11 resolutions Microsoft should make for 2011

What should be Microsoft's top priorities for 2011? I've got an answer for that, as I have for seven years now. Rather than make predictions about what the company will do in the coming year, I offer what it should do. The advice is unsolicited, but given nevertheless with the hope Microsoft will make 2011 better than 2010. As I asserted on December 14: "The year 2011 will be make or break."

Unlike past years' advice -- eh, resolutions -- this list is more thematic. Microsoft has a huge perception problem, and as I've so many times asserted: In business perception is everything. The people with the loudest voices, such as analysts, bloggers, journalists, marketers and software developers are pining for companies like Apple or Google. This translates directly to Microsoft's share price, which is moribund and undervalued. In November I asked: "Why won't Wall Street give Microsoft a break?" Perception is a major part of the answer.

Perception management is a good 2011 priority for Microsoft, with no new versions of its flagship products planned for the year. The company needs to give consumers, developers and IT Pros reasons to get excited again about Microsoft software and OEM products. With that introduction, I present 11 resolutions for Microsoft in order of importance -- from least to most.

11. Appoint a Chief Startup Officer. Microsoft, many of your 80,000-plus employees have great ideas, but they're frustrated about not being able to do something with them. Office and Windows, as products and the management structure supporting them, are in the way. You need someone internally responsible for encouraging internal incubation projects and bringing them to market -- outside the normal management structure (see #1 for why this concept is so important).

10. Set shorter marketing and product development goals. Microsoft, you aren't keeping pace with Internet time and haven't for sometime. Meanwhile, Google sets a rapid pace -- in little more than two years going from nowhere to somewhere with Android (US smartphone OS leader last year, according to NPD) and Chrome (six Windows iterations released in 2010). Both products launched in autumn 2008. Then there is Facebook, which iterates with a vengeance. Pace of innovation keeps nimbler companies in the news, on the blogs, generating positive perceptions.

Your long-standing strength is executing on long-term plans, whereas many public company competitors set quarterly goals that change too often. The Microsoft that released three versions of Internet Explorer in about 18 months during the late 1990s executed tactically while keeping long-term plans in place. You need to do more of this, Microsoft. Setting and achieving short-term goals can boost mindshare -- that you're truly innovating. Innovation sells, imitation smells (see #1 for more on how to do this).

9. Hold smaller, more-intimate product events. Microsoft, you should learn from Apple, Facebook and Google about maximizing buzz without investing in big events. Sure, you make ongoing product announcements outside of tradeshows, but most of the events you participate in or hold are big. Hold more intimate events for bloggers, customers, enthusiasts, news media or partners -- lots of them. I'm not talking about the ongoing marketing and sales roadshows you already do, but invitation-only gatherings, like Apple's. They will generate buzz, particularly if the target audience doesn't officially include bloggers or journalists (but they can get in with a little prodding).

During 2010, Facebook and Google pulled off some seemingly last-minute events that were webcast. They weren't flashy, but they felt intimate, a quality that is lacking from your other forms of outreach, such as Channel 9. Please don't misunderstand; I'm not maligning Channel 9, merely suggesting that live events are newsy and will draw more attention.

Intimacy is hugely important to any relationship. It's easy for anyone with a keyboard to write bad things about an amorphous, distant corporation. It's something else when those same people interact with real executives and product managers. Personal contact changes everything. Walmart is a good example. Those greeters at the door aren't just there to be friendly. Walmart has learned that people who identify the store with a real person, the greeter, are less likely to steal.

8. Bring back Bill Gates -- to sell Microsoft products, vision. You've got an identity problem, Microsoft. You're too good at too many things, which makes your products hard to sell. In last year's resolutions, I suggested that you need a frontman to help build positive perceptions and better sell your stuff. On reconsideration, perhaps you should bring back cofounder Gates in a more visible role. I'm not suggesting Gates should replace Steve Ballmer as chief executive. Gates should be the person selling Microsoft's vision for the here and now and, more importantly, the future.

