Microsoft and the thrift culture

Scoble links to a Microsoft Monitor article on Microsoft’s “thrift culture“:

I also see Microsoft’s thrifty culture as contributing to problems with product pricing. As noted in my report, “Microsoft’s Integrated Innovation: Weighing up Customer Benefits, Risks,” increased integration raises some Microsoft software acquisition costs. Microsoft employees use their own software–and that’s the latest stuff, too, which is another thrifty use of existing resources. I contend that given those modest salaries and use of Microsoft software, product managers are sometimes out of touch with real customer costs and their computing environment little resembles their customers’.

It’s true that Microsoft’s computing environment doesn’t resemble most of their customers’ environments, but I think Joe has the reasoning here backwards: Microsoft’s computing costs are quite possibly higher than they are for most customers, even when you factor in the happy coincidence that MS doesn’t have to buy licenses of its own software.
For example, Microsoft’s email architecture uses on seven-node active/passive Exchange 2003 clusters, with each cluster having its own dedicated SAN. That design offers superb availability and performance, but it’s also very expensive. I’m not aware of any customers who are using similar configurations (although some are using clusters with shared SANs)– it just costs too much. However, the uptime and performance benefits enable a critical part of Microsoft’s business operations, so they spent the money. The same is true of their network– they have a huge and powerful network backbone, with extensive health monitoring, spread all over the world. Why? They need it, so they bought it.
They’ve never been shy about spending money, when needed— that’s the key point IMO. (Another example: check the average age of laptop and desktop computers at MS, or the average time between desktop OS updates– I bet both are way shorter than they are “on the outside”.) It’s true that a penny saved is a penny earned; however, it’s also true that sometimes you have to spend money to make money. The key is that spending money wisely is deeply ingrained into the MS culture to an extent I’ve never seen anywhere else.
Another important difference in the environments has an influence, too. Microsoft is full of überusers. At a typical 50,000-seat enterprise, you might find 10 or 15% of users who match the baseline email usage profile at Microsoft, and I’m sure the percentage of people who use the advanced features of (say) InfoPath or SharePoint is much smaller. The constant flow of new technologies and tools is disruptive, but overall the increase in productivity these tools bring overwhelms their disrupting impact.
I think one of the key drivers behind MS’ aggressive dogfooding is that their users demand, and can gain productivity from, new products’ technology. That’s not always true elsewhere. In fact, when I show ordinary users some of the cool features in Office 2003, it’s clear to them how their productivity would improve, which makes me wonder why the press and analysts so often say that new upgrades don’t offer significant improvements.