When you run a big tech company, a big part of your job is trying to see the intent and strategy of your competitors. If you do it on time, you can gain a market advantage that can translate into millions of dollars in revenue. But if you can’t understand… what happened to Bill Gates with the iPod in 2003 can happen to you.
“I don’t see that we are doing enough to be seen as leaders”
In November 2003, the iPod was two years old and the iTunes Store was coming to personal computers. It was the start of what was to be the music ecosystem that would propel Apple’s revenue. Bill Gates was then chairman of the board of directors of Microsoft (he resigned as CEO in 2000), and writes an e-mail to his colleagues to talk about the direction of the iPod
Bill Gates on the iPod
November 2, 2003 pic.twitter.com/A6q8b1LluQ
— Internal Tech Emails (@TechEmails) August 6, 2021
We can clearly see Bill’s reaction after understanding the direction the market was taking. Warn other senior Microsoft officials that “didn’t see any scenario” in which Microsoft could compete
Bill is also right in his next prediction: “All the hardware people have will be linked to other services. And people won’t want to get rid of their hardware.” In other words, he realized that Apple was becoming secure their consumers with their own music services. If you had an iPod, you bought music from the iTunes Store.
“I don’t think we’re doing enough to be considered leaders,” Bill pointed out in his email. “I admit they’re rich, but I have friends who buy iPods with thousands of songs on them. Herb Allen bought dozens of them for his friends. And Warren Buffett loves them.” By the time this email was sent, it was already too late..
However, Microsoft as such has no complaints: today a good part of its current income comes from its services, and it is growing steadily in the cloud market. Office is still the king of office automation and Windows is still the most widely used desktop operating system in the world. We learn from our mistakes.
