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  • Forget the Apple Death Watch! How About a Microsoft Death Watch?

    December 13th, 2007

    Over the years, some eager-beaver would-be tech writers have been busy proclaiming the imminent death of Apple. Now it's fair to say that they came close to being correct a time or two, because Apple did some pretty foolish things during the late 1980s and early 1990s that nearly did the company in.

    However, through a combination of luck, perseverance, and building lots of great products, Apple managed to confound the doomsayers and keep the company alive. Today, more people have Macs on their radar for near-future purchases than ever, and the figures are equal to or higher than those of most of the biggest-selling PC boxes.

    Forget about the Zune, where most of the sales are apparently being rung up on last year's model, with lots of leftovers being sold at fire sale prices. This season, it's still all about the iPod, with the iPhone being the icing on the cake.

    Yes, there are still a number of alleged tech pundits who trash Apple's products, all-too-often with misleading and downright erroneous information.

    Now if only Microsoft were held to the same standard. What would happen then?

    Well, this week I read a fascinating commentary from my friend Daniel Eran Dilger at his RoughlyDrafted site, comparing Microsoft's efforts at operating system and browser hegemony to the old Soviet Union. The article, along with others Daniel has written over the years, paints a frightening picture as to just how Microsoft used deception and illegal marketing tactics, and just plain financial muscle, to win dominance in the personal computing marketplace.

    But just as the Soviet Union ultimately collapsed of its own accord due to the failed communist infrastructure, Daniel says Microsoft will face the same ultimate fate over time.

    Of course, such things aren't going to happen quickly, and you won't wake up one morning to find all the major businesses around the world embracing Macs. If Microsoft does succumb to market desertion, the process will be slow, and erosion will take years before the effects become meaningful. And certainly Microsoft's legion of online and print apologists will write lots and lots of verbiage in the meantime, explaining why nothing is really wrong with the company, it's only temporary, and they'll come out on top all over again in the end.

    You might wonder, though, just how anyone can predict Microsoft's demise, impending or long-term. Well, maybe not their demise so much as their slow, halting decline into eventual irrelevance. Regardless, it's perfectly true the company is making huge profits, and it's also true that they are still building products that people depend on to get their work done. What's more, you can't rightly say that Microsoft always delivers bad merchandise. I think, for example, that their Mac Business Unit, despite being constrained by misguided corporate policies, is filled with dedicated Mac-heads who are absolutely dedicated to building the best software they can, and I look forward with great anticipation to the forthcoming Office 2008 for the Mac.

    At the same time, the vultures are not just circling Apple these days. Consider Web browsers, where Internet Explorer remains the standard, true, but not nearly by as much of a margin as before. Take the rise of Mozilla's Firefox, Apple's Safari, now on both the Mac and Windows platforms, Opera and a few others, and Internet Explorer has declined to 75% and the trend is continuing. This despite the fact that Internet Explorer 7 was pushed even to users of Windows XP.

    Speaking of Windows, Microsoft has to feel embarrassed over how many of its customers have continued to say no to Vista. In fact, enterprises continue to cut back on their plans to upgrade from Windows 2000 and XP. Sure, it's possible the forthcoming SP1 maintenance update will fix many of Vista's ills. At the same time, preliminary reports indicate that Vista's pathetic performance has not improved to any measurable degree.

    Of course, on the long haul, Vista will undoubtedly deliver more huge profits for Microsoft. Just from the sale of new PCs, millions of OEM licenses will be sold, and most people, frankly, aren't requesting Windows XP downgrades. The same is true for Office 2007 and the upcoming Mac version. Lots of businesses deploy these office suites on their personal computers, and they have yet to fully consider alternatives, such as the online collaboration applications from Google.

    But just look at the fast-track growth of Macs. More and more people are seriously considering them, particularly in the notebook segment. Sure, some people will continue to buy retail copies of Windows to install under Boot Camp, Parallels Desktop or VMWare Fusion. But to many, it's a crutch, a way to use legacy software until they find comparable products on the Mac.

    Over time, as more and more Macs move into homes and businesses, you'll even see developers far more inclined to deliver Mac versions of their key applications. And then things will really take off.

    But the most important obstacle ensuring the potential end of Microsoft's dominance, aside from inferior products, is the fact that more and more companies no longer fear their wrath for outright defiance. With government agencies, particularly in Europe, watching over Microsoft's every single move, they can't run roughshod over competitors as easily as they used to.

    This trend may not play out in a year or two, but, over time, things are going to change. That is, unless Microsoft sees the handwriting on the wall and becomes a responsible corporate citizen that strives to compete fairly in the marketplace.



