Microsoft and the RIAA: Blaming everyone but themselves.

It is interesting to compare Microsoft and the recording industry (RIAA). In fact, in a lot of ways, Microsoft is exactly like the recording industry. They both see their sales in steady decline. They see people no longer lining up to buy their products. Rather than looking at the cold hard truth, they both go on wild goose chases after probably-fictional “lost sales.” They both pay somebody to tell them exactly what they want to hear so they can say, “It’s not our fault. It’s because there are criminals somewhere stealing our products.” In both cases, the real truth has very little to do with piracy, but they are both apparently too stupid to see the real truth.

The real truth is that BOTH started treating their vast numbers of legitimate customers like criminals in order to catch a few bad eggs. In both cases, they cared so little about their customers that they were willing to put every customer through incredible inconveniences simply to catch those few criminals. In both cases, they spend cash lobbying Congress to further limit consumer rights and spend even more cash pursuing those few criminals they imagine are stealing most of their profits. In fact, they spend far more than the total profits they theoretically lost (which are most likely fictional anyway, since those people would not have bought the product to begin with). That seems pretty stupid to me.

In both cases, technology moved forward and consumer demands changed and they did not notice. They don’t care about anything but their own bottom line, so they ignored the changes. In both cases, they are managed by relics who stubbornly ignore what the entire world is telling them and only listen to what their paid consultants say. When you pay somebody to say something, they say what you want. In both cases, consumers got fed up and started looking for alternatives. In both cases, their customers are leaving in droves. Neither grasps why their customers are leaving. Both blame criminals.

Let’s look at an imaginary scenario. (Note that Walmart would NEVER do these ridiculous things because they actually care about their customers. I only use them because they are simply huge, like Microsoft. In reality, I think Microsoft could learn a LOT from Walmart.)

Example 1: Imagine if Walmart decided to require all 200 million of their customers to shop naked because they suspected 1000 of those people might be planning to steal lawnmowers that would probably only cost Walmart a total of $100,000 in bottom-line profit. Sure, they admit, it’s a bit inconvenient for their other customers, but Walmart feels it simply MUST get that $100,000 extra profit at any cost! (Yes, the example is exaggerated, but I really feel that ignoring the rights of the many to pursue a few is an ignorant and insulting practice.)

Example 2: Now, imagine if Walmart decided to sell their lawnmowers in 5 different versions and offer upgrades later. They decide to go ahead with this idea despite customer complaints that 5 versions is ridiculous and too confusing. The Home version of the Lawnmower would be the wheels only. Home Premium would be the wheels and the base so it could roll around and look like you were mowing. Basic Business Mower would add a handle for making it more efficient to push. Business Premium would add the motor but remove the wheels because Walmart figures businesses really don’t need wheels very often. The last version would be called Lawnmower Ultimate. It would include everything from all the previous versions with a nice paint job plus a promise of adding a grass cutting blade to make the lawnmower do something even more useful at some later date. Nine months later Walmart could release another color paint job option for Ultimate, but still no blade.

After all of this idiocy, answer this: Would those 200 million customers start looking for another place to shop? You bet they would! And then Walmart would promptly release a report saying their fears of criminal activity were justified and these sales declines were obviously caused by somebody somewhere stealing a few lawnmowers rather than buying them.

In reality, all of those customers would ask themselves, “What is the point of all the crippled versions of the product I’m buying?” Everyone realizes that it is only to sell upgrades later when the customer discovers that their product is severely crippled. It’s a ploy. It’s a trick. It’s something that would never be done by a company who cares about their customers. Everyone also realizes that charging customers for the promise of added features later is just wrong and the customers will definitely feel screwed when you never deliver on the promise. Microsoft is guilty of all of this and more.

So what is the real truth about the decline in Microsoft’s sales?

The real truth for Microsoft is that Apple treats their loyal customers better than Microsoft does. The real truth is an ever-growing number of pissed-off Microsoft customers are switching to Apple products. Why? Apple charges a fair price ($129) for a complete operating system with no upgrade versions, no crippled versions, no separate 64 & 32 bit versions and no invasive or annoying copy protection. Apple even offers really inexpensive ($199) 5 user home licenses that allow you to install the same copy on 5 machines at home. This is exactly what customers want, and Microsoft simply doesn’t care. They haven’t cared what customers want for years. They do business as usual trying to find every possible way to squeeze another dollar out of every single customer regardless of how the customers feel.

Microsoft’s accountants tell them they need to try their best to charge the maximum amount customers are willing to pay. Under no circumstances will Microsoft charge what customers consider fair. As a result, customers get a feeling like they just bought a  used car from a crooked salesman in a greasy plaid sport coat. When you purchase a Microsoft product these days, you literally walk away feeling violated. Nobody wants to feel that way. So, people are looking for someplace else to spend their money. Apple tops that list.

So am I alone in thinking Microsoft customers are now moving to Apple in ever-increasing numbers? Not at all. Pacific Crest analyst Brendan Barnicle, as quoted in a recent ZDNet article, wrote the following:

“In our Pacific Crest Mosaic surveys, we have seen increasing evidence of Apple taking share in the enterprise market. While Apple is not the only reason for the Microsoft Client shortfall, it seems plausible that it could be a larger factor than acknowledged by Microsoft. As a result, we are somewhat skeptical of Microsoft’s assumption that its Client revenue will snap back next quarter.”

So Microsoft’s sales are in decline, while Apple’s sales are dramatically increasing. Frankly, I believe Microsoft’s situation will continue to get worse until the idiots running the place get a clue. If they wait too long to change, it will be too late. There is a growing international movement away from Microsoft and instead of trying to figure out why their customers are leaving, Microsoft is still blindly focused on a few people in a third world country who may be pirating Vista. In my opinion, the few people buying those $10 pirated copies somewhere in China (or wherever) probably would not have bought Vista legitimately anyway, particularly at the crazy prices Microsoft charges.

Microsoft needs to wake up. Customer choice is what put Microsoft in their lofty position of OS dominance. It is customer choice that will remove them. It may happen sooner than they think. In fact, it may be happening NOW. They can put on their blinders and blame whomever or whatever they want, but the truth is obvious to intelligent customers everywhere. Customers simply don’t want to deal with Microsoft anymore.