This week’s podcast is about Microsoft and how they use bundles to beat competitors. As Slack found out.

You can listen to this podcast here, which has the slides and graphics mentioned. Also available at iTunes and Google Podcasts.

Here is the link to the TechMoat Consulting.

Here is the link to the Tech Tour.

Here is the link to the All In Podcast mentioned. The Microsoft discussion happens at 1 hour and 3 minutes.

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Related articles:

• When Microsoft’s Bundles Are Good vs. Bad for Customers and Markets (Tech Strategy)
• Microsoft’s 3 Big Upgrades to its 2 Platform Business Models (2 of 2) (Tech Strategy – Daily Article)
• What is Elon Musk’s Plan to 10x Twitter? (2 of 2) (Tech Strategy – Daily Article)

From the Concept Library, concepts for this article are:

• Innovation Platform
• Coordination (CCS) Platform
• Bundling
• Money War

From the Company Library, companies for this article are:

• Microsoft: Teams
• Salesforce: Slack

Photo by Ed Hardie on Unsplash

———transcribed below

Welcome, welcome everybody. My name is Jeff Towson and this is the Tech Strategy Podcast from Techmoat Consulting. And the topic for today, when Microsoft’s bundles are good versus bad for customers and markets and competition. And this is basically a reaction to the all-in podcast, which is, you know, for tech billionaires, talking about various things, really great. I mean, really it’s a good podcast, very popular. But a couple days ago, they were talking about the new EU antitrust charges against Microsoft, which were really about bundling Microsoft Teams with Microsoft Office and other things. And that gave rights to a discussion about, is bundling a problem when does it become anti-competitive, or is it good for customers? Is this bundling conversation, is this really just about the Windows monopoly? It was a pretty cool discussion. It went on for a long time for this podcast. The podcast, if you’re curious, it’s all in podcast number 185. The title is Presidential Debate Reaction and the Microsoft discussion begins at one hour in three minutes. I’ll put that in the show notes if you want to click over. But anyways, listening to this, what jumped out at me was, “Hey, I think I know more about this than these four,” because the conversation was a little bit scattered and it was clear the four of them who are super smart and successful didn’t really have a coherent or at least a common framework or language for talking about it. And my impression was this is for really smart dudes really talking about four different things at the same time and not kind of recognizing they’re using different definitions and frameworks for what they’re, so I thought it was kind of scattered. So that got me kind of excited. I like when really smart people maybe are kind of wrong about something I feel I know better. So I jump in. That’s what this is. I’m going to sort of lay out a framework for bundling, which is super important. And so to give you a take on what I think is really going on with Microsoft’s bundles, which are the key issue. It’s not just bundling, it’s Microsoft’s bundles. So we’ll talk about the Microsoft business model. That will be the topic for today. Let’s see, housekeeping stuff. We have an e-commerce tech tour coming up in October. We may move it to November. We’re working on that right now. In October, we may move it to November. We’re working on that right now. But this will be going to Shanghai, Hanzhou, really focused on e-commerce, retail, CPG, that whole sort of deep dive in that area. And then obviously looking at sort of the leading companies in that area, which a lot of them are in Shanghai and Hanzhou, which is a nice high speed train ride back and forth, very easy to do. So if you’re interested in that, go over to TechMope Consulting.com. You’ll see the tech tours there. The link is in the show notes. We have all the details, the prices there. We may change the dates. We’ll do that hopefully in the next couple of days and get that locked down. If you have any feedback on basically October versus November, let us know. We’re trying to get sort of an assessment of what works best for people. Okay, so that’s sort of housekeeping for today. Standard disclaimer, nothing in this podcast during my writing or website is investment advice. The numbers and information from me and any guests may be incorrect. If you use an opinion, the express may no longer be relevant or accurate. Overall, investing is risky. This is not investment legal. A tax advice due to your own research. It’s actually hard to do that with one breath. But with that, let’s get into the content. Okay. Now, for those of you who are subscribers, I sent you kind of a long email about this yesterday. It must have been 3,000 words, which is totally not how you’re supposed to do content. Whenever you write for magazines or newspapers, they always want 600-800 words, you know, short, brief. And, you know, I try to keep these email notes to about 1,500 words, which is a healthy amount of reading, but I think you kind of need that for