Extinction Events

For its last quarter, Microsoft wrote off its Nokia acquisition as a $7.5 billion loss. Within a year of buying it! New CEO’s are known to do such things: they take a hit to profits right after taking over since they can blame it on their predecessor! In Satya Nadella’s case, he has the added advantage that it is true: it was not his decision to buy Nokia and, even better (for Nadella, at least), he had opposed the deal when it was proposed.

Horace Dediu points out that the speed at which things didn’t work out for Microsoft was just too fast to anticipate:
“Most people didn’t believe that such a catastrophe could occur this fast…(Microsoft) just couldn’t imagine that a company that was once as strong and dominant as Nokia could have virtually no value.”
Further, he says that with the launch of the iPhone, Apple took a heavy toll on Microsoft’s Windows/Office empire but it also wiped out other established companies like Nokia and BlackBerry:
“When it happens to everyone, it’s an extinction event.”
He goes on to compare the launch of the iPhone to the arrival of a very infectious virus:
“We tend to think the strong will survive. But a virus is a very small thing that kills big things.”

Under Nadella, Microsoft accepts the ground reality. Its spokesperson said:
“If you miss the first wave, you have to hang on and then drive or anticipate the next wave. We want to be part of the next wave of disruption.”
Unfortunately, they still don’t seem to get it. Because as Dediu correctly says:
“To survive long term in this industry, you have to create a new category or be a fast follower.”

Being a “fast follower” is what Google did with Android after the iPhone was launched. Note how Microsoft did not list that as an option? Google, on the other hand, with its restructuring of established businesses under Sundar Pichai and the future possibilities under its founders, certainly seems to be better prepared for the next “extinction event”.

And Apple? Without Jobs, can they continue to play the meteor that triggers the next “extinction event”? Or is it better for them to start planning like Google, to be ready to play the “fast follower” if that’s what the situation demands?

Comments

  1. KumarAugust 23, 2015 at 1:48 PM

    Interesting to see how thing work these days in business.

    With digital age well rooted, happenings such as extinctions and emerging enterprises, are all set in mind boggling speed! The word extinction, which has its extensive base in the biological context, is now a digital thing! That should not surprise us - did we not think that 'virus', 'worm' etc were biological contextually, until the digital age advanced to destroy the copyright that biology had over them? :-)

    I am sometimes overwhelmed with this kind of, shall I say, fear. With digital machines ruling our mind's process relentlessly, I would like to know what Mother Nature has in her mind about our species. She rarely shows interest in bringing about evolutionary processes and extinction methods at express speed. She is content to have speed in things like avalanches, earthquakes, landslides etc. not so much in biology. She may have no choice however but to think hastily about our species!

    I won't be entirely surprised with the human race pacing away to glory like this, we may reach a stage when the homo sapiens may be at their wits end literally, if nothing else. Consequences may be loss interest in food, very little of sentiments, boredom with sex, family-life through smartphones only, friendships in redundancy mode, art and music no more making sense etc. Why, launching spacecrafts to the next star may only be child's play, but of no interest to the evolving 'we' because there may no more be a child in us. Sure, it may look strange for us now, but then the mind has the ability to transit to a different realm - "where no man has reached before".

    Will the homo sapiens become "extinct"? (If yes, that would make us very short-lived as a species, wouldn't it? One may note - dinosaurs lived on for several million years; but we the homo sapiens are not sure if we can celebrate the completion of even a paltry one million years!) The new species emerging from us, in case it does, may continue towards whatever may be next biologically.

    ----------------------------------------------

    [Note: I write like this only because I am reading with great interest the book K Viswanathan bought and shared with us: 'Sapiens - a brief history of mankind' by Yuval Noah Harari. So it is all his fault! :-) This book is much more interesting than anything digital I have come across.]

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