Frenemies in Tech

The pitfalls of the Microsoft and Apple ‘frenemy’ pact

Andrew Hill

•  Share
•  
  

  
  
•  Print
• Clip
•  Gift Article
•  Comments

©AFP

Microsoft vice president Kirk Koenigsbauer speaking at last week's Apple product launch in San Francisco

If you were surprised when a senior Microsoft executive took the stage at Apple’s latest product launch last week, you need to brace yourself for more of the same. The spread of digital platforms, the ease with which collaborative networks can form, and the willingness of employees to work across newly porous corporate borders mean there will be more pacts between old rivals — and they will bring problems as well as benefits.

“Frenemy” is the term of art for such relationships. Jessica Mitford wrote in 1977 that one of her socialite sisters had minted the inelegant term for “those fringy folks whose proximity, either territorial or work-related, demands the frequent dinner invitation and acceptance of their return hospitality”. Sir Martin Sorrell gave it wider corporate currency in 2006, when he used it to describe Google, a company that was both useful and threatening to WPP, the advertising group he heads.

In corporate, as in personal relationships, the ratio of friendship to enmity varies. Microsoft’s promotion of its Office software applications at an event where Apple was pushing its shiny new hardware points to their respective corporate priorities, particularly following the shift from devices to cloud computing pursued by Microsoft’s chief executive Satya Nadella since he took over from the more bellicose Steve Ballmer in 2014.

Mitford’s dinner analogy is useful. Microsoft is like the annoying neighbour, whose past attempts to obscure Apple’s view with an ugly hedge need to be set aside to allow for a decorous mealtime discussion about the shared path to the two companies’ separate front doors. On the other hand, Samsung, which supplies components to Apple while competing head-on in devices, is the guest who brings a nice bottle of wine, but brags publicly about his own superiority as soon as he has said goodbye.

Frenmity is spreading. Earlier this year, despite having its own Chinese website, Amazon set up a store on Tmall, the business-to-consumer site operated by Alibaba, recognising that while the shoppers might be the same, the two sites’ business models were different (unlike Amazon, Alibabaserves other retailers and does not source or move products). Ron Adner of Dartmouth College’s Tuck School of Business and co-authors have pointed out that carmakers are already having to decide whether to let software apps developed by century-old antagonists into their vehicles.

But let us not go completely soft. Old rivalries are dormant not extinct. The new iPad Pro so resembles the Surface, Microsoft’s convertible tablet, that Steven Sinofsky, the former Microsoft executive who worked on it, sent a sarcastic tweet welcoming the new device. And of course the acrimonious history of what Bill Gates borrowed from Steve Jobs, and vice versa, goes back a long way.

What is more, friendliness between big competitors is often only an email away from being a barrier to entry. Plenty of companies are just happy to collaborate with Apple — as providers of apps, for instance — and compete with each other. It is in Apple’s interests to cultivate this network just as an old-style manufacturer would its competing suppliers. But Apple and Microsoft’s banter could look like a snub to companies that do not just want a seat at the same table but aim to throw their own, better party. Their enemy’s frenemy is almost certainly not their friend.

Finally, while feuds can be double-edged management tools, encouraging dark arts and dirty tricks, they can be effective, too. Motivating a team that can see a target on its rival’s back is far easier than geeing up staff who must now be “comfortable working with, or even in, a frenemy company”, in the words of Insead entrepreneurship professor Henrich Greve. Microsoft’s more open strategy under Mr Nadella looks right. But still I wonder what it must be like for those at the company who were Ballmerised by his predecessor into mostly bashing rather than embracing competitors.

Big companies ought to be able to overcome these challenges, while start-ups are developing with co-operation as their default way of working. Better ways of measuring collaborative success, and encouraging staff to attain it, will evolve. But it is still worth bearing in mind one last truth from Jessica Mitford’s article: “Lifelong enemies are, I think, as hard to make and as important to one’s wellbeing as life-long friends.”


-------------------

Will be interesting to see what will happen between Google and the other digital marketing players, the enemy of my enemy is my friend they say... 

Many people agree Google is big, too big but which of its competitors is going to be strong enough to build frenemy relationship and actually do something about it? 


Tomas