Three Guys and a Podcast

Three Guys and a Podcast: Apple News & Analysis

December 04, 2013 at 6:46am Pacific Time
by: E. Werner Reschke
Categories: iPad, iPhone


Microsoft is on tough times. Their stock price has been relatively flat during the past five years, they've lost their swagger, and outside of Xbox effecting the lives of 17-year-old boys (and those who still act like them), no one outside of stock holders really care all that much about the software giant.

During Steve Ballmer’s tenure, Microsoft launched an unimaginative Windows Vista, followed by a successful Windows 7, followed by an serious error in judgment with Windows 8 —completely altering the user interface in drastic ways that is confusing a great many people. 

Among the many issues Microsoft faces moving forward, the biggest problem the entire  corporate entity must address is becoming relevant in mobile computing. Mobile is both the now and the future, yet Microsoft is still desperately scrambling to gain any form of relevant traction in the mobile arms race. Microsoft certainly has the brand name, enough brain trust and capital to be a force, but there are four main reasons why they continue to be losing in the mobile space.

  1. Hardware that no one needs. Surface. A computer that is both a tablet and laptop? This idea shows a complete lack of understanding of the tablet market, and wreaks of Microsoft insisting their desktop monopoly, in some laptop form, must be a part of mobile life. Just because a magnetic cover keyboard can click onto a bulky touch tablet doesn't make the device a laptop or a tablet. One also has to question whether this is really what the market is demanding? Despite hundreds of millions of dollars in Microsoft advertising the living life out of the global populous, the answer is still a resounding no. Apple's iPad was launched to solve a specific problem — low cost computing that was powerful yet easy to use. At the iPad's launch in 2009, everyone else on the planet was building netbooks. Netbooks were said to be the future because they made computing accessible to everyone due to their low sub-$500 entry price. The big question in 2009 was when would Apple launch their own netbook. Apple coyly stated it was eyeing the netbook space but didn't want to comment on unannounced products. Apple knew there was a market for sub-$500 computers, but also understood that while netbooks satisfied the market’s price point, the functionality piece of the puzzle was lackluster at best. Apple’s answer with the iPad solved both problems. If Microsoft thinks building "click-in" not-a-good-laptop/not-a-good-tablet is the answer to iPad, it will be a very bumpy road for them during next several years. What problem does the Surface contraption really solve?
  2. Don't be late. Unless you are über-fashionable, it is never a good idea to be late — especially when being late to a market that is worth tens of billions of dollars. Despite this sound business principle, Microsoft’s history is littered with late arrivals to key markets:
    • Microsoft followed the revolution from command line computing to GUI based computers.
    • Microsoft follow the move to web browsers and use of the internet.
    • Microsoft followed when it came to online music and players.
    • Microsoft followed in social networking.
    • Microsoft followed in console gaming.
    • Microsoft followed with internet search engines.

    All of these markets are worth multi-billions of dollars that Microsoft, for whatever reason, was late in entering. Some of these markets forgave Microsoft for its tardy behavior, but many did not. The mobile space is the most glaring example and almost (if not bigger) than the transition from DOS to Windows. However, in that case hardware was the same: desktop to desktop. In the current revolution, mobile and desktop hardware are very different and it's not clear Microsoft really understands this key difference.

  3. Office is no longer that important. If this were 2003 Office was an essential piece of software for virtually any white collar worker. Today that is no longer the case. Apple’s iWork suite, Google Docs and other options are all a plenty. Office no longer holds a monopoly on productivity software, and that's a huge problem for Microsoft. The Redmond giant's claim that Surface tablets are the most productive because they run Office no longer rings true for tens of millions of technology users. Maybe Microsoft is living in a bubble and don't get it, or maybe the company is desperate to try and promote the idea that Office is still the only option available? Whatever the case, Microsoft's dual-monopoly power of Windows plus Office has been broken. Users have figured out there are other solutions that do the same job, and there appears no easy solution to fix an ever increasingly leaky ship called Office.
  4. Management. Microsoft's management is summed up in two words: Steve Ballmer. Ballmer's inept ability to understand new and emerging markets and how to leverage Microsoft's strengths to capitalize in those spaces was Microsoft's decade long problem. Unless the next CEO can figure out what Microsoft does best, and say no to all the other things it has proven it can't do well, Microsoft will continue to drown in the sea of irrelevance.

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