depth. If I hit 3,000, that’s just me going down the rabbit hole. So skim, skim, just read the bolded key points and you can skim the rest unless you’re really into it. But it basically it’s on the same topic. And what I like about this topic is there’s a couple good ideas that are worth understanding. So really in this case four concepts that I think are really important they’re all in the concept library. Number one obviously is bundling. Bundling is a big deal in software and I’ll talk about why but you know the idea of putting two products together and selling them for one price well that wasn’t that big a deal when it was shampoo and ooh let’s bundle it with conditioner on the shelves of the drug store for one price. Okay, not that thrilling. Been around forever. Bundling services is actually quite common. Most consulting firms, accounting firms, most service firms will bundle various services together. Here’s that word. And what they’ll do, the reason you want to bundle that way is because you can kind of price shift. You can make the intro service very cheap because you’re going to make more money on the follow-up service. So it gives you a lot of ability to shift costs around, which is why people like it. But when digital took off digital goods, well, they’re super easy to bundle. I mean, you can bundle thousands of videos together and call it Netflix. You can bundle an unlimited amount of things. And for most digital goods, MP3, softwares, articles, apps, movies, the marginal production cost is zero. So, you know, when they say here’s a piece of software, you know, buy this anti-virus program, would you like these two pieces of software as well for free? Well, because the marginal production cost, when you sort of write off the sunk cost, it’s basically zero. So you can give away tons of some bundling for digital goods. It’s just crazy. And that really is the future. I mean, what is a digital good that’s bundled? It’s connection. We’re connecting one good together. Well, the world’s getting more connected. The idea of standalone products is, we’re going to have bundles of everything in the future, in my opinion. So bundling, super important. I’ll talk about tactics and money wars For those of you who follow my books and stuff modes and marathons One of the things I talk about is tactics one of them is money wars talk about that and then two types of platforms Innovation platforms and collaboration platforms, both super important. Those are the four concepts for today. I’ll go through them as we get through. But yeah, there’s four really important ideas here. And I think if you understand these four, I think that all in podcast discussion would have been totally different. Because I think each of the four dudes was actually talking about one of these and not the other. So they didn’t quite have the right language in my opinion. Okay, so let’s sort of get into… Let me summarize what they said briefly. Now, they basically began this discussion with, okay, the EU has sort of started this against Microsoft, specifically the fact that they bundled teams with Office and some other things. Now that was a real problem for Slack. Slack was doing spectacular, it was a small company, they had an innovative new product that everyone was using. small company, they had an innovative new product that everyone was using. And then Microsoft comes in with Microsoft Teams and basically bundles it with their other stuff and you know Slack really got in trouble very very quickly. Microsoft Teams took the market very quickly and Slack ended up being sort of sold merged with Salesforce. So there was a quote that they said by Salesforce CEO Mark Benioff, which is basically, and this is the quote, well, actually, it was a tweet he sent out, “Microsoft excels with bundling. It is their not so secret weapon for dominating new markets. Office plus teams, Windows plus Explorer, Azure plus Visual Studio, 365 plus OneDrive, X plus plus Game Pass. So they’ve been doing this forever. And it works. It’s a very powerful move. David Saxo is the main guy in the four who was talking about this and had I think the strongest opinion. I’m going to paraphrase what I thought his argument was. So this is me, my words, not his. Basically, anytime Microsoft gets faced with a new sort of breakthrough, innovative product like Slack, they can respond by basically doing sort of a simple kind of crappy version of it. and then just bundling it with their existing products. Now if you’re a customer, especially if you’re a customer of office, because you basically have to be a customer of office in this world as enterprise, and pretty much as an individual, it’s a monopoly. It’s a must- have product. Try and get around in life without having Microsoft Word. Can’t do it. So when you bundle it with that, but you could bundle it with other things that aren’t such a monopoly, they have a lot of products, that for the customer, it basically feels like you’re getting it for free. So then you’re like, well, why should I pay for slack when I just get it for free with the thing I’m already