The Software Society

How digital technology is changing our culture and economy

Technology Communities: Microsoft’s Reorganization Reflects a Major Economic Trend

Microsoft’s recent reorganization focused largely on unifying its products and services. The reorganization is a symptom of a major economic trend that I call “Technology Communities” in The Software Society. Briefly, technology communities are based on families of products and services that work well together. If a buyer has a product from an effective community, the buyer is more likely to buy another or an update from the same community. There is usually a single company that is a de facto manager of a community and drives innovation in that community.

Apple is the clearest example of such a community. Apple products share many common features and work well together. The iPhone and iPad have the same operating system. New photos from an iPhone are automatically downloaded by iPhoto on a Mac when the phone is connected. iCloud can connect everything, so your iPhone warns you when you have an appointment even though it was scheduled on your Mac. The list goes on, with Apple constantly trying to add to it, including encouraging car manufacturers to build in a connection to the iPhone’s Siri. You might eventually set your bedroom alarm clock and your household thermostat with Siri.

Another major community is driven by Google, unified by the Android operating system and the pervasiveness of Google’s web search and maps, even on Apple devices. Google has been losing some control of this community; Companies such as Samsung overlay the Android OS with specialized features such as the S-Voice personal assistant, a connection to the customer that is beyond Google’s control. Google’s acquisition of Motorola Mobility and expansion of personal-assistant-like natural-language voice search are in part a response to this threat to their control of the community.

Microsoft still has a strong Windows/Office software community in PCs, but is losing a growth opportunity as communities expand to multiple devices such as smartphones and tablets. Windows 8 is an ambitious attempt to unify the Windows community across devices. Office 365 is an attempt to leverage Microsoft’s dominance in productivity software in the mobile world. The reorganization is an attempt to unify these and other efforts.

In part, the growth of communities is driven by what I’ve called in this blog “digital overload”—Too many devices, too many features, too much communication. Yes, we want many of these devices, but we’d like using a new one to be based on what we know, and not a constant challenge. The growing dominance of technology communities is a response to our reaching a saturation level with “new.” Companies assume younger members of society always want a major innovation, a position that is probably not true for the majority of that group and ignores an aging population.

In an attempt to make the next device a true “breakthrough,” companies are adding features such as gesture control that are more of a gimmick and a battery drain than a true addition to usability. A focus on always adding complexity misinterprets history. The iPhone adopted the familiar Graphical User Interface from PCs, simply using a finger as the pointing device rather than a mouse. The main applications were familiar and didn’t demand a learning curve, e.g., email and web browsing. The iPhone was an innovation, but one that heavily leveraged an established user interface paradigm. The iPad took the smartphone interface and put it on a larger device that made some features such as watching video or reading books easier, an evolution easy to master, particularly if one already had learned iOS on an iPhone.

The core impact of technology communities and feature saturation on the business of technology is not fully understood by most companies and by the business press. For example, there has been much discussion of the declining sales of PCs, usually assuming people are replacing them with tablets. The true cause is that the major historical motivation for upgrading was the core features of more speed and more memory, and most of us now have more than enough speed and memory for what we do on PCs. The future motivation for upgrading may be tighter integration with a community, e.g., built-in dual directional microphones with noise cancelling to allow us to easily speak to our ubiquitous personal assistant when using our laptop. A full exploration of technology communities and their implications is beyond the scope of this blog entry, but companies must recognize the trend and make it part of their strategic planning.

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