Microsoft's Sacred Cash Cow

• Illustration by Dean MacAdam

  

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Jeff Reifman builds Internet tools for nonprofit organizations as director of technology at Groundspring.org. In his spare time, he writes the progressive political journal IDEAlog.us.

Why are Microsoft products so endlessly frustrating to use? Even techno-geeks like me get annoyed by Windows. I'm tired of spending the first 10 minutes of my day rebooting just so I can get to work. Microsoft Outlook 2003, the latest version of the company's e-mail and calendar software, hangs for me about once a day, requiring me to restart my PC. I also have a problem with Word 2003: Whenever I bullet a line of text, every line in the document gets a bullet. Asking Windows to shut down is more of a request than a command—it might, it might not. And recently, Internet Explorer stopped opening for me.

I know I'm not alone. If you're like me, you've invested in technology to become more efficient and productive but mutter about the many frustrations of the digital lifestyle. Technology is my hobby as well as my job, so I regularly ponder why software giant Microsoft Corp., which has more than $56 billion in cash, hasn't solved more of these problems.

I began using Microsoft products 23 years ago, at age 11, and I worked for Microsoft from 1991 to 1999 as a technology manager. For many years, I was a Microsoft loyalist. While aware of Microsoft's shortcomings, I always believed that the Soft did its best to improve products over time, as it did with Windows XP. But recently, I've had a crisis of faith. Perhaps I've rebooted Windows one too many times.

I've had a crisis of faith. Last month I went out and bought a Macintosh G5 and began using the new Mac operating system, OS X. It has been a breath of badly needed fresh air after Windows.

Over the past year, my frustration with Windows grew, as did my envy of Apple's cool new products. Finally, last month I went out and bought an Apple Macintosh G5 and began using the new Mac operating system, OS X. It had been years since I'd used a Macintosh. Until recently, I dismissed those who did as impractical, elitist hipsters, and I mocked the Mac "switch" ads on TV.

But in the first five minutes on my new Mac, I was surfing the Internet, sending e-mail, and ripping a CD. OS X has been a breath of badly needed fresh air after Windows.

This made me wonder about Microsoft's willingness to innovate and compete. Why are Microsoft products still so difficult to use and so unreliable? Why is the company improving them so slowly? Is Microsoft losing its competitive edge? Has the company seen its best days?

The Web's phenomenal growth has driven a number of fundamental changes. And from my vantage, at least, Microsoft seems to have overlooked the most important of those trends. It made a series of missteps, and it's not clear if it has learned from them. In protecting Windows and Office revenues, Microsoft has innovated less quickly than it could have. The company relies on the same strategy that helped it years ago come to dominate the personal-computer market with the Windows operating system, despite mounting evidence that its customers are looking for a new approach. Competitors such as Linux and Google are gaining, and Microsoft seems unprepared for the road ahead.

My Time at Microsoft

I arrived at Microsoft the week I turned 21. I was fortunate to spend the next eight years growing up on the Redmond campus. I learned nearly everything I know about project management there. I became a more critical thinker. And, like many others, I was very fortunate financially. In time, my stock options allowed me to pursue a for-profit dot-com startup, as well as a series of socially responsible nonprofit ventures.

I spent my first four years at the company working to build Windows into fax machines and other office devices. When the growth of e-mail made our work irrelevant, the group was disbanded. In 1995, I helped launch a news site for the fledgling MSN. Less than a year later, NBC joined us to launch MSNBC.com.

In 1997 and 1998, while still at Microsoft, I started two not-for-profit coffeehouses on Capitol Hill, Habitat Espresso and the Four Angels Cafe. Microsoft allowed me to moonlight, and the company's PR folks promoted my efforts as an example of a community-minded Microsoftie.

In 1998, I worked on a team developing prototypes for future versions of Windows, but I became frustrated with the group's lack of focus. I spent my last year working in e-commerce on Shop.Microsoft.com, Microsoft's online retail store. In 1999, I left Microsoft to found GiftSpot.com, a startup that was later acquired by GiftCertificates.com.

In 2001, I started a nonprofit organization called ActionStudio, which builds Web tools for nonprofit organizations. We've since merged with another nonprofit called Groundspring.org, which is where I currently work. I find socially responsible technology work most fulfilling but still enjoy keeping up on the overall industry.

A Victim of Its Own Success

Microsoft had $32 billion in revenue last year. The Windows franchise is an impressively consistent revenue stream. "Financially, there's nothing wrong with the way Microsoft is doing right now," says Paul Andrews, a Seattle Times columnist, author of How the Web Was Won, a book about Microsoft, and co-author of the biography Gates. "It has an incredible record through the economic downturn." By any measure, Microsoft is one of the most successful companies in history.