buying? Now it may in fact be free. They may be shifting the price from that service teams to office and just doing it for free, which they can do or it may just be the appearance of being free because the cost is buried in the bundle. So it could be free or deeply discounted in reality or just perception. Either way, you’re going to take the market. Why would I pay for the other one when I can get this? That basically makes the standalone, the non bundled company slack pretty much non viable. They will start to lose market share, which Slack absolutely did. And then, you know, they get into trouble. Often they end up being sold or merged, which is what happens. Slack got sold to Salesforce. Okay. Now what David had said after that is, okay, now the competitor’s gone. You’ve got the market. Now in this case, the competitor’s not gone. So you can use this tactic to take market share. And sometimes you can use it to kill off a competitor. That doesn’t always happen. That didn’t happen in this case. Slack is still there. But once you have the market, then you can turn around a year or two later and raise the price. Now, I don’t think that actually happens that often, but that was David’s point of view. So he said that tactic is similar to dumping. And there are obviously regulations against anti-dumping. When you’re using a short-term tactic to drive out a competitor or steal market share. Okay, fine, that was his argument. And then he kind of did, I think he was mostly talking about the fact that when you bundle, I mean, Adobe is a big bundle This podcast in my little subscription service is a bundle. I mean it’s a collection of digital goods under one price Very common now when you bundle with a must-have monopoly like Windows or office. Okay, that’s different So he kind of was talking more about that. I think But anyways, it goes into a big discussion, went on for kind of a long time. This question of, “Yeah, but aren’t these bundles good for customers? I mean, if you get something free, what’s wrong with that? That sounds good.” Or if you get something discounted, isn’t that good? I like the fact that YouTube is free because there’s advertising. I like the fact that I can get software for free. This software I’m using to record this, I’m not paying for it. I haven’t paid for it in three years. Then okay, but is it really free or is it just a peer that way because this short term tactic is hiding the price and in fact the price is going to be higher later. Maybe. Is that different digital bundling as opposed to like when you just price shift like you go to your David S. Friedberg had said you know you go to a supermarket they will sell milk and bread cheaper or often at a loss in order to get you to come into the store. So is this bundling or is this more of a product portfolio approach where certain things get your customers to come in and other things you make your profits on, which everybody does. How is this different than Adobe’s bundles? Adobe has been in the software bundling business forever. Adobe has been in the software bundling business forever and there you know you have to buy a suite of products for one price just to get the one you probably want although they do sell a lot of them all a cart is that bad for customers isn’t that what people complain about with cable packages I got to buy 300 channels I only want five Why can’t I just buy the five? Okay, and then isn’t that kind of like the iPhone? Like, you know, I buy the iPhone and Apple gives me a whole lot of apps for free that they’re doing themselves like notes and the clock. And then I get, you know, the marketplace, the store, but I also get a lot of apps. They’re not charging me for those. Is that a bundle? Anyways, big discussion, a lot going on. Very interesting. All right, let me give you four points, which is really my take on what all of this is. Now, point number one, bundling can absolutely be a short term and very powerful tactic to take market share from arrival and sometimes to kill them off entirely. This is absolutely true. I think this is what Microsoft has done many times. I mean, you can look at the market share of Slack versus Teams, and it’s just brutal. Slack was doing great, Microsoft entered, it just shifted dramatically. Now, I would characterize that as a short-term tactic. For those of you who sort of read my moats and marathons books, you know, I sort of break six levels of competitive strength. The bottom level is tactics. You know, lots of back and forth, you know, it’s like a street fight, you know, your competitor has a promotion on Tuesday, you’ve got to come out with one on Wednesday. You’re bundling, they’re bundling, you’re rolling out products rapidly. There’s a lot of back and forth just daily. To me, it always reminds me of a street fight. And you got to be good at just throwing punches and dodging punches. Okay. Moneywars are a really common tactic. Now, various tactics, they change all the time. There’s marketing tactics, there’s product, there’s tons of them. It’s a never-ending list. It’s huge. There’s growth hacks that work, and then