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    15 Responses to “Forget the Apple Death Watch! How About a Microsoft Death Watch?”

    1. Dana Sutton says:

      I heard a different account -- that the demand for Zunes is reasonably high, but that Microsoft didn't make enough of them so can't fill its orders. Anyway, I think the USSR - Microsoft analogy works differently. Not so much the Evil Empire as the bloated and Byzantine organization that moves with fatal slowness and can't get anything quite right because everything they do has to be filtered through so many committees and layers of bureaucracy. Towards the end the USSR was stumbling over its own feet and presided over by a bunch of self-satisfied old men cherishing delusions of grandeur who were pretty out of touch with reality. Microsoft's worst enemy is its own bigness, and there's an argument that it would do a lot better if it weren't such a huge monolith and, like the USSR, broke up into a bunch of leaner and meaner corporations, each devoted to doing one thing only and doing it well.

    2. Tom B says:

      "broke up into a bunch of leaner and meaner corporations, each devoted to doing one thing only and doing it well."

      Ironically, Penfield Jackson asked for just that, a half decade ago. Perhaps it is best the judgement didn't stick, speaking as someone who would like to eventually see MSFT go the way of the TRS-80.

    3. Jeff says:

      "I heard a different account — that the demand for Zunes is reasonably high, but that Microsoft didn’t make enough of them so can’t fill its orders. "

      Coming from a manufacturing background, I can say that this is complete nonsense. Planning with the suppliers was done and contracts were signed months ago in order to establish a reliable supply chain, and if going into the holiday season there weren't enough Zune's to fill orders heads would be rolling.

      Microsoft is trying to leverage Nintendo's Wii strategy of building word-of-mouth and desireability for their product by making it appear to be scarce and in-demand, but unlike the Wii, people don't appear to actually want a Zune.

    4. Al says:

      The Microsoft Prime Directive is "Protect the Windows and Office monopolies". This is the root of everything that is going wrong with the company.

      Visionary, confident companies aren't afraid to win their customers over and over again as they introduce new, state of the art products. They kill obsolete product willingly because they are confident that their new line will win their old customers back and then some. Microsoft won its customers once with DOS (DOS!) and has since been scared of laying the monopoly on the line and winning their customers over again. [Actually Microsoft didn't really win their first customers by themselves, it was IBM that did the heavy lifting. But sly old Bill Gates outmaneuvred IBM when he signed that supply contract. Maybe that's why MS is scared shitless of the thought of winning customers over again --they've never really done it before.]

      Anyway what has this meant for Microsoft?

      1. Software bloat. What do you expect if you want to match the features of state of the art software and still hold on to legacy apps?

      2. Brain drain. Do you expect the best, most creative software designers will want to work in a company so committed to obsolete technology?

      3. Loss of the best customers. You lag technologically, eventually your most sophisticated deeper-pocketed customers desert you and you're left with, well just try to imagine what's left. Think GM.

      Admittedly, Microsoft has a very formidable ally. The army of corporate IT staff who depend on the creaky, obsolete, ultra-complex, support-intensive, jerrybuilt Windows infrastructure for their continued employment.

      Microsoft's demise is hardly guaranteed. Short run or long run. What is sad though is if Microsoft continues to survive while hewing to its Prime Directive, then that means we'll be forever stuck with economically inefficient information systems that frankly is a drag on economic growth and prosperity.

    5. rwahrens says:

      Yes, I agree with the idea of it breaking up into smaller units. I've mentioned this in the past before. I'm not convinced that this would result _automatically_ in them doing their things well, though. But it _would_ expose them to the normal pressures of competition, so if they didn't they would most probably die off eventually.

      Because Windows is such a slave to the old legacy apps their customers are addicted to, if they do spin off the desktop division into its own company, any new desktop that company would develop and sell, even if they try to leverage the Windows name, would, of necessity, need to leave those legacy issues behind in order to truly compete against the Mac OS, which I see as gaining a huge percentage gain in market share in the next two years.

      It would be like a new company entering the market with a new product. As a matter of fact, I believe such an entity would do better just starting all over with a brand new product identity. They'd do better without the Windows baggage.

    6. Gerald says:

      Microsoft should get out of the OS business and return to the Software-for-Microcomputers business. The responsibility for the OS is distracting them from what they are actually GOOD at: Enterpriseware. They should port their APIs to other platforms and start selling their IIS, SAS, .NET, and Office efforts to people who choose operating systems other than Vista.

      Of course, Microsoft cant get out of the OS business altogether; but slap Aero onto MS-BSD and put XP/Vista in a VM (aka "Classic" environment) and call it "Windows 8", it could take on Apple on it's own turf and tweak the Linux crowd at the same time.

