Hardcore Software by Steven Sinofsky

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059. Scaling…Everything

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059. Scaling…Everything

“Microsoft Becomes First $500-billion Company" —Bloomberg News headline July 17, 1999

Steven Sinofsky
Dec 19, 2021
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059. Scaling…Everything

hardcoresoftware.learningbyshipping.com

It is one thing to change a product in order to meet market needs, but entirely another to change the culture. Scaling the teams and processes to meet the needs of our high-paying enterprise customers was another effort, and one that came right when most external indicators made it seem like we were doing everything right, thus making change more difficult. In practice, we had significant challenges meeting the needs of enterprise customers—product, support, quality, and overall enterprise-ness. We needed to bring not just our software to enterprise readiness, but our organizations. The best way to do that is to live through a few crisis moments, whether self-inflicted or not. Microsoft never met a crisis it didn’t enjoy to some degree.

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Increasingly, our newly minted enterprise customers grew frustrated with Microsoft’s readiness as an enterprise partner. When an enterprise customer is frustrated, they describe the company as a vendor rather than a partner. A vendor is what we used to be, or so we thought. We had to up our game.

Customers were sitting on a mismatched pile of software from Microsoft, some of which was by all accounts being ignored by us in the product groups. There were ATMs running OS/2, which we long ago turned over to IBM. Banks in Europe were running Word and Excel on OS/2, which we made as essentially a one-off. One of the leading business magazines had a publishing system that used Word 2.0 and Windows 3.0, from the early 1990s. That was 8 years ago, an infinity in software years.

Slide: Office Support Roadmap showing how each version of Office is supported for many years.
A slide from the tail end of the company-wide process to design a Support Lifecycle showing just how long Office versions would be supported. Imagine intentionally saying code written in 1998 has full support through 2006? Further, imagine supporting all of these code bases in parallel. We didn’t just imagine it but signed up to do it. Yikes. (Source: personal collection)

Business is business and Microsoft needed to change. While it took us more than a year of meetings, in 2002 we finally announced a Support Lifecycle Policy. To much press and customer outreach we announced that Microsoft products would now have a minimum of five years. In the Microsoft blog post describing the new policy, the CVP Product Support Services, Lori Moore (LoriM), explained that we “worked closely with customers, business and industry partners, leading analysts, and research firms”. Noticeably absent from that were the product groups that would be on the hook to deliver bug fixes and updates to customers covered by Software Assurance.

It should be no surprise then that Microsoft’s fully distributed and empowered product groups interpreted this policy with differing levels of enthusiasm. Did it apply retroactively? What about products designed for consumers? What if we have multiple releases over five years? What if product releases took more than five years? What if Exchange has one interpretation and Outlook another? The intended effect of this effort was to do good by enterprise customers.

Microsoft Bows to Customer Pressure, Extends OS Support 15 October 2002 Michael Silver Microsoft's new, extended support plan is good news for enterprises that want to run client operating systems (OSs) longer. However, it will still be difficult for them to skip packaged releases of Windows. Event On 15 October 2002, Microsoft announced a new software support life cycle policy. Business and development software will have a "mainstream" life of five years, during which time it will be fully supported. Extended support will be available for the next two years after that, for a fee. Customers who need nonsecurity hot-fix support will have to pay for an extended support contract. First Take When Microsoft announced its support policy for client OSs in February 2001, we applauded it for giving users guidance on support time frames that had previously been uncertain. However. we also criticized Microsoft because its four-year supported life cycle was too short for most enterprises. We urged enterprises to complain and ask Microsoft to extend its support cycles. Microsoft has now bowed to customer pressure and created a seven-year support life cycle. Moreover, while it previously only had a published support life cycle plan for the client OS, the new policy covers all its software, including versions of Office and servers, starting with all current software. Microsoft is also now accepting Office 97 security issues for review through 16 January 2004. While this does not unequivocally state that it will fix all security bugs for free, it lowers the risk for Office 97 users. Windows 95, 98, and NT Workstation v.4 are not covered by this announcement and retain their previously published dates for end of support. The client OS most affected is Windows 2000 Professional. This was scheduled to enter the extended phase of its life cycle on 31 March 2003, meaning that in less than six months it would have been hard to get new hardware with Windows 2000 preloaded. New bugs would be fixed only if a customer paid Microsoft to do so. Direct licensing to original equipment manufacturers has now been increased to four years, up from three, and we expect that most vendors will continue to offer new PCs preloaded with Windows 2000 as late as February 2004. For enterprises that have not spent significant time working with Windows 2000, we recommend skipping it and plan to implement XP - provided their critical applications are supported by it and they can bear any support risks of nonsupported applications However, the biggest hurdle enterprises have had trying to implement XP is that many independent software vendors (ISVs) will not officially support their software on it. For enterprises with ISV support issues, the longer support life cycle for Windows 2000 makes it a more viable alternative. Enterprises that have been installing Windows 2000 will be able to continue doing so, but we are still skeptical that they will be able to skip XP entirely. We recommend that most enterprises plan to install Windows XP on new PCs starting no later than early 2004. Windows 2000 PCs do not have to be upgraded.
The 2002 Gartner quick take on the first announced Product Lifecycle. The key takeaway was that Microsoft bowed to customer pressure and stepped up. Still there is more to be done. (Source: Gartner)