they stop working. But there’s a couple that you do see frequently in digital businesses, and one of them is money-worse. Now, tactics are incredibly important, but they are not a source of long-term strength. You can’t win by being good at tactics. You need to build modes and other things. But super important not to discount it. Money wars, we see money wars in China all the time. The current electric vehicle thing happening in China, which is now going global, yes, there’s a lot of companies making EVs because it’s a new opportunity. Everybody jumped in. But there is a lot of money war going on, which is they are raising capital or they have capital and they are using it to aggressively subsidize their cars. So to basically take market share from each other or to expand their market share because they know there’s 30, 40, 50 of these car companies, most of them are going to be gone into yours. So that’s why, you know, people are somewhat complaining in Europe and the US, like these cars are too cheap. You know, this is this is Chinese government policy and they’re like, no, it’s not. It’s just a money war they’re using money as a weapon to try and subsidize their prices and this happens all the time in digital stuff in Asia you know shopping and lasada you know they were subsidizing delivery they were subsidizing marketing for things for a long time to try and win the early stages of the e-commerce game. And we also see that in more mature businesses, like factories and solar panels or something, they will start to usually borrow money, build out capacity, and then offer their solar panels or whatever at a discounted price where they’re losing money. So like I’m going to drop my price, I’m going to raise a bunch of cash, put it in my war chest, drop my prices and I’m going to bleed. But I’ve got so much money in my war chest, I think I can bleed for a year and you can only bleed for six months before you’re dead. So they will make everyone in the market bleed operating cash. And then when basically all the competitors have fallen and died off, then they will stop and we call that last man standing, which is a type of money war. There’s lots of ways to do money work. Okay. Digit bundling can absolutely be a money war, but instead of raising venture money or something else and just using cash as a weapon against your competitor to take their market share and maybe to kill them, you’re using other resources. Now in this case, the other resources are your other products that are already being used by customers. You bundle it in and it basically is a short-term tactic if you drop the price significantly or give it away for free. So you could call it a subsidy, you could call it using company resources, cash, whatever, but it’s a short-term strategic weapon. Now, is that bad? Yeah. Yeah, in this case, it’s kind of bad. Now generally money wards are not a problem because it’s a short-term phenomenon. Most companies can’t afford to do this for very long, although Uber and the ride-sharing companies were subsidizing drivers for years to keep their market share, which is why Uber raised more private capital than any company ever. But usually it’s self-correcting. You can do it for a while and then people stop. That happens. Oftentimes it’s not even that logical. Oftentimes it’s just desperation or irrational behavior and that is also self-correcting after a while. They give up, they exit the market and so on. So money wars, fine. Now, in the case of Slack, yeah, they use their other resources as, and you can sort of assess this based on intention. Was the intention of putting teams with Office that we are gonna create a valuable and viable long term product or is this just something we’re doing for a year or two to take market share and maybe kill our competitor so that we get the market but then we’re going to stop this because we’re losing money or whatever. I’m guessing. I would say Microsoft’s probably doing half and half. They are actually which I’ll talk about. They are actually building a viable and fantastic long-term product around teams. Totally true. Yeah, they’re also using it as a tactical weapon in the short term. I think that’s probably true because they have a history of doing this and they’ve gotten into government trouble in the past. That’s just an outsider’s assessment. I have no real information on that. Call that a guess. The first concept, I think this is what David Sachs was talking about. This was a short-term tactical move. You could argue this is the kind of place where we need government intervention like the EU is doing, because big companies do have the ability to just hurt, steal or crush small companies just using their resources. And if this becomes common where every new innovative breakthrough product the company gets killed off or copied. You don’t want a business like that. You don’t want a marketplace like that. It’s bad for customers because there’s not as much innovation and you’re probably raising prices a year or two later. It’s bad for innovation. It’s bad for a healthy marketplace. So in terms of these