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  • Is Microsoft Preparing the Going Out of Business Sign?

    September 25th, 2008

    All right, I know some of you have complained that I tend to write lurid headlines. Maybe there’s even a suggestion that the contents of the articles themselves don’t exactly match that promise.

    I will quibble with you readers over that, particularly this time. After all, I’m sure most people would laugh loudly at even the suggestion that Microsoft is about to go out of business. They are, after all, the world’s largest software company, and their Windows operating system lives on over 90% of the personal computer desktops around the planet.

    Sure Apple has made huge strides, with Macs now garnering over 10% market share when it comes to retail note-book sales, although global figures are still in the lower single digits. So where do I come up with that silly stuff about Microsoft?

    First of all, I’m not suggesting that the executives at Microsoft are pulling the sort of shenanigans that did Enron in. That would seem to be a stretch. I also think that the SEC is, in light of the nation’s ongoing financial turmoil, more apt to observe signs that a company might be keeping extra sets of books or seriously fudging their profit and loss statements.

    But let’s look where Microsoft is right now. Windows Vista has proven to be far less of a force in the enterprise than they hoped. Shipping several years late, without a few key features, it comes across as a bloated version of Windows XP with an updated, resource-heavy user interface. Sure, Microsoft has likely resolved some of the serious conflicts with third-party drivers and applications, but it’s not as if businesses are taking a second look in large numbers. In fact, many are buying new PCs and rolling back the operating system to XP.

    Imagine, if you will, how people would treat Apple if significant numbers of Mac users bought new Macs and tried to induce them to run under Tiger. Sure there are people who still regard Leopard as buggy, but as the updates come forth, those numbers are diminishing. Besides, it’s probably not possible, since the operating system is closely entwined to the hardware, and it would take a lot of hacking to make older systems compatible, with no guarantee of success.

    The promise of Vista’s successor, Windows 7, appears to be a mixed bag. Just the other day, Microsoft was suggesting that the bundled apps, covering email, instant messaging and so forth, might be pulled from the product. Instead, your new Windows desktop would include an icon to go to the Windows Live site to download what you want. Or maybe the PC makers would just add their own alternatives, such as Mozilla’s Thunderbird.

    That, however, doesn’t appear to represent any huge amount of innovation, or any innovation for that matter. It’s just a case of musical chairs, though I can see that it might lessen antitrust concerns if the end user isn’t presented with a load of Microsoft junk on their hard drives.

    Beyond Windows, there is the potential of a successor to Office 2007, and that, and the other software products Microsoft produces, are largely more of the same with extra features to entice you to buy the overpriced upgrades.

    Outside of its core competency, Microsoft’s prospects are fuzzier. A third generation Zune lineup is out, but nobody seems to care. The successor to the Xbox 360 is supposedly under development, with Microsoft working on its own chip designs. However, just what expertise has Microsoft even demonstrated in such an endeavor anyway?

    But the real straw that breaks the camel’s back is the recent news that Microsoft wants to buy back $40 billion dollars worth of its stock. Their efforts to acquire all or part of Yahoo are forgotten, and evidently Microsoft doesn’t want to pour more of their large horde of spare cash into research and development, to demonstrate a real penchant for innovation, rather than a simple claim.

    Now I don’t know about you, but my suspicion here is that such a maneuver would do little more than increase the financial holdings of the executives and reduce the influence of individual shareholders. It would not end up allowing Microsoft to create and manufacturer superior products, or attempt further expansions beyond the software business.

    It’s just a financial maneuver and nothing more. With Microsoft’s stock price fairly stagnant in recent years, why are they doing this now? Could it be that they expect some serious change to their financial prospects in the future, and they want to give their executives a chance to build golden parachutes for themselves in the event of a wholesale firing of large numbers of employees?

    Considering what Apple can do with a fraction of the staff, you wonder what sort of efficiencies could be achieved over a Microsoft with competent management.

    Indeed, just what are Microsoft’s real prospects for five years from now? Forget about ten years. Just the near future, where you expect at least one or two major operating system upgrades, and enhancements to their productivity applications.

    Other than overpriced coffee tables riddled with touch sensors, just what is Microsoft going to do with themselves? Or are they planning to just take the money and run?



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