Instead, it was just an early step in making the transition to a new operating model. Customers interpreted the Lifecycle as a license to deploy what they could or would and then freeze the infrastructure for at least five years. Imagine in our fast-changing technology world, just freezing a company’s information infrastructure. Five years was the minimum. Customers could even buy longer support contracts and they did so in droves. It meant that even five years from now, product groups were on the hook to support products that no one was actively working on.

That said, on the Office team we created a team that grew significantly over-time of full-time engineers dedicated to what we termed Sustaining Engineering. The team, Microsoft Office Sustaining Engineering (MOSE), originally envisioned by Excel test manager Carl Tastevin (CarlT) and then led for many years by former Word test manager Jeanne Sheldon (JeanneS), prided itself on being a direct connection to customers. They would spend the time to understand the context and customer environment driving problems and were reliably the best source of information anywhere for how the product was doing in market with customers. The team was not an outsource model for quality and fixes because the product team developers that created the problems were accountable for fixes. It was a fantastic model for us and one we would later replicate in Windows which had gone full outsourcing after Windows XP shipped, which turned out to be less than ideal.1

The industry trade press loved talking about “10 year minimum” which was also our lead talking point. This approach cemented the policy that essentially products would be supported forever. Windows XP was supposed to have 10 years of support, but it was extended at least two times. (Source: ComputerWorld, May 31, 2004)

It would not take long, not even eighteen months, and the policy would again be updated. The feedback was less than positive on the first policy, mostly because it was uneven across the company and hardly long enough compared to traditional enterprise partners. This time the product groups were deeply involved in the process, in what grew to a major corporate undertaking. Since the first announcement, most teams released major new products, and all had built out engineering teams that were able to handle the new volume of support issues from enterprise customers. I attended many of the meetings of the product leaders who were trying to agree on a more uniform policy. The group was working well together but not converging. Microsoft’s multiple billion-dollar businesses each serving distinct customer types and each with substantially different release schedules were struggling to arrive at a more uniform policy that was also longer. Some product groups aimed for very long support terms and others wanted nothing to do with previously released products. Office was in the middle. The position depended entirely on the primary buyer such as IT professionals, OEMs, or general corporate buyers.

Support Lifecycle - THANK YOU Andy Erlandson To Vanessa Lee; Albert Chu (LCA); Jill Friar; Craig Hajduk; Mark Hassall; Kirk Gregersen; Jason Demeny; Raju Malhotra; Ramona Ramadas; Ines Vargas; Mike Torbenson; Sarah Davidson; Larry Meadows; Michael Murphy (GSO); +63 others Cc Lori Moore Ross; Mike Sinneck; Paul Flessner; Brian Valentine: Steven Sinofsky; Eric Rudder; S. Somasegar; Walid Abu-Hadba; Bob Kelly: Chris Jones (WINDOWS); Bill Landefeld; Brad Goldberg: Bill Veghte; PSS Leadership Team; +2 others Media and analyst coverage recap: Support Lifecycle Outlook item Tue 10/22/2002 5:23 PM I apologize in advance for the length of this mail, but with a project the scope of lifecycle, it's important to recognize all contributors for a job well done. If you are on the To: line, then you were an important part in helping Microsoft to launch its new support lifecycle and for that, I want to personally thank you. This was a large undertaking that would not have been possible without the cooperative, cross divisional teamwork displayed by the entire team. Last February when Steveb told us to go get this done, I was a little worried that we might not be able to pull it off. However, in each step of the process, with both negotiation and compromise, reasonable and patient minds prevailed. I was so impressed by everyone that was part of our Lifecycle team. Truly, it is experiences like this that make Microsoft such an awesome company…as big as we are, we can still pull together to drive big change that does right by our customers! Attached is the recap of media and analyst coverage that you all helped to achieve. While every one of you helped to make MSL a reality, I want to call out a few individuals who were with us for the majority of the project and frankly we couldn't have done it without them... Kathy Prince - Our Program Manager who pulled it all together. Long hours, meetings with hundreds of people across the company, painstaking review of every description of every product and lifecycle date that we covered. Fantastic job! Vanessa Lee - Communications guru who did so much toward the success of this launch. Couldn't have done it without youl Jill Friar & Sarah Davidson - Jill was our representative for the Server OS from day 1. We used Jill's expertise with a prior NTS lifecycle announcement. Jill was right there with Kathy in leading the entire project. When Jill had to leave us a month before we announced, Sarah stepped in flawlessly. Craig Hajduk - Representing the Server Apps space from day 1. Craig's knowledge of the industry and unique ability to simplify tough subject matter were called on often during the entire project. Craig coordinated our customer focus groups and this feedback was likely the most used of any feedback we collected. Mark Hassall - Representing the Client OS space from day 1. Having done the most in the lifecycle arena previously with announcements on NTW & Win9x, Mark often served as our sanity check with new ideas.and hey, he had to work through the pain of a lot of IE support lifecycle confusion. For keeping me out of this, I really thank him! © Kirk Gregersen - Representing Office from day 1. Kirk was always super responsive and conscientious. He had tough issues to work through with all of
This is the “we’re done” email from the Product Support Services manager who coordinated the company-wide initiative that was about 18 months in the works. Just to give an idea of the scope of this project, the mail was addressed to 77 people across the company. The CC line are all the product team executives. Note: this is just part of the mail. (Source: personal collection)

