capitalization cannot win the respect of peers, only continuous innovation can.

Microsoft is once again on the top of the wave, and on the surface, it is an evolution based on the success of strategic transformation, but it is actually the stamina for innovation. This is inseparable from Nadella's transformation of Microsoft's cultural genes.

Former Microsoft employees recall that Nadella promoted the growth mindset after becoming CEO, whose core ideas were openness, humility and inclusion. The opposite is solidified thinking.

Growth mindset is not an empty slogan. Microsoft's external partners and competitors felt the impact of this thinking around the same time as Microsoft employees.

In March 2014, Nadella's second month in office, first brought the Office suite to Apple's iOS. At the iPad Pro conference, Apple's vice president invited a special developer, the vice president of Office 365.

"Who knows productivity better than Microsoft?" Behind Apple's vice president's joke is the handshake between two old enemies. Microsoft has always regarded Apple as one of its main competitors, but Nadella's "mobile-first" strategy has allowed Office to break into Apple's iOS and Google's Android.

In the XR feeder, Microsoft's game app Our World is connected to the Meta camp's VR device, Oculus Rift, although the latter is Microsoft's own MR product HoloLens is the most powerful competitor.

The most surprising cooperation was the sharing of Microsoft and Red Hat. When Nadella stood in front of the slide of "Micrsoft❤️Linux", some analysts dropped their jaws in shock, "The sun is coming out of the west."

As a Linux solution provider, Red Hat and Windows have always been in competition, but the partnership allows Microsoft to attract more developers to its camp.

In the process of constantly putting down its body, a more open Microsoft stands. In 2016, when Microsoft acquired LinkedIn for $26.2 billion, LinkedIn CEO Jeff Weiner told the media that Microsoft was becoming more agile, open and innovative, which played an important role in facilitating the deal.

Microsoft employees weren't surprised, as similar changes were happening internally at the same time. The most detailed change is that they now dare to publicly display their iPhones and Macs without worrying about the unhappiness of their immediate supervisors or sales department.

The "dog-eat-dog" assessment system has also been eliminated: Microsoft used to be a brutal last-place elimination system, where even the best teams were eliminated every year based on rankings. This is really an emphasis on internal competition. Under governance, the performance evaluation dimension revolves around three points: first, the influence on the company's business; the second is the influence on the success of the team; The third is the influence on the success of others.

It's clear that the new assessment method encourages teamwork and emphasizes individual contributions to the business, which is more conducive to innovation.

Nadella realized early on that something was wrong with Microsoft's corporate culture. In 2011, tech cartoonist Manu Cornet drew a cartoon to show the nature of the organizational structure of top tech companies.

In that cartoon, Facebook, which began with social networks, is organized like a web of nodes; Apple has only one core, needless to say, only Jobs himself; Oracle's architecture gives the illusion that it's more like a big law firm than a software giant; The most ironic is Microsoft, where departments point pistols at each other.

Needless to say, the comic satirizes Microsoft's involvement, internal politics replacing teamwork.

After taking over as CEO of Microsoft, Nadella also turned himself into an open-minded mobile advertising screen. When HoloLens creator Alex Kipman tried to persuade Nadella to "top up" Hololens, he bluntly said that XR requires a long-term high investment, and it is difficult to define how valuable it will be in the future.

Nadella chose support, "As a leader, you often have to put away doubts, create first, do first and talk later." His reasoning is that one cannot accurately predict future technological changes, but a growth mindset can make oneself more responsive to uncertainty and constantly correct mistakes, that is, refresh, in the case of rapid technological changes.

It's hard to tell whether it's reshaping the internal culture, inspiring innovation and bringing Microsoft back to the top of the tech wave, or whether the right strategic transformation is ultimately the elephant dancing.

There is only one thing that is clear: big waves will always come. Instead of regretting missing out or being forced to catch up, it's better to be determined to catch the next bus.

As for individuals, openness and tolerance of technological innovation is also one of the essences of a growth mindset.

Resources:

(1) "How was the globally popular ChatGPT born?" , Fortune magazine

(2) "Refresh", CITIC Press, Satya Nadella

(3) "Microsoft Hardens", Financial World Weekly