A detailed blog posting in the company’s machine learning journal makes public the technical effort that went into its “Hey Siri” feature — a capability so banal that I’d almost believe Apple was trying to make a point with highbrow mockery. Even so, it’s worth taking the opportunity to explore exactly how much effort goes into the features that do, for… Read More
When Apple announced its partnership with GE this week, it would have been easy to dismiss it as another random collaboration from a company people don’t generally associate with the enterprise. After all, Apple killed off their enterprise server product years ago. You might rightly ask, what exactly do they have to do with the enterprise these days? But if you consider the notion of… Read More
Duo Security raises $70 million, a close look at Apple’s self-driving car, Snapchat’s Halloween costume and Abu Dhabi’s state fund is doing business in San Francisco. All this on Crunch Report! Read More
3D sensing will be a “key selling point” of all new 2018 iPhone models. While Apple currently faces manufacturing difficulties with 3D sensing, TrueDepth cameras and Face ID will help Apple “capitalize on its clear lead in 3D sensing design and production for smartphones.” Read More
As a follow up to last week’s Machine Learning course, here’s a deep learning specialization designed by Andrew Ng (formerly Baidu AI, Google Brain) to help you break into AI. The five courses go through the foundations of Deep Learning, how to build neural networks, and learn how to create machine learning projects. Note that the courses require some prior programming experience. Read More
Alibaba the country’s biggest online shopping company, has introduced a grocery store that has both a virtual and physical presence. It quietly started rolling out the stores two years ago “because no one was watching and we wanted to try it out,” Vice Chairman Joe Tsai said at a conference in Hong Kong last week. Read More
The percentage of women partners increased of 17 percent in top 100 venture firms, and eight of those firms each added a female partner for the first time ever. There’s more where that came from… Read More
Apple has always shared the kernel of macOS after each major release. This kernel also runs on iOS devices as both macOS and iOS are built on the same foundation. This year, Apple also shared the most recent version of the kernel on GitHub. And you can also find ARM versions of the kernel for the first time.
But first, it’s time for some computer history. The first version of macOS… Read More
Despite their cringeworthy hardware, software, cloud services, and acquisitions, Microsoft is still a brilliant company in this day and age and you would be foolish to underestimate them in this regard. Sure, their last three operating systems have been complete turds and they have been reduced from being able to charge hundreds per license to having to place ads on Windows 10, invasive telemetry that can’t be disabled, and malware-esque distribution tactics; Windows 7 still has almost twice the market share of Windows 10 and it is almost a decade old. Their Surface line of laptops are even hated by internal employees and their quality is so poor that Consumer Reports had to pull their recommendation. Even worse, they spend more on marketing than R&D, $14.7 billion vs. 12 billion in 2016, which essentially means that they’re a marketing company with a software problem. So what makes them so brilliant? Their partner network.
95% of Microsoft's commercial revenue comes from partners (3/7)
To those unaware, Microsoft’s partner network consists of consulting firms, software resellers, and the like and is responsible for 95% of Microsofts commercial revenue. Most partners offer a wide range of services surrounding the Microsoft stack, including but not limited their implementation, management, and support (IMSs). But, they don’t do this because Microsoft happens to provide the least defective or most efficient solutions. Instead and on top of having 19% higher profit margins than their nearest competitor, for every $1 of revenue that a partner firm steers towards Microsoft, the firm stands to earn an additional $9.01 through their IMSs at the expense of their clients.
Unfortunately, what is profitable for a typical consulting firm comes at the expense of their clients and there are few situations where Microsoft offers the most economical or productive solution than their competition. In a blog post to their partners, Microsoft suggested that they “create stickiness” with their solutions, which is slang for “creating profitibility” and I have been all but forced to accept that their own products are created with this same mindset. Because of this, even companies like IBM, the inventor of the PC, have migrated to Apple products after realizing that their Total Cost of Ownership (TCO) was 1/3 that of a Windows PC, which is significant.
“Creating stickiness is all about looking for opportunities to entrench your (our?) solutions and increase switching costs.” -Jen Sieger, Sr. Business Strategy Analyst @ Microsoft
It shouldn’t be difficult to see that how defective or “sticky” an IT solution is relative to how costly it is to implement, manage, and support. As IT solutions become less defective over time, the cost and frequency of their IMSs also decreases. Conversely, as IT solutions become more defective over time, the cost and frequency of their IMSs increases, becoming more profitable for partner firms. For software companies, and just as software becomes more defective over time, it also becomes more expensive to market just the same; re: marketing company with a software problem. I digress, but it is easy to see how partner firms can profit immensely off of defective software solutions while minimizing less profitable and less defective solutions that generate less necessity for their services. However, it is also easy to see how a massive conflict of interest can emerge on both sides.
Rather than putting their clients first and aligning their business model with their best interests, Microsoft partners are in complete alignment with Microsoft for obvious reasons; hence the designation of “partner”. Seemingly, in exchange for Microsoft “creating stickiness” or shipping turds if you’re into that whole brevity thing, their partner firms generate the majority of their revenue through their IMSs and continue to sell Microsoft solutions while also fending off or flat out ignoring competing solutions, regardless of the potential impact to their clients.
Meanwhile, the businesses trusting Microsoft partners are paying more than the cost of their IMSs; IMSs are less often than half of the story with regard to IT finance. Even in a well-managed environment, more defects lead to more downtime, more downtime leads to more productivity loss, and productivity loss is almost always the largest IT expense for businesses of any size; whether they realize it or not. After productivity loss, IMSs come in as the second most costly with hardware/software costs coming in third.
Believe it or not, Microsoft actually seems to have more of an incentive to maintain an ideal amount of “stickiness” or “profitibility” for their partners at the expense of their clients. Even though they don’t directly go into their code and intentionally create bugs, they can absolutely impact how defective their code is via the volume of work, quality of employees, and how much pressure is placed on said employees. Microsoft also recently laid off a significant amount of QAs and SDETs, which will have an obvious effect on how defective or profitable their software will be.
In a way, Microsoft has found a way to profit off of defective software, which is brilliant in itself and you have to give them credit where it is due. Even though such a relationship dynamic between Microsoft and their partners may actually be a violation of the Sherman Act if it’s intentional, it would still be a brilliant crime if that were the case. They may be the Buick of software companies and their logo may look like painted Borg cubes doing their best Voltron impersonation, but they are anything but stupid you would be wise to remember that they do not generate almost $100 billion dollars per year by accident, nor are they shy about discussing where the majority of that comes from.
The Microsoft Hustle was originally published in Hacker Noon on Medium, where people are continuing the conversation by highlighting and responding to this story.