If it is possible for a company to be hugely profitable while also being incredibly boring, Microsoft is that company. First off, they’ve never innovated. They’ve only copied and smothered their competitors (reasonable people can disagree). The last ten years have been especially boring for Microsoft. They’ve tried to enter several different markets, including, search, […]
" />

My Thoughs On Microsoft

If it is possible for a company to be hugely profitable while also being incredibly boring, Microsoft is that company. First off, they’ve never innovated. They’ve only copied and smothered their competitors (reasonable people can disagree). The last ten years have been especially boring for Microsoft. They’ve tried to enter several different markets, including, search, smartphones, music, and game consoles. Microsoft hasn’t managed to capture significant market share in any of these markets except for the game consoles. And calling the Xbox a “success” is misleading. Microsoft has had to shell out billions of dollars in console repairs. That’s a success few other companies could afford.

Instead of innovating, Microsoft just sat and collected money throughout the 90’s. There was little competition to speak of. Apple was weak (due to poor management and Microsoft’s brutal tactics), and few dared step in the Operating System market after Microsoft repeatedly smashed other companies in the early 90s.

Complacent from the success of the 90s, Microsoft found itself being passed up by smaller, nimbler companies like Google, Apple in the 2000s. Google essentially developed, and now dominates the search market. Microsoft is still trying to catch up. Their offering? Bing. Let’s face it, Bing isn’t bad, but it really doesn’t offer anything dramatically different than Google, and that’s why they haven’t captured significant market share in search.

As for Apple, Microsoft keeps brushing them off, or otherwise treating them as a non-threat, or like they’re only a niche player. Almost as if Microsoft is unbeatable. This is the same mentality that got Apple in trouble in the early 90s. Apple was king then, and thought they couldn’t be taken down. They dismissed Microsoft, and five years later they were facing bankruptcy. Microsoft seems to be in a similar mindset. That’s why Apple has whizzed by and dominated the music player market with the iPod, has a huge market share in the (U.S.) smartphone market with the iPhone, and has nearly doubled their market share to 10% in the computer market over the last decade.

In response Microsoft has just thrown some of their ample money at the music player market, first with a PlayForSure initiative, and more recently with the Zune. Notice how you don’t hear to much about the Zune. Microsoft is rapidly losing what little market share they had in the smartphone arena to Apple and Google.

Microsoft has never had imagination. They’ve only ever copied other’s products and made them their own. After they owned a market, they fought to keep their monopoly. This worked really well for the PC industry in the 90s. It hasn’t worked so well in the 2000s in the consumer electronics arena.

Even now, can one really say the latest releases of Windows are amazing. Once upon a time, Microsoft offered a low-priced “good enough” alternative to the Mac. Nowadays for PC makers, Windows is an expensive, “kinda decent” alternative to the Mac. The only reason more PC manufacturers haven’t tried to use Linux, is due to the fact that Microsoft threatens to revoke their OEM licenses if they even try to sell a machine with Linux preinstalled.

Microsoft also needs to figure out if they are in the Windows business or the software business. If they are in the Windows business, their path (to maintain OS market share) is headed for obsolescence. If they are a software company, they need to develop exciting new platforms and not just throw out flash demos of tablets that won’t make it to market. A prime example would have been to create a custom OS for tablet PCs. Instead they just tried to shoehorn Windows onto a device that demanded a new UI better suited for the touchscreen. Apple has done just that with the iPhone and iPad, and I believe that’s why they are successful products.

Where Apple is eating away at Microsoft in the consumer electronics, and specialized computer markets, Goole is eating away at software. Take GoogleDocs for instance. It is a free (ad supported), “good enough” alternative to Microsoft’s Office suit. Microsoft may be in trouble once Chrome OS ships, which is a cloud-based, free OS.

Apple is eating away at Microsoft’s high-end PC market with the Mac, and Linux (and soon Google’s Chrome OS) are eating away at Microsoft’s low-end segment of the market. With little new to offer other than a redressed version of the same old Windows NT kernel, the company may soon find itself in a pinch.

Next time you think about it, just stop and notice how little media coverage Microsoft gets these days, let alone the attention the company gets from Apple or Google. The rest of the industry is rapidly expanding into new markets such as tablets and smartphones, and away from desktops. Apple and Google are (for the most part) letting Microsoft have the Desktop OS market because they realize it is not the future, so any increase in market share is welcome, but not being savagely fought for.

In summary, Microsoft is safe for now, because large numbers of people still use PCs to get work done, but they had better also set their sights for the future, and stop looking at the world through the “Windows” lens. This is especially true as the industry transitions away from the traditional PC, as it inevitably will. Microsoft is dominating a market that will be shrinking in the next few years, and they have no plans for expanding into new markets as Apple and Google have.

Continue reading:

TAGS: