Orthogonal Pivots

Microsoft has announced that by the end of the year the Groove music service will be phased out. Users are being offered the option to move their music libraries into Spotify.

This brings to an end a long story of Microsoft in the music distribution business. It started nearly 15 years ago with technologies in Windows that allowed for purchase and playback of various media formats. Microsoft sought to enable a large number of music retailers to market music through its formats and DRM and transaction clearing.

Services such as AOL MusicNow, Yahoo! Music Unlimited, Spiralfrog, MTV URGE, MSN Music, Musicmatch Jukebox, Wal-Mart Music Downloads, Ruckus, PassAlong, Rhapsody, iMesh and BearShare and dozens of hardware players licensed Windows formats. Almost all of these services have shut down and the devices disappeared.

The next stage was to offer an integrated experience through the Microsoft Zune player and Zune Marketplace music service. This too failed and was replaced by the Xbox Music brand in 2012. On July 6, 2015, Microsoft announced the re-branding of Xbox Music as Groove to tie in with the release of Windows 10.

There was a time when Microsoft was thought of as the certain winner in media distribution. Inserting media into the Windows hegemony was classic “control point” strategy: owning the access points was a sure way to collect a tax on what transacted through the network.

Instead we are facing a market where media is consumed through new access points: phones, tablets and TV boxes. Netflix, Spotify, Roku, Google, Amazon and Apple are all offering distribution and some are investing in original programming.

It’s perhaps worthwhile to recall that Microsoft and Apple both started their media efforts around the same time. Apple’s iTunes is 16 years old and the iTunes Music Store opened in 2003, almost 15 years ago. Today Apple is transitioning to streaming with 30 million subscribers. The graph below shows the history of subscription growth to Apple Music and Spotify.

Apple Music is a small part of Apple Services (part of the orange area below).

On a yearly basis Apple Services are this year crossing the $50 billion gross revenue run rate. This year Apple released a new Apple TV 4K and is releasing a new smart speaker called HomePod.

The contrast between Microsoft and Apple is most visibly between the Mac and PC. But the story of how media paralleled mobility and how Microsoft struggled with both is perhaps a cautionary tale.

Microsoft saw the limits of modularity when new product categories emerged and when new user behaviors were created. They attempted to pivot into being more integrated but those efforts also failed. The efforts continue today with Surface devices; looking forward they will continue with AR/VR and perhaps a pivot of Xbox..

But the long arc of history shows how hard it is to succeed in vertical integration after you build on horizontal foundations. Generations of managers graduated from the modular school of thought, specializing rather than generalizing. Now they are facing an integrated experiential world where progress depends on wrapping the mind around very broad systems problems.

Entire industries are facing this orthogonal pivot: media, computing and transportation come to mind. Huge blind spots exist as we see only what we’ve been trained to see.

  • So many products that use to be physical objects – music, news media, transportation – are becoming more software and experience. In that world integrated is the way to control user experience, which may be the key differentiator. In a modular environment can you have a UX specialization?

    • klahanas

      Why not? You offer your experience as delivered (defaults), if the user changes them, it’s up to them.

      The waiter brings my soup. I choose whether to add salt.

  • Luis Alejandro Masanti

    If Microsoft Music (or whatever name they have today) would still ‘paralelling’ Apple’s Music (or whatever name they have today) we would see the new TV show… ‘BSOD’s lovers!’
    “When the screen went blue, love lights on!”

    • klahanas

      Doesn’t happen much anymore. About the same as the beach all. So let’s combine them into a spinning “blue ball”… ‘cause with fewer crashes the love lights don’t come on too often.

      • Luis Alejandro Masanti

        That’s birth control, Microsoft way!
        (Les BSOD, less love, less children…)

        I think that BookCamp’s icon —the Apple’s way of running Windows on Mac hardware— is a monitor with a blue screen,

        Love to hear is happening less and less… The BSOD is death! God sabe the xSOD!

