I’ve caught a lot of flak for predicting Microsoft’s imminent demise. The average person looks at Microsoft’s current sales, and just can’t see why Microsoft can’t continue on forever, coining money. The problem is that things change. What Microsoft is doing today, that is bringing in good sales, may not be the right thing to do tomorrow.
And I’m not the only one who’s noticed this. Business Insider, has run a series of articles about Microsoft’s problems, dating back to December 16, 2007. Let’s take a look at them.
Microsoft in Denial: Google Threat is Classic Disruption from December 2007, covers the threat of Google Docs to Microsoft’s main cash cow, Microsoft Office, and argues that Google Docs is a classic ‘Disruptive Technology’. While right, the article fails to mention Microsoft Office’s biggest competitor, Microsoft Office. If you compare Office XP (2001) with Office 2010 (2010), the only substantive difference is the interface. If there’s no real difference, why upgrade? And the answer is that most people don’t bother too. They don’t get enough value from an upgrade to make it worthwhile, which is why you can walk into lots of offices today, and find Office XP (and for that matter older versions) still in daily use.
Christmas Present For Apple Bulls: Mac Cleared for Takeoff also from December 2007 predicts growth at Apple, explains why, and also why this would be bad for Microsoft. It’s interesting to look back at this article, and then consider Microsoft’s failed attempt to imitate Apple’s retail success.
Google Search To Surpass Size of Microsoft Windows in 2009 from May 2008 covers the growth of Google, and the negative implications for Microsoft.
Microsoft’s Real Problem: The Second Coming of Apple from July 2008 is an exceptionally interesting read today, now that Apple has managed to attain a 20% share of personal computer sales. Back when the article was written, Apple had begun to see increased sales, partly due to it’s excellent IPod music player, and caused a fair bit of excitement with the launch of the IPhone. It’s computer sales were rising faster than any other company. But – there was no evidence that Apple would be able to keep sales rising, and in fact many analysts believed that Microsoft would produce a product that would make Apple once again an also ran. We know now that they were wrong, and Apple has gone from strength to strength, each time taking business away from Microsoft.
CHART OF THE DAY: In Case You Had Any Doubts About Where Microsoft’s Profit Comes From from February 2010 confirmed that yes, Microsoft get’s most of it’s profits from two product lines, Windows, and Office. I’ve been saying it, and I’ve even linked to their SEC filings, but you wouldn’t believe the number of people who still don’t believe me. OK folks, here’s the same thing, this time from a specialty business publication. Do you believe me now?
The Odds Are Increasing That Microsoft’s Business Will Collapse from June 2010 goes over several reasons that Microsoft, even though it is currently highly profitable, is probably going to have problems in the future. As the author points out, Microsoft is under heavy attack on it’s most profitable markets, and has little or no relevance to the new hot markets, such as mobile.
Here’s Why Microsoft Needs To Make Office Apps For The iPad from September 2010 suggests that Microsoft start producing IPad applications. The only problem is this article ignores the June 2010 article. Microsoft can’t afford to make IPad apps, or at least they can’t afford to make them and sell them at a price that can compete with Apple’s IWork ports. And of course you have to remember that Apple products are banned at the Gates house (and I suspect at the Ballmer house too). How do you evaluate your competitor’s product, if you don’t allow it’s use?
What’s Going On At Microsoft’s Secret iPad Group? from October 2010 confirms that yes, Microsoft has an IPad Group. What exactly it’s doing no one seems to know. Whether it will actually accomplish anything is open to question.
The Next 10 Products On Microsoft’s Chopping Block from November 1, 2010 covers some products that Microsoft has axed in the past, and makes suggestions for further product cuts. The problem is of course that cutting products does decrease expenses, it doesn’t increase sales.
Are You In Line For A Windows 7 Phone? from November 8, 2010 covers the Windows 7 phone launch, and asked people to send in pictures of line ups, if they saw any. Apparently they didn’t get any pictures.
Is It Possible Microsoft Only Sold 40,000 Phones Yesterday? from November 9, 2010 covers a persistent rumor – that the total number of all makes and models of Windows Phone 7 phones sold was 40,000 on the first day. I don’t know if this rumor is true, but currently Google is activating 200,000 Android phones per day, and generally the first day of sales is the big one, if there’s any excitement about the product.
This ties back into the June 2010 article, where Business Insider pointed out that Microsoft has been a spectacular failure in every new product it has introduced, except possibly the XBox360, and when I say possibly, it’s because while the XBox360 sold a lot of units, it had a horrendous return rate. The return rate was so bad that Microsoft took a huge write down to cover repairs, and no one knows if the XBox360 is profitable or not yet. In fact opinion is that because we don’t know, that it probably isn’t.
So if Microsoft only sold 40,000 phones on the first day, it’s quite possible that Windows Phone 7 is going to be a flop. There are also rumors of stores that sold out however. Whether this is because of limited stock, or because of higher interest in some areas, we don’t know. A final rumor was that there have been shortages of touch screens, and that this may have affected launch stock.
But all we have is rumors. The phone launched on Monday, it’s Wednesday night, and no one can tell us anything? That’s really odd. Apple was able to provide sales estimates the first weekend that the IPhone was on sale. We had sales estimates for the IPad as well.
So why don’t we have estimates for Windows Phone 7? Maybe because they are afraid to release them. I just wish I knew.
A final note – Business Insider also published an article titled Cybercriminals Launch New Era of “Geek Terror” which covers a range of attacks that have been made on a range of targets. The article misses one critical point. Almost all of the attacks mentioned only worked because the target was running Microsoft Windows. There was only one attack which may not have involved Windows, and that was the diversion of Chilean internet traffic to China. Get rid of Windows, and you get rid of the dangers, because every other operating system on the market uses a proper security model.
Wednesday November 10, 2010