Microsoft’s Scary Revenue Problem

It’s common knowledge that Microsoft’s board of directors forced CEO Steve Ballmer to expedite his resignation, and the timing couldn’t come any sooner. Why? Well, a big reason is because Steve Balmer really sucks as a CEO. I don’t think I’m being overly critical — I think I’m being a realist.

Cry me a river: Steve Ballmer’s long-awaited goodbye:

Word on the street is that the search to replace Ballmer as CEO has come down to well-respected Ford CEO Alan Mullaly, who did a wonderful job turning Ford around, and Satya Nadella, head of Microsoft’s cloud computing division. Ahh, the classic internal/external debate! Should Microsoft promote a homegrown talent, or should it look to bring in a CEO with a fresh new perspective?

My opinion on this matter obviously doesn’t matter, but if I had to make my choice, I’d pick Mullaly. For one, Microsoft needs an outsider who can see the world from another perspective – namely one that deems Microsoft to have a soon-to-be failing business model. The problem with Microsoft is that they think too highly of themselves, really. Although they turn a tidy profit seemingly every quarter, those profits are centered on businesses that don’t trend well into the future. Does anyone really believe that Office can continue to be the bread-winner for Microsoft, especially when services such as Google Docs and Apple iLife/iWork are completely free? When mobile usage is up-trending with every iPad, iPhone, or Android sold? Scarier even is the fact that Apple just made the move to make all future operating system releases completely free.

Here’s a look at how Microsoft has made their money from June 2012 to June 2013:

Microsoft's revenue breakdown (June 2012-213)

Microsoft’s revenue breakdown (June 2012-213)

57% percent of their revenue is Office and Windows, software that is offered completely free by their competitors (as loss leaders, probably). How can that trend continue? What’s even worse is the 13% that accounts for “Entertainment & Devices”, probably made up mostly of xbox with a tiny bit of Surface sales, if any. Does anybody truly believe that the future of gaming is a box with a CD slot in it? That is ludicrous. The future of gaming — all the young talent, money, time, and investment — is going into App Stores. I don’t mean the Apple App Store, per se, but online app stores in general. See, the future of gaming is not a box at all. It is networking and connecting through wireless devices that I already own. I should be able to download an app on my phone and be able to play that game on my TV. It’s as simple as that. To have such a big portion of a companies sales based around a concept like that is sad. To make matters worse, I guarantee the next CEO of Microsoft continues to invest in the things that are making money right now – such as xbox, Office, and Windows, rather than take a big-picture view of their profits.

To hell with the future!

Ahh, well here’s a sign of Microsoft’s innovation:

What Apple Really Sells

Every time I pay a visit to the local mall, I make it a necessity to visit the Apple store. Admittedly I’m an Apple “fanboy”, and I do invest in the stock, but it’s not just that for me. I actually like visiting the Apple store — especially when I have a half-hour to kill when my fiancé is busy shopping for the house or herself. In those 30 minutes, I listen to a few new songs, play around with the newest iPads and Macs, look at some cool new apps, and so on. It’s really, really fun.

After my last visit there, I started to think about what Apple actually sells, and I came about a not-so obvious answer. Apple is not trying to sell you iPads and iPhones (well, they are) – they are trying to sell you a better life. Think about it — go to an Apple store and pick up an iPad and write down every single emotion you are feeling while you use it. They sell you on pictures and videos of your family. They sell you on using an application on your next flight. They sell you on paying bills and keeping your finances in order. They sell you on taking quick notes. They sell you on great new songs. They sell you on funny, random videos. They sell you on fitness and eating healthier. They sell you on everything you have going on in your life, and everything you might be able to achieve, if only, you could think different. AHA!

Here’s a recent iPad commercial, aptly titled “Life on iPad”:

What are things some of the other companies are selling us? Let’s think:

Starbucks: Their main business is coffee but what they are really selling is much grander. They sell two general concepts – the first is their name and logo. People hold Starbucks coffee cups with the logo pointed outward so everyone else can see. Secondly, they sell inspiration, motivation, and education. They’ve managed to take advantage and build upon the entrepreneurship culture of this past decade with free Wifi and a cultured, nuanced store design and feel.

Google: Google is much like Apple is the sense that their product (a search engine) helps you get more out of your life. Google sells a better life through answers and through knowledge. Everything you need to know now is at your fingertips. It’s essentially crowd-sourcing of information. Here’s a memorable Google commercial called “Parisian Love” about a man who travels Paris to study and ends up meeting and marrying a woman there:

Amazon: This one’s a little more difficult than Apple, Starbucks, and Amazon, but it’s still glaringly obvious. Amazon is selling you the ability to have whatever you want or need, immediately. Think about it, All of Amazon’s recent innovations have been about speed of shipping (same-day) and also a vast and incomparable catalog of products (3rd party sites).