In a moment of frustration for how long this was dragging out, I, probably the more senior product group person in the room, suggested (with some force) we should all settle on a ten-year support offering. This would make customers happy and would put this issue to rest. Our competition, such as IBM, supported products for decades. How much support would customers really expect nine or ten years from now for a product long forgotten? What a huge mistake I made. In hindsight, I was intoxicated with the idea of making sure the field (and SteveB) knew we “got it” in the product groups and also over-confident with the idea that we could execute on such a commitment. I really can’t believe I thought this was a good idea—not only for Microsoft but for customers to rely on it. Think of all that changed ten years prior or all that would change from 2000 to 2010, especially considering how most customers were still far away from deploying email and the internet. Yet, SteveB and the field support and sales teams were incredibly happy and thankful for the teamwork and support from the product groups it took to make the updated policy a reality.

Microsoft Becomes First $500-Billion Company From Bloomberg News REDMOND, Wash.-Microsoft Corp. on Friday became the first company to op $500 billion in market value, equal to he ninth-largest economy in the world, Is its shares closed at a record high. Chairman Bill Gates' holdings in the software giant neared $100 billion as the stock climbed $5.06 to close at $99.44 in heavy Nasdaq trading. The market value hit $507.5 billion. The shares surged on prospects that the company will issue a tracking stock to more fully value its Internet assets, primarily its MSN network of Web sites. The software maker is likely to announce plans to issue such a stock soon, as early as this month, according to people famil- iar with the situation. Microsoft's shares have risen almost 500-fold since it went public in 1986, fueled by the explosive growth of per- sonal computers and the fervor of co- founder Gates, the world's richest man. Microsoft, founded in 1975. consistently posts earnings growth and profit margins of more than 30%. It reports earnings Monday and is expected to beat analysts' estimates. "They continue to drive the personal- computer revolution. " said Robert Finch, a portfolio manager with Altus Invest- ment Management Inc., which owns more than 7.9 million shares. "They plan to go beyond the PC platform to drive the benefits of micro- computing to a whole host of products and devices that people are only just starting to talk about. Microsoft also won a legal battle Fri- day when a jury found it didn't deny access to its computer code to a small Connecticut software company, Bristol Technologies Inc. In its antitrust suit, Bristol had sought up to $263 million in damages. A landmark antitrust trial involving Microsoft put some pressure on the price earlier this year from which the company recently rebounded. It stands accused by the Justice Department and 19 states of using illegal tactics to extend its near- monopoly in computer-operating systems to the Internet. The Redmond. Wash.-based com- Market Values Microsoft is the most valuable company in America, measured by market capitalization (stock price times number of shares outstanding). Market caps for some major U.S. firms: Company Stock value (in billions) Microsoft General Electric Intel Cisco Systems Exxon AT&T Merck Coca-Cola America Online Procter & Gamble McDonald's GM $508 389 223 213 193 177 168 160 130 120 60 45 Source: Bloomberg News Los Angeles Times pany's $507.5 billion value is 34% higher than the gross domestic product of the Netherlands, estimated at $378 billion. If Microsoft were a country, it would rank as the ninth-biggest economy in the world, behind Spain with a GDP of
Around the world, newspapers and broadcast carried the story that Microsoft was the first company to cross the $500 billion dollar market capitalization mark. This happened in the peak of antitrust activities making the story even more exciting. The list of companies Microsoft surpassed really felt like a changing of the guard when considering the likes of GM, Exxon, Merck, etc. (Source: Bloomberg wire service, July 17 1999) To save looking it up, here’s the comparisons today (chart): $2.4T (0.5), $101B (389), $207 (223), $254 (213), $262 (193), $170 (177), $192 (168), $253 (160), - (130), $390 (120), $199 (60), $85 (45). By the way, Apple hit $10B in 1999 on the heels of Steve Jobs return.

You could feel the bubbles and the froth everywhere as the end of the millennium approached in the Fall of 1999.

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