Microsoft is making a good chunk of change off of Google’s Android mobile OS. In a series of patent-protection deals announced recently, Microsoft is shown to be basically legally extorting money from Android device manufacturers citing patent infringement as the cause for royalties. One of the biggest and most recent of these deals is with Samsung. The deal is currently under negotiation, and could net Microsoft $15 per handset. According to market analysts, Microsoft is actually making more money from Android than they are from their own mobile platform. To many, this may seem a bit underhanded. In a statement to the press about a similar deal with HTC last year, Horacio Gutierrez, Microsoft corporate vice president and deputy general counsel of Intellectual Property and Licensing, said,
"HTC and Microsoft have a long history of technical and commercial collaboration, and today’s agreement is an example of how industry leaders can reach commercial arrangements that address intellectual property."
One wonders if HTC feels the same way.
While Microsoft hasn’t publicly bared their fangs like this in a while, the company has never really abided by a Google-esque "don’t be evil" methodology. In fact, Microsoft has made somewhat of a name for itself in the world of aggressive business strategy. In a paper published by ECIS, a timeline of Microsoft’s alleged anti-competitive tactics is laid out, beginning with their practices against DR-DOS in the early 80’s, all the way through the Corel WordPerfect days, and eventually leading up to server competition with Sun and Oracle, and their most recent struggle with the inclusion of Internet Explorer in every copy of Windows.
The legality of any of those tactics notwithstanding, the actions Microsoft has taken in the past to quell competition were anything but pacifist. Ex-CEO Bill Gates himself was the leader of this charge, and he’s been known to use rhetoric that explicitly placed Microsoft in an aggressive light.
"What we are trying to do is use our server control to do new protocols and lock out Sun and Oracle specifically"
"If Intel has a real problem with us supporting [Intel’s microprocessor rival, AMD] then they will have to stop supporting Java Multimedia the way they are."
"Intel has to accept that when we have a solution we like that is decent that that is the solution that wins."
"This anti-trust thing will blow over. We haven’t changed our business practices at all."
As Microsoft’s dominion in the market’s eye slowly but steadily diminished in the hands of CEO Steve Ballmer, Microsoft toned down the aggression and began to focus on survival, at least as far as the public was concerned. However, a schoolyard bully is created at home, and Microsoft is no different. While the playground may have gotten a lot bigger and scarier over the last 10 years or so, the culture within Microsoft itself hasn’t changed a bit. According to Scott Barnes, former Microsoft product manager,
"The culture within allows bullying, in fact it’s very "lord of the flies" at times when there is little or no direction and/or worse when there is failure upon failure occurring (as you end up with "hey I can fix that, get of my way…" followed by more…"hey I can fix that fix, get out of my way") moments."
According to Barnes, the destructive culture of bullying and power plays is pervasive enough that getting rid of Ballmer won’t help; it may actually make things worse. What remains would be a power vacuum, a void that the heads of every disparate and misaligned product group will vie for viciously until only one remains.
"90,000+ employees do not take their marching orders from a single man. It goes through layers of bureaucratic passive aggressive stakeholders first."
The recent spate of patent "deals" with Android phone manufacturers are only a small part of a much bigger picture, a picture of a bully that can’t see that its own aggressive behaviors are possibly the single largest factor in the current slide down the tech empire food chain. Sure, money will be made, and many will see that as the only judgment that matters, but Microsoft is not in the same environment it used to thrive in. It no longer has the power and reputation it once enjoyed, and it can’t afford to take pot shots at smaller companies and technologies for marginal short term gains. Maybe this is what David Einhorn saw when he called for Ballmer’s resignation in May.
The industry as a whole is generally optimistic about Windows 8 and the changes that the new OS will bring to the entire Microsoft infrastructure. If implemented correctly, we could see a new level of integration and seamlessness that has become the Achilles heel of Microsoft product groups. Cohesion and synergy, from both a tech and personnel perspective, is what the company needs to get back on its feet, and Windows 8 looks promising. Unfortunately, these patent deals make it look like business as usual for Microsoft. It’s another reminder that the corporate culture within Microsoft is one of aggression and perceived dominance, and it’s an attitude that the company could really do without.