Miley Cyrus Proves Curious Behavior Wins

My fiancé is a huge Miley Cyrus fan and would not let me sleep until Miley Cyrus performed at the AMA’s last night — and if you didn’t notice, her performance was left for the very end of the show. Telling people that Miley Cyrus would be performing after the break for nine consecutive commercial breaks is a sure way to keep people tuned in for two hours or more. After all, it’s amazing what people will do to watch a half-naked, semi-crazy woman perform at an award show these days.

Image

Miley cyrus performs with a cat at the AMA’s

Not surprisingly, when she did finally get on stage, she managed to shock the world again. But… instead of getting naked or lighting up a joint on stage like she did in Amsterdam, Miley decided to go a much more mundane (and curious) path with her performance. She still was scantily dressed (of course), but the performance itself was somewhat subdued. Nevertheless, her performance won over the internet. Why? Because she did what people least expected. Rather than shocking with lewdness, she put a large, singing, crying cat on the TV screen behind her. What? A kitty? Why? What does it all mean?

Curiosity is a great way to get attention. I’ve already written about Miley Cyrus and her genius marketing team. They’ve got a few things going for them in that they can sense what people expect from Miley and they plan for something entirely different. You can’t get much more crass then getting naked on stage whilst doing unimaginable things with a foam finger. But you can still get a lot weirder, apparently, and putting a large kitty behind you during a performance is curious, if not plain-old weird.

I don’t know where she goes from here, but I’m almost certain her next performance will be the opposite of what we expect.

Twitter and Facebook – a Bubble or a Revolution?

Twitter shares (twtr) debuted on the NYSE and almost doubled in value faster than the time it takes to tweet out a 140 character message. Facebook’s stock (fb) went through it’s trials and tribulations in the early going, but has found its groove as of late and is up almost 75% on the year.

Talk about companies on the move! On televisions screens all over, and on the social media sites themselves, analysts are debating whether or not lay people like you and I should invest our hard-earned money in these companies. And guess what? Most analysts are all the way to either side of this issue — screaming “Buy now!” or, well, screaming “Don’t buy!”.

So what should you do? On one end of the spectrum, you know and understand the Facebook and Twitter story. You “get it”. These companies are not meaningless fads, they’ve slowly become a big part of our lives; a dependency, almost. We can share and connect seamlessly with family members and friends. On a macro level, these companies help perpetuate ideas between strangers in communities, cities, and as we’ve seen before, countries. These are world-changing ideas – nothing short of a revolution. This is Apple in the early 1980′s, pounding a point home that everyone would use a personal computer at some point in time, before anybody really understood that concept. It is not just sharing pictures of what happened last night on Facebook or posting a 140 character joke to a friend — it is so, so much more.

On the other end of the spectrum, these are overvalued stocks that don’t consistently turn a profit yet (or ever, in twitter’s case). Worse yet, they don’t really have a wide moat, despite their enormous brand names. Is it really that difficult to start a cool concept and parlay that into a billion accounts? If Snapchat and Instagram could do it, why not others in the future? Too many of these companies are getting started, sharing their viewership amongst each other, and theoretically, their profits too. Who’s to say that Facebook doesn’t lose its way in a few years, when people are a little more bored with their service than they are now, and they have to compete with new and more exciting ideas?

At the end of the day, of course, it’s your call. If you really believe that Facebook and Twitter are here to stay (and grow), then they are not overvalued. Not with all the information they gather, with all the communities they’ve changed.

Marissa Mayer, Yahoo’s Attention Seeker

This past week, Yahoo CEO Marissa Mayer posed for Vogue and well, all hell broke loose. Many a blog, newspaper, and magazine gave their two cents about whether Mayer’s cover was “too sexual”. Time magazine took issue with Mayer’s apparent faux modesty and Entrepreneur.com simply asked: “Should Marissa Mayer Have Posed in Vogue”? Because, you know, Mayer is a CEO or a major publicly traded company, and people like that don’t flaunt their sexuality on magazine covers like Vogue.

Marissa Mayer Vogue cover

Marissa Mayer Vogue cover

The truth is, Mayer set out to be on the cover of Vogue for the sake of the company she runs, not for her own best interests. Personally, Mayer has very little to gain with all the attention her Vogue cover is giving to her, and it’s obvious that wasn’t her intention anyway. What is always of paramount importance is the company she runs, Yahoo, and a Vogue cover like this is in keeping with what Mayer has actually done at Yahoo since she took over.

Before Mayer, Yahoo had been struggling amidst internal company turmoil, increasing competition in the search and advertising business, and a quickly aging user demographic.  When Mayer stepped in, Yahoo!’s stock was in a nosedive and their public image was not in much better shape. That she need to do something and do something quick was a matter of public record. So what has she done since she’s taken over? For one, she seems to be focused on the public perception of Yahoo, both in terms of that pesky, aging user base and also in terms of jobs seekers. In short, she needed to find ways to make Yahoo “cool” again — cool enough to use and cool enough to work for. After all, Yahoo wasn’t going anywhere if it couldn’t find and hire talented people, and keep and motivate the talented people already on board.

