But Microsoft Can’t Scale!

One of the more interesting conversations I had during my tenure while President and CEO at Xtras, Inc. was in October 1997 when Network+Interop came to Atlanta for it’s annual visit. One of the Microsoft Windows NT Server Product Managers Luis Bonifaz decided stopped by my office for a visit and gave me an education of how Microsoft positions its competitors; I’ll never forget it.

Anyway, for those of you who remember those early formibable days when Windows NT Server first became a serious operating system, around v4.0, it was a fun time. In those days, the major systems players were feeling (rightfully) threatened and so they came out with continuous anti-NT campaigns with the simple message of:

Windows NT Server Can’t Scale!

Many vendors jumped on the "Let’s bash NT" bandwagon, but probably the loudest two were Scott McNeely of Sun Microsystems and Larry Ellison of Oracle Corporation. Being a Microsoft kool-aid drinker at the time (Xtras was running a reseller focused on Microsoft systems and developer tools after all) I was of course ready to do rhetorical battle with ol’ Scott and Larry. But what Luis told me was truly educational and amazing; talk about an on-the-job MBA in marketing!

Luiz told me that, unlike most companies that focus on attempting to position their company in their prospect’s eyes, Microsoft was excellent at positioning their competitors, and further that Microsoft trained all their marketing people to think this way. Luis then went on to say that the anti-NT crowd had been trying to taint NT with the "can’t scale" brush for quite some time as he started drawing a triangle on my whiteboard to illustrate. He said that the Microsoft strategy was this:

"We’ll accept that. We’ll accept that we can’t scale up to operate the largest systems on the planet. Okay, but we’ll counter with the fact that you can’t scale down and we can, and that market is much, much larger!"

Using his triangle he showed the marketshare they attempted to guard (in yellow), and the marketshare they didn’t even attempt to take from Microsoft (in blue.) Luis continued:

"Then we’ll just continue working it," "We’ll continue improving the operating system and we’ll continue riding Moore’s Law. Eventually we’ll add the features that are needed to scale, by those who demand the bigger systems, and eventually the hardware we run on will be able to match all but the most demanding applications in the world. And then we will be able to scale; from the bottom all the way to (almost) the top. And the absolute top won’t really matter. At that point, what do you think will become of the "NT Can’t Scale" crowd? Like Zack Mayo (Richard Gere) in "An Officer and a Gentleman" they will have "nowhere else to go."

Fascinating. Anyway, it was fascinating to me back in 1997. And here we are almost ten year’s later; have Luis’ projections proven accurate? I’d say he was pretty close to correct.

P.S. What is all the more ironic about this story is how Microsoft doth protest too much these days about open-source software and Web 2.0 companies when they make pronouncements about not being able to scale and/or they are not being good enough for prime time. If history is any indication, Microsoft had better watch their back or people may soon be saying: The King is dead. Long live the King. :-)