In The Boardroom, The Mighty Boardroom, The Ballmer Sleeps Tonight

Steve Ballmer, President and CEO of Microsoft
Steve Ballmer, President and CEO of Microsoft

Steve Ballmer has a huge series of problems. I guess you could say he’s a popular guy.

Problem #1 – Apple

Apple’s out to get Microsoft. Most people will tell you I’m crazy to say this, but look at it this way: Microsoft can’t win if Apple survives, because Apple owns the top end of the market. And while Apple can win if Microsoft survives, no one at Apple is stupid enough to turn their back on Microsoft.

And the proof exists. How come every time Apple introduces a new product, it hits one of Microsoft’s markets? Lets see:

  1. IWork competes with Microsoft Work
  2. OS X competes with Windows
  3. OS X Servers competes with Windows server
  4. The IPod competes with all of the Windows Media music/video players including the Zune
  5. The IPad wiped out Microsoft’s Ten Year old Tablet PC market.
  6. The IPhone destroyed Microsoft’s ten year old Windows Mobile market.
  7. While Quick time hasn’t destroyed Windows Media Player, it’s a good alternative.
  8. MobileMe competes with Windows Live
  9. Apple TV competes with Windows Set Top Boxes
  10. Itunes competes with Microsoft Plays for Sure, Certified for Windows Vista, and Zune Marketplace

There’s probably other markets where they compete that are not listed here. I wasn’t trying to be complete, but to illustrate a situation that most people don’t believe exists. The fact that a situation this obvious is so totally ignored everywhere, including the press is amazing.

Yes, Steve Jobs did say that Microsoft didn’t have to die for Apple to win. Agreed, he really did say that. Now prove that he was telling the truth. You can’t. There’s no evidence that he is, and there’s no evidence that he isn’t.

Me, I’m convinced that Apple intends to kill Microsoft. There are a lot of people at Apple who still remember the lawsuit over the Microsoft Windows interface, and how they lost. As far as they are concerned Windows infringes on the copyright of Mac OS. They want to get even.

Apple’s Latest 10Q

Microsoft’s Latest 10Q

Problem #2 – Low Powered Devices

And no, I’m not talking about phones or tablets. Microsoft, however late, is working fixing the problems there. I’m talking LOOOWWWW powered devices. How about this baby, designed to monitor eyeball pressure to check for glaucoma?

It’s a really low power device, and has to be, since it’s implanted. There are two basic operating systems that can run on this, GNU/Linux and GNU/BSD. And not a sign of Windows in sight. Power requirements are an issue. Windows is designed for top of the line hardware, not some pokey little ARM chip, so it’s not usable. Because most of the new applications we are going to see over the next couple of years will use ARM. Remember hearing that Google TV is being put back a year? It’s being put back because governments want low powered TV sets, and Google made the mistake of specifying X86 hardware. X86 isn’t low power. So Google had to switch to ARM, which while itself wasn’t difficult (since the software was running on the Linux kernel, which works fine on ARM), is delaying the project.

Problem #3 – The Consumer Cloud

Recently Microsoft shut down Live Blogs, moving the users to Word Press, a Free Software based blogging platform. Hotmail is dropping users, not because of the technical problems which knocked it out, but because it has abysmal spam filtering. It’s partner Yahoo has the same problem.

Why can’t Microsoft deliver an ad supported free service? Wish I knew. Lots of other companies are successful doing so. The problem appears to be Microsoft specific.

Problem #4 – Microsoft Exchange

Microsoft’s Server and Tools Division has been doing well, in fact better than I had expected. The replacement of it’s current head doesn’t bode well for a division which has two massive problems.

Microsoft Sharepoint by all reports does work. In fact it appears to be one of the few products that Microsoft has gotten right. It’s a fantastic corporate document storage portal. With one huge weakness. Exporting the document database out.

Most people don’t think that this is a big deal. The problem is that Microsoft depends upon sales of Microsoft Exchange to support Microsoft Sharepoint at the present time. This could put Sharepoint in a bad spot, is Exchange sales dry up.

And that could happen. Exchange has some massive technical problems. Way back in the early 90’s, Microsoft was working on a project called Cairo. Exactly what Cairo was supposed to do no one is certain, because Microsoft said so many contradictory things. But one of the technologies developed in Cairo was Object File Store.

