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Apple vs. Microsoft: The Value of Strategic Thinking

Having a strategic plan and following it doesn’t guarantee corporate success. There’s always the possibility that the strategy is bad and fated to fail. But you can rest assured that the lack of a strategy will doom any enterprise to failure–and why I worry a lot about the future of Microsoft.

As Ben Thompson at Stratechery and my Tech.pinions colleague Ben Bajarin point out, Apple’s iPhone 5c and 5s announcements this week were logical steps in the careful execution of a mobile strategy that goes back at least to the original iPhone introduction in 2007. Apple’s plan is simple to state, though difficult to execute: Provide an outstanding customer experience and focus your energy on dominating the high–and profitable–end of the phone and tablet markets.

The strategy has no lack of critics. It leads to product choices that are predictable and a bit dull, endlessly disappointing tech writers who live for novelty.  And Wall Street simply hates it, applying its “past success is no guarantee of future results” disclaimer to Apple with a special vengeance.

Apple doesn’t care; it has its vision and it is sticking to it.

A key element of executing a strategy is knowing what not to do. Despite its latest explosion of iPhone variants, Apple offers amazingly few products for a company of its size. And it will sell no product before its time, much preferring doing it right to doing it first (Wall Street and tech writers hate this too.) Yes, it has had its failures–me.com and Ping were recent ones–but it has had an astonishing percentage of hits over the past 15 years.[pullquote]A key element of executing a strategy is knowing what not to do. Despite its latest explosion of iPhone variants, Apple offers amazingly few products for a company of its size.[/pullquote]

Contrast this disciplined approach to the chaos swallowing Microsoft these days. All of Microsoft’s major businesses face serious threats: Long-term shrinkage of the PC market and thus the PC software market seems inevitable, attempts to turn Windows into a tablet operating system and to become and integrated producer of tablet hardware and software are sputtering, competition for Apple and Google is driving the cost of consumer-grade software to zero, and on and on.

A real strategy would force Microsoft to take a hard look at its lines of business and decide what is savable and what is worth saving. I’ve made no secret of my preference–that Microsoft should focus its efforts on business software and be prepared to let consumer-facing products go.

The acquisition of Nokia makes it clear that this is not Microsoft’s choice. But it gives no clarity whatever to what choices Microsoft will make. To attempt to defend everything is ultimately to defend nothing.

Strategic choices are difficult and usually painful. A strategically focused Microsoft, whatever focus it picks, will at least initially be a smaller company. But for Steve Ballmer in his remaining months or his successor to fail to make these hard choices will jeopardize the entire enterprise.

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Steve Wildstrom

Steve Wildstrom is veteran technology reporter, writer, and analyst based in the Washington, D.C. area. He created and wrote BusinessWeek’s Technology & You column for 15 years. Since leaving BusinessWeek in the fall of 2009, he has written his own blog, Wildstrom on Tech and has contributed to corporate blogs, including those of Cisco and AMD and also consults for major technology companies.

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