Microsoft, FDR And Escaping The Prison Of The Past

America still gropes for a generally accepted conceptual past template to explain the present and future. The most hegemonic meme is ‘The greatest crisis since the Great Depression’. The slogan is everywhere. It taps into a hazy Jungian collective memory and aligns American expectations for Obama. The meme’s 7 words are shorthand for 100 days, public works — the dimly recalled 3-4 pages from high school American history textbooks.

Redmond and the American Future

We’ve all seen how America’s soupy consciousness sucks it in from blog and cable micro channel niches, silos, stratifications and spam. The dominant meme itself then becomes a news story as contrarians fight for web hits and fleeting relevancy.

In 1933, as today, a new president stepped into the White House, vowing change and decisive action at a time when a banking crisis posed a grave threat to the nation’s economy.

The economic morass that confronted Franklin D. Roosevelt 76 years ago was undeniably deeper and more ominous than the trouble President Obama is facing. Yet, according to economists and historians, there are also some telling similarities and cautionary lessons to be drawn from the experience of the Roosevelt years in the 1930s.

And so on. One does wonder what FDR would have encountered had Hoover’s Commerce Department and then the newly created FCC not nationalized radio spectrum and protected government and incumbents with licenses and regulatory control. A small reason there to be thankful Obama is not following the Hoover-FDR thing too closely.

Beyond FDR

But we digress. We offer an alternative meme to FDR. One that resonates with today and looks foward with honesty.

Consider Microsoft and its latest earnings report. Microsoft’s setbacks were long anticipated by technology watchers (in fact most reported in December the layoffs would be 15,000, not the actual 5,000). Much like the American economy in 2008-2009, Microsoft is reaping the bitter harvest of its once seemingly permanent business model/license to print money. Redmond’s prognosis is a better template and cautionary tale than FDR when thinking about the post-Warlord economy.

The Microsoft Economy Is Not Sustainable

First, a short recap why Microsoft, like the American economy, suffers from structural flaws. Most know Redmond’s billions accrue from its strangehold on the desktop environment: (a) the operating system; and (b) office applications. Think of Microsoft operating systems as the American economic model – pervasive, loathed by some, and the epitome of the Davos set.

Unfortunately for them, Vista, Redmond’s latest operating system, is a fiasco. Now the recurring butt of Leno monologue jokes, it is the IT industry’s Edsel. It may go down as one of the biggest corporate blunders in American history.

Fine. That’s one product. More damning, however, the world environment changed. Customers and enterprises are migrating to web-based applications instead of the old Office Suite. It doesn’t matter so much which operating system is around. A surprising rise in the new ‘netbook’ segment of ultra portable notebooks in 2008-2009 caught Microsoft flat footed. The hot-selling smaller devices can not run the Vista bloatware — XP remained in demand. To Redmond’s alarm manufacturers for once had the upper hand — they could always turn to the free Linux alternative. Microsoft’s comical tilting at Google wind mills via the aborted Yahoo acquisition speaks for itself.

A slight confession here — the Stiftung is not ambivalent about Microsoft. We’ve dealt with Microsoft’s Chief Operating Officer, Vice Presidents, Directors and alarmingly smug managers over decades. In both a representative capacity and other ways. With the possible exception of one defense contractor, the Stiftung never met a more duplicitous, dishonest, mendacious, anger-filled and sociopathic corporate culture. But like a broken clock (or should that be Zune?) even Microsoft can be right.

Redmond warns investors and the market that the future will not rebound to 2007 or before. Based on current economic trends and its own business model (described in strictly revenue terms for the Street) the future will unfold on a significantly lower economic plateau. Is Microsoft finished? Doomed? Hardly, but it will have to fight harder and make do with less.

This is where the Obama Administration makes a strategic error. The ‘Stimulus Bill’ is a misnomer. Obama should ‘state clearly’ (his favorite phrase – it makes a great drinking game, try it) he is proposing a stabilization bill. This is in keeping with his ‘create or preserve’ jobs meme. It’s also more accurate regarding his plans for the States. A ‘stabilization bill’ also protects him from retroactive recriminations down the road for preserving what never cratered.

As we wrote recently, Obama should come clean with the American people that there is no going back to the economy and lifestyle fueled by the tech and real estate bubbles. This means resetting expectations to circa 1994 at best. Many of those jobs related to the bubbles are gone for good. Obama is wise enough to cloak this message in fairer, more palatable terms than say the Peanut Farmer’s malaise thing. It needs saying.

Regardless Dear Reader, don’t you think we need to move beyond the imperialism of the FDR meme?