Why Microsoft has been making such a habit of changing its mind |
Register here for our next TechFlash Live networking event, March 23, featuring an expert panel discussing the future of online advertising.
Microsoft surprised mobile-phone software developers last week by reversing its plan to charge them for minor updates and fixes in the programs they submit to its upcoming Windows Mobile application store.
But maybe the switch shouldn’t have been such a surprise.
Microsoft seems increasingly willing to reverse course on policies and practices large and small — including software usage rules, worker perks, Windows 7 user account controls, gay rights legislation, and its decision not to require some two dozen laid-off employees to return those accidental overpayments, after all.
In many cases, the decisions are applauded as open-minded responses to feedback from partners and customers. But there’s a fine line between flexibility and chronic flip-flopping. Some industry analysts wonder if the company is too often putting itself in positions that require it to publicly change its mind.
“The good side is that it does demonstrate that Microsoft is listening. It’s paying attention, it’s open to feedback and it’s open to responding, too,” said industry analyst Michael Gartenberg, vice president of strategy and analysis at Interpret LLC in New York. “On the other hand, when you do that too much, it does raise the question of why you didn’t think of these things in the first place, before you went public with them.”

In the case of the Windows Mobile application store, the company initially indicated that it would consider software updates and fixes made after seven days to be the equivalent of new application submissions, potentially costing developers an additional $99 if they had exceeded their initial five-application allotment.
The idea was to “make sure that people aren’t just submitting stuff to submit stuff, but there’s actually value” in the changes they’re making, explained Aaron Woodman, director of consumer experiences for Microsoft’s mobile communications business.
Microsoft wants to make sure it has the resources to test “significant changes” developers make in their applications, Woodman said. But after hearing the feedback, the company has changed the policy so that developers won’t be charged extra for “incremental upgrades,” such as a minor bug fix in a submitted application.
Woodman pointed out that the Windows Mobile store is a new initiative for the company, and as a result, it’s a learning experience, as well.
“Our intention is to work with ISVs (independent software vendors) -— we’ve always had a history of doing that,” Woodman said. “We’re going to look at that feedback, be nimble and make changes that serve the needs of the ISVs and consumers.”
The most high-profile flip-flop at the company has been its internet search brand — which started as MSN Search, then became Windows Live Search, then Live Search, and now may be switched to “Kumo” or some other name entirely.

Other changes have been more subtle. In June 2007, Microsoft briefed reporters on a plan to relax its rules for which versions of Windows Vista could be run using virtualization software on Macs and other alternative computers. At the last minute it changed its mind, keeping the rules in place — only to later change its mind again several months later and relax the rules anyway.
In 2005, the company reinstated its support for workplace gay rights legislation after coming under criticism for switching its stance to neutral on the issue.
In 2006, the company brought back many worker perks -- including laundered towel service -- after coming under criticism for taking them away.
In February of this year, the company agreed to make changes in how it handles user account controls in the upcoming Windows 7 operating system after initially insisting that the security problems cited by bloggers weren’t a cause for concern.
Also in February, the company sent letters to about 25 laid-off workers asking them to refund the excess severance they were accidentally paid. Within days, the company reversed course and said it wouldn’t ask for the money back.
To be sure, there are many times when Microsoft sticks to its guns in the face of negative feedback. In recent weeks company has repeatedly reiterated its support for — and employment of — immigrant workers on H-1B visas, despite criticism from U.S. Sen. Charles Grassley, R-Iowa, and others who say the program isn’t fair to U.S. workers.
The need for Microsoft to reverse course sometimes reflects its decentralized corporate structure, said Matt Rosoff, an analyst at Kirkland-based Directions on Microsoft. Empowering product groups to make decisions means that sometimes those decisions end up being overruled later by upper management, particularly if the business implications end up being bigger than originally envisioned.
“Every product group is pretty autonomous,” Rosoff said. “I think it’s a good thing.”
Microsoft co-founder Bill Gates was notoriously stubborn, but the company’s relatively newfound flexibility doesn’t appear related to his departure from day-to-day duties last year. Instead, industry analyst Gartenberg points to Microsoft’s U.S. antitrust trial, in which its every action was scrutinized. In this new era of its corporate life, Microsoft wants to be perceived as responsive to criticism, even if that makes it seem sometimes as if it’s constantly changing its mind.
It’s not necessarily a bad thing, said longtime Microsoft observer Mark Anderson, publisher of the Friday Harbor-based Strategic News Service technology newsletter.
“It’s hard to change your mind publicly and not look bad,” Anderson said. “But it’s a sign of intelligence that when the things around you change, you change. That’s called Darwin in action. Adaptability is good.”
Update, Friday evening: Microsoft cancels campus bar.
Todd Bishop is co-founder and managing editor of TechFlash. He has covered Microsoft and the technology industry for more than five years, most recently as a daily newspaper reporter and blogger based in Seattle.
READ FULL BIOGRAPHYSeattle University Software Engineering
Chinwe Okeke (MSE’08) pursued her graduate degree while working as a developer and technical analyst for the Boeing Company. She picked the SU-MSE program for small class sizes and real world learning opportunities offered through the academic service-learning and capstone projects.
The MSE program at Seattle University is geared for working professionals with classes offered in the evenings. The program builds upon the computing experience of its students and offers courses in a variety of technical and management areas of software engineering, with an emphasis on teamwork and a disciplined approach to problem solving.
Marchex is one of Seattle’s largest ad technology companies with 300+ employees providing call and click based performance marketing products, and managing over $100m in ad budget for tens of thousands of advertisers. Our customers range from local businesses to the Fortune 500.
Our talented and creative product engineering group is hiring.
If you are an innovative software design engineer interested in solving difficult problems at scale, across a wide array of technologies from Lucene to Hadoop to Asterisk and SIP then we’d love to hear from you!
Apply now.
Technology Tax Planning – Did You Take The Deduction?
Technology companies require professional advisors who can assist in all aspects of the business. The BDO Technology Practice provides a full range of services tailored to help address the changing needs of domestic and international companies. In addition to core audit and tax services, BDO professionals can assist technology companies with:
· Revenue recognition
· Business combination accounting
· R&D tax credits
· Compensation and benefits
· Business valuations
Backed by 38 national offices and an international network in 110 countries, we have the domestic and global footprint to serve growing technology companies. Contact sphilpott@bdo.com (audit partner), mreeves@bdo.com (audit partner), psmith@bdo.com (tax partner), tzambito@bdovaluation.us.com (valuation), tfiscus@bdo.com, Director, 206.624.2020