So Mayer re-energized Yahoo’s workforce by putting a ban on working from home. Surely, it was a divisive decision, but it was an easy way to figure out which people actually cared about Yahoo. It was a great way to put Yahoo in the news, making it be known Yahoo wanted only the most driven people working there. Then, to attack the aging demographic problem, Mayer acquired Tumblr, the blogging service that oozes all the “hip” and “cool” that Yahoo wanted and needed. The underlying trend here is that Mayer knows Yahoo needs to be in the news, one way or another. Underneath her publicly recognized title of CEO, there’s a genius marketer in Marissa Mayer. Yahoo needs all the attention is can get, and Mayer’s Vogue cover has put Yahoo in the news, and that’s always a good thing. Top of mind means tip of tongue.

The Very First Starbucks

I’ve got a grande Pike Place roast right in front of me, so in honor of this coffee drink and with all the energy it’s giving me, I’m writing an article about the very first Starbucks, which was located in… you guessed it… the Pike Place Market in Downtown Seattle.

Here’s a picture of the original Starbucks in Seattle:

Inside the Pike Place Market Starbucks

Inside the Pike Place Market Starbucks

The story of Howard Schultz and Starbucks is an inspirational one, going all the way back to its humble beginnings as a small company offering fresh-roasted whole coffee beans. Schultz’s visit to Italy and many an italian coffeehouse helped him re-imagine Starbucks as a more romantic and intimate coffee house setting. Since then, I’ve probably had more than a thousand cups of Starbucks coffee.

What’s so unique about Starbucks stores all around the world is a sort of simple industrial, rustic, and un-fastfood-like vibe that no other company has been able to replicate. I think that’s why I keep my loyalties with Starbucks. Where Dunkin’ Donuts feels brightish, pinkish, bubblyish, and almost childish, Starbucks makes me romantic. Rustic. Nostalgic. Warm when it’s cold outside.

I’ll pay the extra half-dollar for a coffee for 5 minutes of inspiration — because I truly get inspired when I walk into Starbucks’ stores. To me, that is worth the extra cost in spades. How you feel inside is doubly important to what the coffee tastes like. And trust me, the coffee tastes incredible.

Here’s some more pictures:

Starbucks Pike Place Market Store

Starbucks Pike Place Market Store

First Starbucks Storefront

First Starbucks Storefront

The original Starbucks logo

The original Starbucks logo

 

Miley Cyrus, the VMA’s, and a Genius Marketing Team

Miley Cyrus at the VMA's

Miley Cyrus at the VMA’s

If Miley Cyrus wanted to shock the world with her VMA’s performance, she accomplished that and more. Heck, she out-shocked the queen of shock-value herself, Lady Gaga. In terms of her popularity, Miley Cyrus was already knocking on the door of superstardom and world-domination. But after last night, she tore down that door like a SWAT team looking for a serial killer and now shares the room with the likes of Lady Gaga, Beyonce, and Rihanna.

You may not like her music, her hairstyle, or her antics, but you will be talking about her all week. With your friends. With your co-workers. With your gym buddies. With random people a the bar. With your grandma for Christ’s sake. That might be a very scary proposition for you, but it’s a very exciting proposition for Miley Cyrus and her genius marketing team. See, with every conversation of Miley Cyrus, offline or online, she’s gets a little richer, and you can bet your bottom dollar she knows that.

Which brings me to the point I’m trying to make. Miley Cyrus has been claiming in interview after interview that she’s found her “real self” and that this is who she really is. Essentially, Hannah Montana was a little girl imagined and forced onto her by a group of writers and producers for a TV show. The real Miley Cyrus is this crazy, shaved-head, party girl who literally knows no bounds or rules. She twerks on stage when she wants to and she gets naked on stage when she wants to, even if there may be children watching at home. After all, she “can’t stop” – this is who she really, really is people!

Now, I don’t know Miley Cyrus personally but I’m calling bullshit on all of this. The shock-value is just too over-the-top to be a coincidence. After all, sex sells and Miley Cyrus isn’t trying to find a comfortable place in between “cute” and “sexy”. She’s trying to find a place in Amsterdam red light district sexyAnd that kind of sexy is manufactured to shock or even enrage people. Just to be clear, I don’t really have an opinion about all of this except that it will help her career more in the short-term than in the long-term. I’m just interested in her performance from a marketing angle.

The sad truth is, in this day and age of uber-sharing every little thing, her VMA performance is marketing gold. There’s no doubt it’s going to work for her. It is working for her. She and her marketing team know how to make people talk, and they’re doing just that.

What will be interesting is finding out what happens to Miley Cyrus’ career after last night. You can’t get any nakeder than naked, can you? She might find it much more different to keep shocking people to this degree, since people will know what to expect now. How is she going to stir up conversation with her next performance or song? Her performance last night is definitely going to win her some new fans but will those fans be loyal enough to see her through tamer songs, videos, and performances?