The technosphere is overly-obsessed with Apple CEO Steve Jobs, who is viewed as being visionary, ultra cool and having good taste. But the majority of people aren't like Jobs. They're more like Gates, whose stilted speaking and awkward manner is more like them. Sure Gates is smarter than most people, which makes him unlike most everyone else from another perspective. But he's also the American Dream, the self-made and shrewd billionaire whose products are used by most of the world's population. Success commands respect, as does his philanthropy. Even better, bring in the Gates family, talking about how they use Microsoft technology in their home or when traveling the globe.

7. Resume giving financial guidance to Wall Street. Once again, this resolution makes the list, and it's up three places from No. 10. This month, two years will have passed since you stopped giving guidance for future earnings. Microsoft, how can Wall Street have confidence in you when you don't show confidence enough to give them quarterly guidance -- like other major public companies? Sure there is some risk that weak projections will hurt the stock. But by withholding guidance, you let uncertainty and gossip determine perceptions about sales and earnings performance -- particularly when Wall Street love child Apple now has larger market capitalization and quarterly revenue than you. Microsoft, take charge of perceptions by giving information, rather than withholding it.

6. Release reference designs -- and give them away or sell them (cheap). Google had the right idea with Nexus One (released in January 2010) and followup Nexus S (December 2010): Design and brand a product, even at the risk of causing conflict with retail or manufacturing partners. I'm surprised how many analysts, bloggers and journalists got hung up on Google direct sales or number of handsets sold -- and by those measures called N1 a failure -- while missing why it was a huge success. Nexus one appealed to enthusiasts and developers and established a baseline for manufacturing partners. More recently, Google gave out 60,000 laptops running Chrome OS, as part of a six-month test.

Microsoft, you're no stranger to this approach, you just haven't gone as far as Google. During PDC 2009 you gave away Microsoft-designed, Acer manufactured thin-and-light laptops to paid attendees. The laptop's features set a baseline around which developers could create applications. Then for Windows Phone 7, you set minimum hardware configuration for your mobile OEM partners. These are great strides that could be much more meaningful by:

  • Offering a Microsoft co-branded baseline laptop and mobile phone
  • Providing branded reference-design products to developers at cost or for free
  • Giving away the same products to select enthusiasts, user groups or IT managers

(See #2 for more on enthusiast advantages.)

5. Open a unified applications store. Microsoft, I've been encouraging you to sell third-party software from within the operating system for about as long as Office and Windows have had product activation (2011 is the 10th anniversary). I made several formal recommendations during the mid-Noughties, when working as an analyst. If you can activate your own stuff and distribute updates through a download mechanism built into Windows, surely you could make the technology available to third parties. Let them offer products for sale and activation through Windows -- from a branded Microsoft store.

If you're afraid of causing trouble with European or US trustbusters, don't be. Take the risk. Apple is selling iPads and Macs hand over first. There is plenty of PC competition, much of it from mobile devices. Apple will open the Mac App Store later this week. You should have been there first, but you can still do better.

Google has the Apps and Chrome Web stores offering apps in the browser/cloud. Apple and Google both have mobile app stores. You should combine the concepts into a unified applications store for mobile and PC applications and those running in the browser (or widgets) connected to the cloud. It's an ambitious project that would generate helluva lot of buzz and could shift some developer excitement winds back your way. Give developers a way to distribute their software anytime, anywhere and on anything, in a way that discourages piracy and makes bundles of money, and they'll love you. Or at least embrace your approach.

4. Step up the "value marketing." One of Microsoft's founding principles is value -- making computing affordable enough to put a PC on every desktop, in every home. Your marketing messaging has drifted from the value principle, Microsoft -- although Windows Phone 7 marketing shows right refocusing.

