Conventional wisdom dictates that, to be successful, companies need to aggressively focus on competitors and investors. That ethos certainly defined the Windows-era Microsoft. But today’s Azure-focused Microsoft is far more customer-centric…and yet it’s this Microsoft, not the old one, that reached a trillion dollars in valuation this week. In this ever more hostile world, it’s good to remind folks that peaceful paths can also be far more lucrative. Credit: Martyn Williams/IDG [Disclosure: Microsoft is a client of the author.] I recently took a call about how Microsoft is competing against Amazon AWS and one of the questions really got me thinking about how much the company has changed. I pointed out that the old Microsoft would have been far more aggressive. The weapon they developed in the early days was “Embrace, Extend, Extinguish.” It effectively took out both Lotus and IBM’s OS/2 efforts, and nearly took out Apple. But it resulted in a company that cared more about competitors than customers, a firm that was exceedingly arrogant, and one that almost was regulated out of existence in the 1990s. Tactically, the strategy was brilliant. Strategically, not so much…because it nearly killed the firm. Today’s Microsoft is very different. And these differences, while they represent a far lower competitive problem for Amazon, represent a far better path for those of us who actually use Microsoft’s offerings. They’re also why they reached a trillion dollars in valuation this week, a new milestone for the company. Windows Microsoft Microsoft came up hard. What I mean is that, from the start, they had issues with IP theft and companies like IBM trying to put them out of business. As a result, they focused aggressively on competitors and often left partners hanging. For instance, I was recently eyeing a book coming out on 3Com. One of the things that badly hurt that company was that Microsoft wasn’t straight with them on Microsoft’s plans with OS/2. That failure to disclose hurt 3Com a lot and significantly contributed to the CEO’s early departure. And rather than apologizing Steve Ballmer said something to the effect that the 3Com CEO should grow up. They did, which meant they never trusted Microsoft again. Microsoft was a warlike company thinking that locking customers in was a good thing and that as long as they were making money everything was good. I recall the launch of Windows 95 where they had lines of people wrapping around buildings to buy the thing. But when problems overwhelmed support, rather than staffing up, they blocked the support lines so folks couldn’t get through – pretty much assuring they’d have no lines when Windows 98 launched. Instead of competing with Netscape in market they worked behind the scenes to torpedo the company. Ironically, none of what they attempted actually worked. (It reminds me of what was disclosed in the recent Mueller/Trump report where Trump’s staff disobeyed orders and prevented the President from obstructing justice.) But the regulatory backlash took Microsoft out at the knees. Then they tried to simplify their pricing model. But they didn’t look at what that would do to customers, resulting in millions of dollars of unanticipated charges. Linux, which had pretty much been a joke until then, became a real competitor – kind of like Lamborghini, which was created because Ferrari pissed off a rich customer. The end result was a decade where it seemed Microsoft couldn’t get out of its own way. This decade is often referred to as the “lost Microsoft decade.” Azure Microsoft Azure Microsoft doesn’t look like Windows Microsoft. Focus isn’t on competitors, it’s on the customer. Rather than fighting interoperability the firm is fighting to be the best at it. Rather than fighting Linux, which still is largely customer backed, they have embraced it. Not as part of an “embrace, extend, extinguish” strategy, but instead as part of a strategy to create a loyal customer base. With regard to Amazon AWS, rather than creating clouds of FUD surrounding the offering or aggressively pointing out problems with that platform – of which there have been a few – they are instead working to interoperate with it. This is because they recognize that many customers want dual suppliers for critical services and for very good reason. Rather than only supporting their own platforms they have embraced both iOS and Android. They are even using Chrome as the basis for their next generation browser, abandoning their old proprietary Edge platform. In other words, today’s Microsoft will both “embrace” and “extend,” but without the “extinguish.” The end result, and this isn’t intuitive, is that Microsoft just became a member of the Trillion Dollar club. Not by gleefully destroying competitors but by interoperating with them and focusing like a laser on customers, developers and partners. Ironically, this not only makes for a far better company to work with, it also results in one that is far more successful. Lessons learned Like most companies, Microsoft was created to fill a customer need. Many companies lose track of this as they grow and are pounded by competitors and focus increasingly on the needs of investors. Microsoft’s turnaround shows that if you can maintain that customer focus, both the customers and the investors will be happier. And the competitors are likely to burn resources on other competitors, or, by focusing on you, lose track of their customers and naturally fail. Yes, Azure Microsoft could likely take on Amazon AWS and win, but they’d be left weaker, more open to regulation or break-up, have a lower valuation and a higher risk of ultimate failure. Wisely, they are choosing not to do this, and there are a number of firms (Apple and Oracle to name two) that could benefit from this lesson. Focusing tightly on what customers want is old school, but that doesn’t mean it’s wrong. Microsoft reminded me of that this week. Related content opinion Extended-reality employee training — a beginning for robotic onboarding? The use of extended reality to train employees could open the door for more involved robotic use in some industries in a few short years. By Rob Enderle Oct 19, 2023 4 mins Augmented Reality Technology Industry opinion Why we need to focus AI on relationships We are increasingly using AI to create and maintain relationships with customers, but the real short-term need is in creating and maintaining relationships with our employees. 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