      • klahanas

        Microsoft’s way of making love (with their users) is through non-reproductive means…

        Apple’s too, but they somehow convince billions to like it.

      • Luis Alejandro Masanti

        Well, this is the difference of a loooong history of having/not having BSOD!

      • Space Gorilla

        Yes, people actually enjoy using Apple products. I’ve used a lot of Microsoft stuff over the years, didn’t enjoy any of it. Office 365 wasn’t bad but had enough problems I finally had to switch to Google Drive/Docs, which was like a breath of fresh air after Office 365. Microsoft just doesn’t seem to sweat the details or care about delivering a nice experience. I suppose that’s tech culture though, Apple was always mocked for making nice things.

      • Shawn Dehkhodaei

        Is that how you came to be?

      • klahanas

        Are you baiting me for an inappropriate comeback? That was too soft a pitch, hardly fruitful…woops!

        Yeah, I came to be by non-reproductive means…

      • handleym

        Luis, this sort of mocking MS for problems of fifteen years ago is not helpful. You know what also sucked fifteen years ago? Mac OS (the original version). And (in different ways) the OS X of the time.

        Criticize companies for their flaws today, not for vaguely remembered flaws of the past. Because the fact is, at the OS level, there are a number of thing that MS does as well as, or better than, Apple.
        And both are far from perfect (in part, probably, because of the horror pile of complexity that is ACPI, x86, and the related HW specs). Both are liable to spawn demons that go beserk and start using 100% of CPU. Both have a non-zero probability of hanging every time they go through a sleep-wake cycle. Apple seems more susceptible to hanging if you plug in bad hardware (like a disk that is going bad), but that might just be personal experience.

        They’re both remarkably good compared to what we had 15 years ago. And remarkably bad compared to what we should have.

        And BTW the Boot Camp Icon is two stacked hard drives with the windows “squares” on top, in a grey color. No blue, no screen.

  • Walt French

    “Services such as AOL MusicNow, Yahoo! Music Unlimited, Spiralfrog, MTV URGE, MSN Music, Musicmatch Jukebox, Wal-Mart Music Downloads, Ruckus, PassAlong, Rhapsody, iMesh and BearShare and dozens of hardware players licensed Windows formats.”

    Microsofties complain how the DOJ anti-trust case shell-shocked them, prevented them from being aggressive in expanding into new markets. The quote suggests that the conclusion—the difficulty in pivoting from horizontal foundations—may have applied to a host of other initiatives that foundered, that are not called out. Browsing. E-Transactions, including even bitcoins. A whole host of services.

    Or perhaps, Microsoft never wanted in any business other than being a platform company for well-identified markets.

    • handleym

      That’s precisely what such judgements are SUPPOSED to do! That is why they are punishments!
      When the sin is trying to suppress competition, the appropriate remedy is to hamstring the company in such a way that it will limit itself from competing too hard, and so allow others entrance. And it usually works in the cases that matter.

      Tough on the Microsofties. That’s what punishment looks like. Maybe you geniuses should have studied some history and considered the big picture before being so aggressive throughout the nineties, huh?

      Coming up next: Qualcomm and the same issue…

      • Shawn Dehkhodaei

        By all accounts, Microsoft didn’t get any punishment. They just got a slap on the wrist. When Bush came to power, all of it was put aside, and Microsoft continued it’s pattern for another 7-8 years. Only the EU managed to actually penalize them.

    • klahanas

      They should have busted MS up into at least two pieces. But I can’t stop wondering what would have happened if MS had say in what programs were allowed to run on Windows. You mean to tell me insufficient market share is the sole criterion of allowing iOS to do it?

  • berult

    …hence the acute uneasiness for the busy bee to migrate from an apple tree’s blossoms to the game-theory killing fields. Unforgiving.

    …hence the infinite opportunity cost incurred by falsetto spreadsheets to behold an in-tune quantum dot. Unforgiven.