Last week, Jack wrote about significant announcements made by Dropbox, Slack, Google, and Okta, and he referred to a conversation we’d had about companies like this and how they’ll fare in the face of stiff competition from Microsoft. In particular, we talked about Dropbox and MobileIron, both of which make products that I love. I believe that their road to growth is going to become more challenging because of Microsoft’s increasing level of involvement in their respective spaces, while Jack believes that we have more flexibility today and that there is plenty of room to coexist and even switch between platforms as needed.
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Call me a cynic, but while I agree that there is a lot of flexibility today, I’m not convinced that it will matter because I’m pretty sure I’ve seen this playbook before. Microsoft has made it a practice to sit back and observe a new technology that was made possible by APIs that they provided or standards that had evolved industry-wide, seemingly ignoring or dismissing it, until they determined it was a space in which they wanted to play. Granted, I can’t think of a situation where Microsoft has put anyone completely out of business (even NDS, well, eDirectory is still around in one form or another), but it seems like once Microsoft sinks their teeth in, only the strong survive.
There are other examples throughout history. Office wasn’t the first productivity suite. It gradually usurped the top spot from other products like Lotus 1-2-3, WordPerfect, and Quattro Pro. (Those last two are still a thing!) Exchange is another great example. By the late 1990’s it had all but replaced other non-Microsoft email servers. You could still find the odd GroupWise or Lotus Notes environment (my last “real” job in 2006 used all three platforms! I was not the email admin.), but the writing was already on the wall for them. Only the most devout IBM shops are running Lotus Notes today, and most other companies that don’t use on-prem Exchange are using Office 365 or Gmail.
Which brings me to the modern version of this discussion. As flexible as this new world can be with regards APIs that support interoperation between platforms, the ability to build upon new standards, and support for multiple identity providers, when a customer is faced with a decision to use the product from Microsoft that more than likely comes with their Enterprise Agreement or move to a third-party platform, which do you think they’ll choose? For many companies, there would have to be a large gap in feature set to do anything other than choose the Microsoft route when the Microsoft product is “good enough.”
Hyper-V is a great example. When it was first released it mostly a laughable alternative to ESX. Today it’s far and away the number two hypervisor in the world. Microsoft missed the boat during the first movement towards virtualization, but managed to wrangle a significant share of the market once they were ready. And on top of that, they leveraged all the newfound APIs and standards that didn’t exist when they first got in the game to do it.
Of course, we’ve all seen this play out in the desktop virtualization space, too. Though Citrix has survived numerous “Citrix Killer” efforts from Microsoft (our term, not Microsoft’s), many others have failed to hang on. Jetro, GraphOn, HOBlink, and many other have fallen by the wayside as Microsoft added feature after feature to make RDS more usable (in spite of the flexibility that they added while taking advantage of Microsoft’s protocol and APIs). Both Citrix and VMware have done a great job building a platform that works on top of RDS while adding features, but it takes large companies with deep relationships and deep pockets to make that sort of thing happen.
That said, Citrix has been affected by Microsoft doubling down on certain technologies, too. They deferred app streaming capabilities to App-V some time ago. More recently they announced an “embrace and extend” relationship with Microsoft InTune and XenMobile. Who’s to say that in a few years when OneDrive is more widely accepted that Sharefile won’t take the same path? And that’s all from a company with close ties to Microsoft!
You can see this taking shape today
Okta, Dropbox, and MobileIron are good examples of how this time-honored tradition still applies today. With regards to Okta, as companies move to Office 365, they’re embracing Azure ID, which means that they’re increasingly relying on Microsoft to handle their users’ identities. If a company is already married to Microsoft for its identity services, and those services already provide the modern services that the customer needs, how likely are they to also use Okta (a company that Microsoft once de-invited and then reinvited to a conference due to the competition)?
MobileIron does EMM, and they do it very well. They, like VMware and Citrix, have also bought into the concept of Unified Endpoint Management, which lets you manage Windows 10 devices the same way you manage mobile devices. It’s a cool concept, but guess what? Microsoft is the one that made the APIs available to do that sort of thing. Microsoft also makes an EMM product, which means that while on one hand APIs and standards have helped MobileIron exist, those same things make it possible for Microsoft to dominate the space.
Dropbox is another example. I am a longtime Dropbox subscriber, but as successful as Dropbox has been, it’s quite possible that the Dropbox for Enterprise product is too little, too late. Why would a company that has invested in Office 365 (which currently has more than 70 million monthly subscribers) choose Dropbox over OneDrive when they’re entitled to OneDrive? Dropbox would have to have some killer features that make it worth the additional investment. They’re working on those features, but their efficacy in the fight against Microsoft is yet to be determined.
Standards, APIs, and interoperability aside, life is just easier when you get all this stuff from one location, especially if you’re entitled to it as part of your enterprise agreement. Sure, there might some bolt-on products that you add in that leverage all the new APIs and standards and extend the feature set to suit your needs, but the backbone of it all will be Microsoft...again. You can bet this keeps Okta, Dropbox, and MobileIron up at night, along with many other companies looking to establish a gap between their platform and the quickly-approaching alternative (and eventual de facto standard) from Microsoft. To say those companies aren’t concerned would be foolish.
Getting to the point
This all sounds pretty bleak, I know. And calling out Dropbox, MobileIron, and Okta makes it seem like I’m picking on them, but they’re the independent figureheads at the top of their respective heaps. Each of them likely has the reputation and resources to hang around and find ways to differentiate themselves enough to justify interest, but what of the other products out there?
My point is, Microsoft has a pattern of taking a long time to get rolling before becoming the de facto standard in a given space. In that time, companies in spaces adjacent to what Microsoft is doing appear, grow, and are acquired. Those ones that are left have the unenviable task of trying to hammer out a corner of the market that can withstand the inevitable shakeup created by Microsoft when they finally decide to make an entrance. I don’t see that dynamic changing, even with extensive integration and API capabilities, mainly because I’ve seen it before so many times.