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The Real Magic Sauce

Still catching up on my reading.  From this NYT story on the future of Microsoft, as Bill Gates steps aside:

If he is stepping away from Microsoft, Mr. Gates has shed none of his trademark combativeness. He rejected the Silicon Valley view that Microsoft has begun to exhibit the same sclerotic signs of middle age that I.B.M. did when it dominated the computer industry, but failed to respond effectively to the challenge of the personal computer.

I.B.M. is no longer at the center of the computer industry, he asserted, for two reasons. First, the industry is now centered on personal computing. “As much as I.B.M. created the I.B.M. PC, it was never their culture, their excellence,” he said. “Their skill sets were never about personal computing.”

Second, the center of gravity in the computer industry has dramatically shifted toward software, he said. “Why do you like your iPod, your iPhone, your Xbox 360, your Google Search?” he said. “The real magic sauce is not the parts that we buy for the Xbox, or the parts that Apple buys for iPhones, it’s the software that goes into it.”

The real magic sauce?  If you’re an uber-geek, it’s the code.  It’s all about the code.  And if you’re a consumer?  Does Microsoft still miss the fact that computing is part parts, part code, and part cool?  Google and Apple and the XBox 360 are cheap hardware, fancy software, and style.