      If Microsoft made a play for BSD they have a very real chance of taking it over and becoming the dominant unix distro, especially if they ported DirectX to it.

      Microsoft DirectX for BSD: Closed, proprietary, requires an account, and it phones home every time you fire it up. Priced at $200, it would still sell like Halo 4. Why? Because it works on Mac, "Windows 8", Free-BSD, and any new flavor that rolls in that MS bares no responsibility for. ...and Halo 4 requires it.

      MS-BSD (without Aero, Direct X, or the "classic Windows" environment) is free, but Windows 8 costs as much as Windows 7, Vista, XP, 2000, Me, 98SE, 98,95...

      The sheep will buy Windows because that's what they know and freeloaders (FOSS users who don't contribute) will drop Linux for the free unix that runs the games, causing it to shrivel like BeOS.

      Hey Microsoft! The Enterprise requires Office and Outlook. Gamers require DirectX. Unweld them from your boat anchor of an OS and start making money!!!

    7. Chuck says:

      I have another take on this: MSFT is losing their cash horde. To the tune of $15B over the last 6 quarters. If this continues, they will be broke in the next two years. They are buying technology companies left and right. But until they can leverage the technology they are buying into profitable software/services, it is all for naught.

      MSFT has, for all intents and purposes, the desktop and Office suite markets. They have to find new avenues to make money. That is where they lack business sense. Instead of creating new markets, they try to fight it out with entrenched leaders (Google in search, Apple with the iPod/iTunes/iTMS). That is costly to do because you have to have a killer product and advertise it, which costs money. And if you fail, then you gambled a lot of ad dollars for nothing.

      Daniel is right: MSFT is NOT an innovative company. They may be a successful software company, but they are not innovative. Apple on the other hand lives on innovation. You could argue that point, but how do explain a company like Apple, with a quarter of the employees MSFT has, and a quarter of the cash horde MSFT has, turning out edgy products like the iPhone, and walking away with market share in a matter of months?

      It is only going to get worse until MSFT re-makes itself. I think they need to re-evaluate their mission statement and clean house. But then again, I am not sure they even know how to do that.

    8. Tom B says:

      "To the tune of $15B over the last 6 quarters. If this continues, they will be broke in the next two years. "

      Wow. I had no idea.

      Factor in the fact that MSFT has to almost hand out copies of Windows for FREE in the 3rd world to prevent them all from adopting LINUX......Can you say-- eroding margins?

    9. abend says:

      Ray Ozzie to the rescue!

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      LOL!

    10. Steve says:

      A death watch for Microsoft is too strong, but I agree their influence is waning and is likely to continue. In a way, it's the beginning of IBM or GM story all over. Both are still here and viable, but their roles have changed dramatically.

    11. Chuck says:

      Just to be accurate, I mis-stated the Microsoft numbers. It should have been $10B over the last 15 months. Doing the math their $60B they currently have would be down to zero in 7.5 years. Sorry.

      See here:

      http://blackfriarsinc.com/blog/2007/11/incredible-shrinking-microsoft

      Carl Howe, the author, points to some very distressing financial numbers that most MSFT investors may not be deducing. I think the article speaks for itself.

    12. MichaelT says:

      The question, then, becomes who will take their place? I don't want it to be Apple. That would put Apple in the same predicament. They would be the monopoly that people love to hate; they'd lose the "underdog/rebel" identity.

      Besides, I think the demise of Microsoft will be because the landscape of computing will change so drastically that they won't be playing the same game as the rest of the world. They'll still be figuring out desktop icons and touching big screens when we're on to something completely different. That could happen in the next 7.5 years, don't you think?

    13. Tom B says:

      "The question, then, becomes who will take their place? I don’t want it to be Apple. That would put Apple in the same predicament."

      OK, there would be a "big bad monopoly", but with good products this time around. I could live with that.

      I think Google/ Apple; the new MSFT/ Intel duopoly.

    14. Aaron says:

      “The question, then, becomes who will take their place? I don’t want it to be Apple. That would put Apple in the same predicament.”

      Perhaps we will see a more fragmented OS market having MS give way to Linux and Apple. I'm sure MS will still be around just not as strong..Time will tell.

    15. “The question, then, becomes who will take their place? I don’t want it to be Apple. That would put Apple in the same predicament.”

      Perhaps we will see a more fragmented OS market having MS give way to Linux and Apple. I'm sure MS will still be around just not as strong..Time will tell.

      That depends. Microsoft didn't become number one by virtue of having the best products.

      Peace,
      Gene

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