Reader Feedback: You Are Preparing for a Recession
We wanted to know last week whether and how
you were preparing
for an economic slowdown. Well, you are. Joseph, though,
hopes that his business has things pretty much under control:
"We are definitely preparing. Many of our customers appear at the
moment to be scaling back on new purchases; luckily we provide managed services
to many of our customers, which will allow us to maintain a steady revenue
flow, since it would be difficult for those customers to do without our support
services as we basically are their IT department. However, the scaling back
of the purchases of new machines and other equipment does also hurt our bottom
That's the beauty of managed services -- that steady revenue stream. Perhaps
feeling a tad less confident than Joseph, James proposes some more radical suggestions:
"As the economy slows down, people are not going to be able to pay
for legal software and the high costs of IT repair, nor do constant changing
of operating systems. We need to take a step back so that we may go forward
again. I feel that we should continue to run Windows XP and that Microsoft
should produce plug-in modules for Windows for people to try out. These modules
should be free and not on a trial basis only. These modules should have the
ability to be uninstalled.
"I say make Win XP run more stable and make XP Pro the standard.
This will remove issues between the home and office worker and the driver
being written for the OS. Once we have reached a plateau, then we take on
a new operating system with the new improvements that consumers like the most
and need the most. Too many options of operating systems have caused an industry-wide
lack of drivers and usable application software. We are trying to drive forward
too fast. Today's operating system uses far too many system resources, causing
a major lack of speed."
So, James says, as the economy slows down, maybe we should, too. Or maybe we'll
have to. We'll see.
While we're here with reader feedback, let's throw in a response from Michael
in Australia, mate, who writes about Microsoft's shifting
executive roster and the shifting strategy that seems to be going with it:
"I personally went through some of what you are describing with Microsoft,
though on an infinitely smaller scale. I purchased and built up a small, regional
IT shop and opened a second shop in another thriving regional centre. Then
there were some changes in my life that required me to scale down my business
interests, so I sold the business. I worked with the new owners for six months;
the business was healthy and profitable for those six months. Then the new
owners made the decision to chase the consumer market at the expense of their
corporate clients, and within 18 months the business was gone.
"Now, one of the points that I'm going to make with this story (be
it far removed from the scale of Microsoft) is that there was absolutely nothing
wrong with the business skills of the new owners. One of the new owners was
a regional manager for a financial company with many years of experience in
various small businesses in his past. The other was a seasoned IT manager.
The parallel I'm trying to draw here is that regardless of the experience
and skills of the management and the health of the business now, if your business
gets too focused on pursuing a particular market you may end up in a dry creek
(isn't Microsoft currently trying to woo the small business market?).
"Before anyone replies and says, 'Microsoft has sufficient resources
to ride out such a mistake,' you've got to ask yourself the question: 'Would
you invest in a hydroelectric power station that has cracks in its dam wall
and gets its water from a desert catchments area?' Yeah, sure, they've got
a diverse portfolio of electricity (read: OS), water (read: Office), shares
(read: shares), etc., but..."
Michael, that's why we suspect that Microsoft is trying to move the market
rather than be moved by it. Chasing the rabbits of SaaS could end up being costly
and counterproductive. But developing your own (or, in this case, Microsoft's
own) strategy and using your considerable size and influence to "help"
customers conform to it on your schedule could be a successful blueprint for
riding out the eventual decline of fat-client, on-premise computing. It's all
about using influence rather than being influenced.
Oh, and while we're here, there was one more reader comment we enjoyed this
week. Pete took issue with our reference to the "perfect"
New England Patriots:
"Don't you mean the CHEATERS from New England? I wonder
if there will be an episode of that late-night TV show, 'Cheaters,' with Bill
Belichick being surveilled and confronted by Joey Greco and his band of investigative
thugs with video cameras?!"
If anybody's going to do any surveillance, Pete, it'll be Belichick himself.
And, as LaDainian Tomlinson (RCPU's favorite player and fellow TCU alumnus)
said -- about the Patriots -- not so long ago: "If you ain't cheatin',
you ain't tryin'."
Thanks to all who took the time to write. The mailbag is always open: email@example.com.
Posted by Lee Pender on January 24, 2008 at 11:54 AM