Microsoft Lives in the Bizarro Universe

February 20th, 2013

So Bill Gates is disappointed that Microsoft hasn’t done more to gain a substantial foothold in the smartphone market. Well, maybe, but coming up with a credible alternative to the iOS and Android, and discovering that noisy ads only turn people off, would be good for a start. But you have to wonder about many of Microsoft’s decisions these days.

Windows 8, for example, hasn’t earned much love, and making an operating system nothing short of confusing and distracting didn’t help PC sales this holiday season. Of course, it may no longer be possible to do anything but reduce the sales erosion somewhat. It’s also possible Mac sales will continue to decline, though I won’t dispute Apple’s contention that the inability to deliver the iMac in a timely fashion hurt big time during the last quarter and it appears that situation will continue through the March quarter as well.

When it comes to Windows Phone, I’m not saying it’s necessarily bad. But it’s not as if the tiled interface has a real record for success, even though Microsoft has opted to stick with it. With reports that the platform’s market share is even less than BlackBerry has to hurt. Industry analysts who asserted that Windows Phone would be a real contender with iOS and Android shouldn’t quit their day jobs. If being an analyst is the day job, they need to consider a different line of work.

One key difference between Apple and Microsoft is that the former isn’t inclined to stick with something that’s demonstrably unsuccessful. As much as Steve Jobs clearly adored the Power Mac G4 Cube, he accepted the inevitable and discontinued the product. Even when new iPod models were successful, Apple didn’t hesitate to throw it all away and try something new. It’s also true that Apple ignored analyst claims that the iPhone and the iPad were yawners and destined to fail. Clearly there’s a disconnect.

Microsoft lives in a world where throwing money at a problem will eventually yield a solution. The company poured billions into developing and marketing the Xbox gaming console. Eventually, modest profits resulted, but not enough to put the aging platform into the black overall. Was it worth the effort? Well, it did make Microsoft a credible contender in the gaming console business, but at what cost?

So it would seem that Microsoft will continue to pour money into Windows Phone, even when the industry moves elsewhere, perhaps emphasizing wearable devices. How many years does Microsoft expect it to take to build market share? The industry is moving far too fast to make much room for another platform, or to reevaluate an existing platform. BlackBerry is equally fated for ruin. The new BB10 smartphones may be quite good, but not good enough to upset the industry and encourage buyers to reconsider BlackBerry.

Now in a move that surely lacks substance in the logic department, Microsoft has just upped the prices of the aging Mac version of Office, released in 2011. Rather than cut prices, which would seem to be the appropriate move for a product that might be getting a tad long in the tooth, the prices have increased by roughly 17%. But it doesn’t end there. There are no more multiple user packs for Office 2011, meaning you can’t just buy a copy and have it work, say, on your Mac and your MacBook. That, in effect, more than doubles the price.

Microsoft’s goal is evidently to move you to a subscription program, so you pay annual fees for Live 365 rather than one fee for a software license that works until new hardware makes it obsolete. That may make sense for Microsoft’s bottom line, but doesn’t that move make iWork, itself a project in need of an upgrade, a far more attractive alternative?

Worse, despite the fact that the Windows 8 upgrade hasn’t been very successful, Microsoft has not opted to continue the special upgrade price of $39.99 for a downloadable version. As of the first of February, the price increased to $119.99 for the regular version, and $199.99 for the Pro version. Maybe the profits will be fatter, but how many potential customers will just say no? Where’s the logic in making a product with at best a modest level of success more expensive? The bean counters at Microsoft may have won the battle, but where’s the logic in that?

All right, so Gates is fully supportive of his old chum, Steve Ballmer, as CEO of the company he co-founded. So what has Microsoft done lately to demonstrate that any current product is ahead of the competition? The Surface tablets, which have almost universally been damned with faint praise and shown no evidence of delivering more than modest sales? Windows Phone, where the share of the market has actually declined? What about the flagship OS, Windows 8? And does Microsoft really believe potential customers won’t be turned off by the decision to increase the price of retail software, and push people towards an even more costly subscription service, where you pay forever to keep the apps running?

Welcome to the Bizarro universe, where down is up, and losses are really profits.

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5 Responses to “Microsoft Lives in the Bizarro Universe”

  1. Ted Schroeder says:

    If I were Bill Gates, I’d fire Ballmer and put Daniel Erin Dilger in his place. LOL, I know this’ll never happen, but at least he should fire Ballmer.

    (Seriously, they should make Office for iPad and Office for Android. Now, before it’s too late.)

  2. Don108 says:

    Ted, my guess is that they already have Office for iPad developed and sitting on the shelf. They don’t want to release it because they consider it a key to their symbiotic trifecta of Hardware-Windows-Office. Cut off one leg and they feel they’d be doomed. So they’ll hold onto Office to drive people to Surface hardware.

    MS, in the past, has shown they will support money-losing projects (XBox) for years until they can convince enough people to use it and make some money. They’ll do the same with Surface until they can’t justify it any more. Then they’ll release office of iPad with much fanfare while they Plays-for-Sure, Kin, and Bob the Surface.

    The question is whether Apple can update iWork to make it a viable Office replacement, or if some form of Open Office and fully replace MS Office and they can publicize it. If either happens, MS loses a leg and can fall, especially if Apple updates iWork for Mac and makes it available for Windows.

  3. Dave says:

    Time for Apple to release a serious update to iWork. Release it simultaneously for Windows at the current prices and watch M$ squirm. Office is bloated, confusing and like Windows, the user interface changes drastically with every major release. I don’t want to learn a new application to send a letter.

  4. AlfieJr says:

    as for W8 upgrade pricing, basically everyone who was ever going to upgrade their current PC to W8 has done it already to take advantage of the initial sale price. that’s it, it’s over. MS intentionally pushed that hard to generate good initial sales numbers for W8. plus shipping a lot of licenses to OEM’s, probably at an initial discount too, for the same reason – aka, channel stuffing.

    but now that these one-times tricks have been played, MS is going to have to face the truth about W8 – it’s unpopular. so PC sales will remain depressed and decline even further as businesses and consumers hang on to their W7 computers for extra years to avoid it. by the end of the year it will be clear W8 is a huge flop – worse than Vista.

    and so will be Windows Phone 8, and both Surface tablets. pretty much a catastrophic year for MS. oh wait – the XBox 720! yeah, that will save the day.

    the only question is will Bill then finally throw his BFF Steve overboard? (answer: of course he will).

  5. DaveD says:

    Windows 8 (the “meh” edition) is Microsoft’s grand play that will go nowhere. Few will care to use/upgrade, but the masses have moved on to bigger (or smaller) and better things that have enriched their lives. The office drones may toil on Windows 7 for years. My bet is that Apple knows where the puck is going to be. Microsoft is using a shotgun approach hoping that one pellet hits the target. Good luck to that.

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