money wars, which is similar to anti-dumping rules, I think there’s a reasonable case that the EU should get involved in this to stop what they’re doing or look at it at least. Okay, this point one and concept one, money wars as a very common tactic, especially in China it’s brutal. Okay, point two, which is a contrast to number one. Bundling can also be a very powerful tool for creating value for customers over the long time, over the long term, and for beating your competitors with a better product in a fair and healthy market. It can absolutely do that. In fact, I think this is most of what bundling is about. You bundle products because it creates a better solution for the customer. And it also creates some barriers to entry that pretty much wipe out your competitors or at least hurt them. It’s a good way to win and you’re winning the right way and it’s viable long term. It’s not a short term brute force approach to take some market share or try and kill a competitive. People like to complain about their cable channel. I don’t want these 300 channels. I only want five. That is actually not true. There’s a famous article by Chris Dixon, who talks about the economics, which is basically called Chris Dixon’s a famous venture capitalist. He has an article from 2012 or something like, how bundling benefits sellers and buyers. If you actually break down the economics of bundling, the buyers and the sellers both win. It’s a better deal for customers and it’s a better deal. Even though you think, “Well, I’m not getting those 200 channels I don’t want.” Not true. It is generally better to bundle products together. Physical products, services, definitely digital goods. Because it creates a more complete solution for your customers. Most people, customers, they don’t want to buy hot dogs from one company, mustard from another, and buns from another. What they want is a hot dog they can eat. That’s the solution. So when you bundle together, you’re giving them the solution in one package. Here’s a hot dog with buns and mustard, one price. That’s really what the customers want. They want a complete solution. Bundling lets you create more robust solutions. And you can see this in the digital world all the time in the way we don’t see it in physical products. You know, you can have enterprise software or creator tools at Adobe that are everything you need to run a successful podcast or whatever. Descript which is a nice program for podcasting. It does absolutely everything you need. You know, a lot of features, a lot of different products that link together. It’s great. It’s really quite great. So one, you get a better solution for the customer at a better price. Two, because you have multiple types of products, you are able to cross-subsidize. So you might discount product A and make your money up on product B. That’s a little bit of product portfolio of theory. That tends to be a pretty powerful lever for customers. Hey, this is free. Try this and then you try and upscale them. FreeMium is a bundling approach. You get the basic version for free, then you can pay for the upgrade. That’s a bundle. Netflix is a bundle of 10,000 shows for one price. Okay, so that’s sort of the first half of bundling. The other half of bundling is it’s a devastating competitive approach to your competitors, it’s a– I don’t call it a competitive advantage, and I don’t call it a barrier to entry, but if you look at my moats and marathons, the six levels of competitive strength, I put it in there as soft advantages. Bundling is a soft advantage. In the famous example of this is Bill Gates back in the 1990s, he has three different products, Word, Excel, PowerPoint. And they each had different competitors. They each sold for about $500, and then he bundled them together in Microsoft Office, sold it for $1,000, pretty much wiped out the competitors. And they weren’t leading in a couple things, like Lotus Notes was doing better than Excel. But suddenly for $1,000, you get all three products. So it’s like you get the third one for free because it’s a bundle. Now think what that does to competitors. One, the existing rivals have to start offering products they don’t have. If you’re Lotus and you’ve got an XL like company and you’re competing against a bundle, one, it’s like if you buy the bundle you get Excel for free kind of. But two, how do I compete with that? Do I have to now have Word and PowerPoint and Excel products to compete? And the answer is yeah, you do. So it puts them in a huge advantage and most of those companies disappeared. So you have this real competitive strength, which I call a soft advantage. And then the other thing, it creates a barrier to entry. If you want to compete with Microsoft Office, from day one, you have to offer three completely different products that are linked together. Well, that raises the barrier to jumping in. Very difficult. Bundling is a powerful approach. So I put that in there if you look at my Moz and Marathon’s frameworks, you can see that as soft advantage one bundling. It’s a big deal. And it’s easy to do in bundling. Like let’s say