Object File Store was supposed to be a database file system, however it never say mainstream deployment, instead it was deployed as a technology in Microsoft Exchange Server. While it might have been a good idea to treat emails as ‘objects’ to make searching and retrieving them more efficient, there were certain downsides. Microsoft Exchange Server has never been all that stable.

When it gets even less stable, you can end up with your server installation going south at a high rate of speed. In simple terms, because of the software architecture Exchange Server’s reliability isn’t all that good. Even with it’s problems it’s been a good, solid, money maker for years.

So what if a combination of the future release of Samba 4, an GPL/AGPL email/collaboration server, and a GPL/AGPL content management server were released? It could destroy the economics of Microsoft’s server business. And it certainly would put Microsoft’s current pricing structure under significant competitive pressures, cutting margins.

Problem #5 – Customer Loyalty

This is actually the killer. The problem is that Microsoft has been the eight hundred pound gorilla for too long. Eight hundred pound gorillas get what they want, after all, who would be crazy enough to argue with them?

But Microsoft has messed up too many times recently. Microsoft wasn’t able to supply a mobile phone operating system, so it’s phone system customers had no choice but use Google’s Android to compete with Apple’s IPhone.

And now Microsoft doesn’t have a workable tablet operating system, or at least not one that will run on ARM chips. After all, if they wanted to deliver a table using Intel chips that had the same operating time between charges, they’d have to use triple the size of battery, which pushes costs up, making you uncompetitive.

So everyone is using ARM to compete with the Apple IPad, which uses ARM. And Microsoft’s ARM operating system is a primitive hunk of junk. Microsoft promises that they will have Windows 8 working on ARM as well as Intel, but Windows 8 is approximately two years away.

And no one is going to make the mistake they made last time. There’s no damned way that any of the OEMS will let Apple own the field for two years. And since Windows isn’t available, Android is getting the call. The early Android tablets, like the Samsung Galaxy are pretty horrid. In fact the Galaxy has sold 2 million tablets into the ecosystem, but customers aren’t buying it off the shelf. They are however buying IPads.

It doesn’t matter that the Galaxy is apparently a failure. Samsung learned a lot from it, and it’s replacement will be better. If it isn’t, someone will be looking for a job.

In fact the Darwinian pressures in the tablet market will be positively fascinating over the next 18 months, by which time things will have settled out, and Android should pass the IPad’s market share by the end of 2012.

All before Microsoft can even get an operating system in the field.

Poor Microsoft.

Regards

Wayne Borean

Tuesday February 1, 2010

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5 thoughts on “In The Boardroom, The Mighty Boardroom, The Ballmer Sleeps Tonight

  1. I actually think Apple and Microsoft would be happy to share the market between them. Apple don’t need market dominance to win. Microsoft however does need the board room. Apple doesn’t. Interestingly both Apple and Microsoft seem to be partners in a lot of ventures these days. They are for example ganging up on Android and open source in general.

    I do however think you’ve got it right with the call that Microsoft is over and out. Unless by some miracle of bribery Microsoft suddenly manage to muster support for their phone OS it’s time for a change. And that change will come fairly easily.

    1. While Apple might be happy to share the market (and I’m really not sure they would be), Microsoft wouldn’t. And that’s the deciding factor. When someone is trying to kill you, well, you have no choice but to fight back if you want to survive.

      Wayne

  2. the iPhone success in the consumer market.

    Windows Phone it´s very better than the iPhone in games, and music (i prefer Zune to iPod and iTunes). And much much better than Android in theese fields

    Also combined that with the enterprise fetures that Microsoft can provide (i mean, exchange, office, etc,…)

    Sorry but I think in 2 years Windows Phone will have the same market share than the iPhone. In fact the iPhone market share was flat last year (about 16%).

    Of course, Microsoft will no abandoned the computer and the enterprise space, like Apple is doing.

    1. Windows holds the dominant position in the market, because Microsoft uses it’s market position to lock everyone else out. Which is why a U.S. court found that the company was an illegal monopoly.

      As to Apple taking Michael Dell’s advice, possibly Michael Dell should take Michael Dell’s advice.

      As to WIndows Phone 7, we’ll see. I expect total sales for the year to be less than stellar. Most people seem to prefer Apple for games and music so far. Unless Microsoft can do something special, that’s not likely to change.

      Wayne

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