Business models and making decisions about which technology systems to use

2023-04-13

Let's look at one example: choosing an office suite for an organisation. This often is seen as a binary choice between the main brands: Microsoft (365) and Google (Workspaces). I'll include Apple as well for contrast. I'm not including the main open source alternative, Nextcloud, as I don't know enough about their business model, but hope to find out more about it soon.

The point is not to simply say one brand is better, but to encourage intentional thinking about what is the most appropriate choice given the particular context of an organisation and its stage of development.

Here is a very quick summary of the business models, customers and trajectory of each brand.

Microsoft

• Business Model:
  • Software/subscriptions
  • Cloud services
  • Bit of hardware
  • Bit of advertising
• Customers:
  • Consumers
  • Businesses
  • Education
• Trajectory:
  • Starting point: desktop PC software
  • Moving towards: subscription services, cloud services, integrated AI infrastructure

Google

• Business Model:
  • Advertising
  • Search
  • Bit of cloud services
  • Bit of hardware
• Customers:
  • Advertisers
  • All internet users
  • Bit of education/business
• Trajectory:
  • Starting point: internet search
  • Moving towards: integration/monetisation of global information (including developing AI infrastructure)

Apple

• Business Model:
  • Hardware
  • Subscriptions
  • Bit of advertising
• Customers:
  • Primarily consumers who can afford Apple hardware/service
  • Bit of education/businesses
• Trajectory:
  • Subscription services (including financial services)
  • Rich eco-system of hardware and software
  • Refinement of hardware manufacturing processes
  • Bit more advertising

How does this all relate to the choice of an office suite?

The key is to relate the business model of each brand to your organisation's own needs.

For example, looking at current business models:

• Microsoft has a business model in which organisations are a key customer, and the development of their office services is a key aspect of their plans.
• Google has a business model which is much more widely focused (the monetisation of information, primarily through advertising) and therefore office services for organisations form only a part of their plans.
• Apple has a business model which is more focused on consumers than businesses. Therefore, they haven't invested in their office services to anything like the extent that Microsoft and Google have, although their office applications benefit from the excellent hardware and eco-system of hardware and services developed primarily for consumers.

In terms of their different trajectories as brands:

• Microsoft started in the 80s with the desktop PC model. They have a huge legacy of software, and that can be seen in their office suite, which has depth of functionality but also the weight of cumulative complexity. Microsoft have been remarkably effective in recent years in pivoting towards subscription services, cloud services and AI - that appears to be down to the leadership of Satya Nadella. So the resulting 365 office suite is functionally rich, still somewhat clunky and unintuitive to use, but really well poised to take advantage of developments in AI.

• Google started in the 90s with the internet model. They caught up with, and in many senses overtook Microsoft with incredible speed, creating an office suite with an internet mindset (for example, with very strong collaborative tools). The resulting suite is functionally rich (but without the same functional depth of 365).

• The question of Google's position in regard to AI feels more problematic. Google understood and grasped the internet in a way Microsoft couldn't. It doesn't feel as clear that they have understood AI, and they may need to restructure both their search services and office suite, whereas Microsoft seem to be already nearly there.

• Why are Google off the pace with AI? Google have built their infrastructure on a free to use model (their revenue coming from selling the eyes of their users). That depends on their core services (like search) being relatively cheap. AI isn't that cheap to deliver, either in cost or energy terms. AI integration will make more sense within a paying subscription service like 365. Also Google have a vaultingly ambitious and broad strategy (monetising access to all global information), whereas Microsoft have been much more tightly focused on the needs of customers and organisations. AI will probably operate more effectively and safely within the closed system of an organisation's own data.

• Apple's trajectory gives them some remarkable strengths: great hardware, a coherent eco-system of services. Yet in terms of AI, they are even more painfully behind Microsoft. Siri should have been the mechanism to bring AI into Apple's eco-system but ChatGPT and equivalents make it clear that Apple will have to transform what they currently provide.

So in terms of making a decision on which office suite to use, it may be useful to think about where your organisation and its staff sits in relationships to the generational shifts outlined above:

• Microsoft 365's strengths are providing deep and complex functionality, and the formality and structure of the desktop era - if your organisation needs that.
• Google's Workspaces provides great collaborative features and an internet mindset. This makes it an appropriate choice where an organisation values collaboration above structure and informality above formality
• Apple provides great hardware, (mostly) well designed software and a great eco-system - but not one really set up for large organisations. If you are a small business with reasonably simple requirements in terms of functionality (and an appreciation of simplicity and design and enough income to pay for it), there is genuine value in what Apple provides, but it probably won't scale up as the business grows.
• If you want to prepare for the next era, which looks like it will be marked by the integration of AI into everyday activities, then at the moment Microsoft (perhaps unexpectedly) looks to be the most appropriate choice.

The Intentional Technology Newsletter...

... will help you use technology with focus and enjoyment.

Subscribe