the barrier to entry. If you want to compete with Netflix, Netflix is a huge digital bundle. From day one to be a viable competitor, you need how many shows that your customers can watch? A thousand? How do you… I mean, it’s really difficult to get a library of a thousand different shows just to get into the game. And the vast majority of Hollywood studios and production companies do not have the volume to do that. Disney is kind of getting their Amazon’s kind of getting there. But most of the other companies, the CBS, NBC, who wanted to create streaming services, they don’t have a sufficient library to match the bundle. So they really kind of non-viable as streaming services. So anyways, bundling, point number two here. Bundling is a powerful lever for creating great products that create tremendous value for customers over the long term, and for also at the same time putting your competitors at a real disadvantage. And I think that’s what some of the all-in cast were talking about. Isn’t this good for customers? And the answer is yeah. Yeah, if you’re talking about a long-term product approach, yeah, this is really great. And it also pummels your competitors in a fair and healthy market. So that’s point number two. Okay, let me get to point number three, which is this is going to be the last point. Okay, everything I just said was about bundling strategy, physical products, services, and digital goods where this concept, which has been around forever, became dramatically more important. And I would argue flat out, you know, bundles are about connecting products and services into one more robust complete solution for your customers. As the world continues to digitize and connect, I think bundles are going to be the norm. Connected and bundled products are going to be the norm, not the exception going forward. Okay, now that could be a that all of that could apply to lots of companies and it’s really common. It’s different when we start talking about Microsoft. When we start talking about Microsoft’s bundles. Okay, now we’re talking about something different and most of what’s going on with the EU is not about bundling, it’s about Microsoft’s bundles. And Microsoft’s bundles are really powerful because they piggyback the power of their platform businesses, especially the Windows Monopoly office, Azure. So it’s not just like bundling as a topic. It’s when you have this incredibly powerful dominant business model, when they do bundling, it really leverages that power and becomes almost an entirely different thing. So most of what I think this discussion was about was, are Microsoft’s bundles good or bad for customers for the market? And if they are doing this in terms of a short-term tactical move, then I think you can argue rightly this is not great. This is anti-competitive. But if they are doing it to create better products, well then this is fantastic because they’re doing bundling in a way that create better products. Well, then this is fantastic, because they’re doing bundling in a way that dramatically improves products. And I think that is 51% of what’s going on here. Now, I have a couple articles I did a while back laying out Microsoft’s business model, and where I think it’s going because it’s evolving into something new and Azure is a big part of that. They’ve been acquiring companies like Crazy, GitHub, LinkedIn, no code development tools, obviously open AI, Microsoft Teams, they’ve been building out their product suite really rapidly over the last year or two years, because I think they are creating sort of a new business model, which is honestly in my opinion, fantastic. And I think it’s two things. I think it’s an innovation platform. And I think it’s a collaboration platform. And then a lot of infrastructure. Now, the foundation of Microsoft has always been Windows Plus Office, which is an innovation platform business model. You can go to the concept library and look that up. Incredibly powerful business model, personal computers and enterprise, gave them a global monopoly for the operating systems on personal computers. Amazing. And then they tied that with office, which was the bundle we talk about. And, you know, they make huge amounts of money on office. And I would argue, you know, the operating system is more about just sort of keeping control. And then profited off this. So yeah, that’s been unbelievable for 30 plus years, more than almost 40 now. Fine. But they’ve been moving beyond this. First of all, they’re moving onto the cloud. So a lot of this stuff is becoming Azure. I would characterize most of what they’re doing in the cloud is infrastructure building. They’re basically offering an entirely new type of digital infrastructure that companies can use, which is cloud services. And on top of that, they want Windows, they basically want to be the operating system there too. So they’re kind of extending what they’ve always done from PCs up into the cloud. That may or may not be successful, I suspect it will. But OK, we can call that kind of the next evolution of their innovation platform. And when we look at sort of