Apple commands a high price for cool, and there's a place for that. Apple is the Neiman Marcus of computing. There's no shame in your being Walmart. The giant retailer generates more revenue in one quarter than Target does for a whole year. Emphasis: Value. The cool, rich kids can have Apple. Microsoft should be computing for the rest of us.

Contrary to popular convention, value isn't about low pricing but getting the most from what you spend. For enterprises, isn't that what ROI (return on investment) and TCO (total cost of ownership) are all about? Perhaps one reason Apple focuses so little marketing efforts on enterprises is that it has so little value -- ROI and TCO -- to sell them.

Value matters to consumers, too, and not just by how much they spend. For families, there is the value products bring to them. The measure is often emotional. McDonalds succeeds for many reasons, but family values is among them. Happy Meals help make McDonalds an affordable place to bring the kids to eat. Later, as teenagers, they go there and shop the "value menu." Microsoft CEO Kevin Turner is a 20-year Walmart veteran and someone who should know something about value and family marketing (see #3).

3. Open 50 more stores or cafés. In my past three years of resolutions for you, opening retail stores ranked near the top of the lists (No. 4 last year). In little more than a year, you opened 7 stores, which is good start but not start enough. You need to open another 50, this year. After experiencing the store here in San Diego over six months, I see a winning retail formula. Families fill Microsoft Store here, in contrast to the Apple Store just four shops away. Microsoft Store should be a destination for families, gamers and computer enthusiasts -- and people seeking real value from their technology purchases. (see #4 for more on this advantage).

Don't be afraid of losing money on the stores, at least early years. They are marketing investments for better building your brand and for selling the Microsoft lifestyle. Among the metro areas I recommend launching stores: Austin, Boston, Chapel Hill-Raleigh-Durham Triangle, Columbus, Los Angeles, New York, San Francisco and Washington, D.C. Make cities with high student populations a priority.

Internationally, open stores in Beijing, Berlin, London, Mexico City, Moscow, Paris, Rio de Janeiro, Sydney, Seoul and Tokyo. Make cities with large numbers of tourists a priority. Localize the stores -- don't make them all the same like Apple does. Also use them to educate people about the benefits of buying software over pirating it.

2. Engage enthusiasts. This one makes my list most every year, and it's up six places from 2010. You did much better engaging enthusiasts in 2009 and 2010 than all the rest of the millennium's first decade. But you're not doing enough. Enthusiasts are any company's best marketers. You need to step up enthusiast engagement and extend it with more outreach, freebees and contests during 2011. It's more important this year than during the last five, because you're on the other side of major new product announcements -- Windows 7 (October 2009), Azure (February 2010), Office 2010 (May 2010), Windows Phone 7 (October-November 2010) and Xbox Kinect (November 2010).

With the big product launches behind, it's time to engage enthusiasts tactically -- as much for the future. New mobile products, Bing advancements and Office 365 are among the opportunities to generate excitement; 2011 should be the Microsoft year of the beta, where there is seemingly thousands of new products for enthusiasts to try and get excited about. Reward loyal customers with goodies, freebees and intimate engagement and they'll pay you back with praise that's the most valuable marketing ROI.

1. Empower internal "cloud" startups. You really upset this journalist when gutting Windows Live Labs (April 2009) and later shuttering the incubation project (October 2010). Live Labs was but one of many incubation projects whacked in 2009 and 2010. How dare you, Microsoft. Some of the best, mid- to-late-Noughties products or services came from incubation projects.

You've got to bring them back and focused on mobile and the cloud. Incubation groups should operate like mini-startups, free to develop unfettered by any requirement to connect any of their work to any other Microsoft product, particularly Office or Windows. Let them run free, run wild, wildly innovate. Reward innovation, with pay incentives and other goodies. Appoint a chief startup officer (see #11), whom employees can submit their projects, getting them outside stifling bureaucracy and mid-managers' self-preserving priorities.

Empowered employees will produce, Microsoft. You just need to let them.

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