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Microsoft Lives in the Bizarro Universe

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.