the six levels of competitive strength, we get up to competitive advantages. Well, innovation platforms have indirect network effects and switching costs too. Super powerful, I mean, unbelievable. This is why there’s only one or two of these types of companies for most operating systems, whether it’s Windows on PCs or iOS on smartphones, Android, I mean, it’s super powerful. Okay. The other thing I think they’re doing is I think they’re building a coordination platform. Now, an innovation platform, lots of app developers and people build on your platform. It’s a place for them to innovate. The more app developers that create software that run on your windows, the better it is for the people who use it. So win, win, indirect network effect. A collaboration platform is more like GitHub or Slack. It’s a place where individuals, developers, companies, team members will go to coordinate activities on a more complicated enterprise, which is a lot of what happens in enterprise software is teams go online and they share messages and they share documents. The primary purpose of those types of platforms is not to create, it’s to collaborate. If you want to create an animated movie, you might go to a collaboration platform like WeChat might go to a collaboration platform like WeChat or Slack. And in that chat room that you create, you might have a graphic designer, you might have a writer, you may have a person who does the IT. And over time, you will collaborate to create this more complicated product, which might be a short animated movie. OK. I think Microsoft is building a collaboration platform that will sit at the center of a lot of their enterprise software. Teams is a key in fact the center part of it. I mean the fact that it’s called teams tells you this is where teams can work together and get stuff done. I think it is the centerpiece and maybe the foundational layer for their enterprise software. WeChat has the same thing in China. So does DingTalk. This is what all companies use as the starting ground. And the beauty of collaboration platforms is they can have direct network effects, they can have indirect network effects, they can have indirect network effects But you see it all over the place So I think that’s what they’re building and I think that’s why they’ve been acquiring a Lot of companies that will make this more robust like GitHub GitHub is a place where developers and software codos work together GitHub. GitHub is a place where developers and software coders work together. OpenAI is about providing tools, especially to software developers, or content creators, where they can, you know, work to, you know, they can basically become more productive. But Microsoft doesn’t want to be in the tools business. They want to be in the collaboration business. So you create a collaboration space, and anyone who comes there gets all these free tools that make them more productive. So they’ll doing that. Now, you know, there’s different types of collaboration. The simplest version is just communication, Skype, Zoom, Slack, Microsoft Teams. The next level up might be data intelligence where you’re starting to share data between different parts of the organization or with external parties. It can go into operational automation eventually. So, you know, how the internal parts of an enterprise interacting collaborate is a big idea. And then they can also interact externally with other parties. So I think that’s where they’re going and I think Teams is part of that and I think it’s a spectacularly smart business model because they end up with my favorite of all business models which is a complimentary platforms. Having one platform business model, like Windows is unbelievable, having two that support each other. Awesome. Now, actually, Microsoft has more than two. They have several. Google has several. Alibaba has several. So I think that’s where this is going. I think it’s awesome. So anyways, that’s kind of my take. But the four concepts that I would encourage you to look into a little bit, think about money wars as a tactic, think about bundling as a soft advantage in a fairly powerful move in terms of product development as well as competitive strength. Think about innovation platforms, think about coordination platforms. So sort of four ideas for today. And it was my conclusions on the whole all-in argument discussion is kind of what I said. Bundling is a powerful short-term tactic to take market share from someone, especially if they’re smaller than you, and sometimes to kill them. That strikes me as anti-competitive, bad for innovation, bad for the market, bad for customers over the long term. The EU should absolutely be involved. Microsoft doing bundling is another area where the EU probably has to get involved, not because they’re doing bundling, because they are so powerful. If Microsoft really set out to kill off slack or take their market, okay, they could do it with bundling, but they could have done it 10 different other ways as well. They’re that big. If Amazon wants your business and you’re, you know, a decent sized beauty e-commerce company, if they really want your business, there’s not much you can do to stop them. So that’s the other area where I would say like the EU should get involved or any government is. When these tech giants are so big that they really can start, they are no longer limited or vulnerable to competitive forces. They’re too big. And when you are too big to be limited or stopped by the normal marketplace and competitive forces, that’s when you need the government to come in and balance the competition and give the smaller companies more of a chance, which China has actually done over the last year. When they did their tech crackdown, what they did is they curb the power of the giants over smaller companies and suppliers, actually. So that’s kind of how I would look at this. And then at the same time, I’d say, look, you don’t want to do any regulation against bundling outside of those two scenarios because bundling is fantastic for customers. It’s a good competitive strategy. It’s a great way to beat competitors in a marketplace in a way that’s totally fair. So we don’t want to stop bundling just those two cases, I mentioned. And keep in mind the bundling is probably going to be connected and integrated products and services is going to be the majority of the future, in my opinion. Anyways that is it for today. Hope that was helpful. I feel pretty good about that one. I think there’s a lot of, I like when these topics are like 50% theory and then 50% companies doing real stuff in the real world and And when they, and when the first helps you understand the second, which I think today did, at least for me it did anyways, I hope that’s helpful. As for me, I’m doing well, I’m just working like crazy, which is always satisfying. I left Bali, which was, I’m thinking of spending a couple months per year in Bali. It’s so easy to get to in Southeast Asia. It’s a bit of a weird place. The nature is fantastic. The jungles, I really like jungle. The beaches ain’t terribly good. Not if you’re from Thailand or somewhere like that. The Bali beaches are like, really? This is your beach? Yeah, it ain’t impressive if you’re kind of a beach snob You know the problem the problem we actually had this will be this will be a nice story for the podcast We must have gotten sick from food five times Four times at least in about 10 to 12 days Meet me and my girlfriend like at the same time, it was like, we go to the restaurant, oh, this is, you know, this is good, we’re having fun, it’s beautiful here in the jungle, 15 minutes later, you feel bad, I don’t feel real good. She’s like, I don’t feel good either. And there is really a special moment in the relationship when you both go to the restroom at the same time and simultaneously throw up in different stones. Like that never happened before. That happened one time. And then a couple days later, it happened again. Where you know, we’re at a different restaurant, different part of Bali and, and we didn’t even get out of the restaurant 15 minutes after eating, do you feel nauseous? I’m like, I feel nauseous too. Again, simultaneously vomiting. (laughs) My whole life that’s never happened once, it happened twice, and I’ll leave out the stories of what happened with the other events after eating, which were not vomiting. We’ll just leave it at that. Four to five times in about 10 days. You can go online and people will talk about this. They call it the Bali belly. No. That’s trying to be nice about this. This is like find whos ever in the government in charge of food safety and food standards and fire them all. Like if you’re having people get sick in restaurants, it’s ’cause your government functions in terms of food health and safety and checks of restaurants suck. I mean, that’s what it is. They used to have this in Mexico, they used to call it monazoomas revenge, we’d go to Mexico City and you get sick in the first couple of days. But then they ramped up their government functions and they got better. And it went away. Nobody talks about it anymore. Right? This is the same thing. It reminds me of the transportation in Bali. Like, the roads just don’t work. Like, there’s no crosswalks anywhere No streetland. I mean, it’s it’s it’s sort of you know decades and decades behind so Anyways, but we really liked it We really enjoyed it, but it does take away from the beauty of the nature and hey, this is an awesome vacation where it’s like Really again? Like I’m sick again like it does take away from the experience a little bit. Anyways, that’s a good story for the podcast. I thought that would be nice to share. Anyways, that’s it for me. Hope everyone is doing well. I will talk to you next week. Mm, bye-bye.

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I write, speak and consult about how to win (and not lose) in digital strategy and transformation.

I am the founder of TechMoat Consulting, a boutique consulting firm that helps retailers, brands, and technology companies exploit digital change to grow faster, innovate better and build digital moats. Get in touch here.

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