Microsoft Death Watch – OHHHH, SHINEY!

Me and my junior editor, Kleopatra
Me and my junior editor, Kleopatra

Kleopatra and I have been laughing ourselves silly. Everybody got the Apple announcements from Tuesday September 10, 2013 wrong.

Not just wrong, DEAD WRONG.

OH, SHINEY

Yes, there’s a new iPhone. Two of them. They DO NOT MATTER.

Sure, Apple is going to sell a lot of phones (though I think that Tomi Ahonen was right, and that the price point on the cheaper iPhone is wrong).

Yeah, iTunes Radio may be competition for Pandora. Quite frankly who cares?

IOS7 is mostly a yawn.

But….

Buried in the IOS7 announcement is the most important part. New IOS devices will get copies of the iWork Suite free.

At this point most of you are probably wondering if I’ve lost it. Apple has just decided to give away software that they’d been making a decent profit on (at least we think they were making a decent profit, the information in the 10Q isn’t clear on this).

Ah, but…

Microsoft’s Surface RT died in the marketplace. We don’t know if Microsoft intends to continue the RT line. There were rumours that Nokia had been working on an ARM tablet, to compete with Surface RT. Of course Microsoft now owns Nokia’s mobile division, so they also own the rumoured Nokia tablet.

And Nokia Mobile has access to Microsoft’s sales chain. This is an advantage to both companies.

Regular Surface tablets appear to have sold better than Surface RT tablets. In part this is probably because they can run standard Windows software, which Surface RT tablets couldn’t.

The big advantage that both Surface and Surface RT had over the iPad was Microsoft Office. Rumours are that Microsoft was charging $99.00 for Windows RT including Microsoft Office, and about $35.00 for standard Windows 8, without Microsoft Office. Office seats cost a variety of prices, depending upon whether or not you get a Corporate Discount.

To a certain extent that made Office semi-competitive to iWorks, which cost $30.00 for Pages, Keynote, and Numbers. iWork doesn’t have an equivalent to Outlook, but Mail can do most Outlook functions, it it was already free with IOS. Other Office Applications only come with the more expensive versions of Office (Professional, etc.)

Now iWork is free.

How does this impact Microsoft?

Really badly. The only competitive features that the Microsoft Windows 8 tablets have are Office, and the ability to load standard Windows software. The Windows RT tablets only had Office.

Effectively they’ve lost that advantage. When you buy a new iPad, iPhone, or iTouch, when you start it up for the first time, you have the option to download and install the iWork suite. At no charge.

There’s going to be a lot of argument that the iWork suite for the IOS devices isn’t as good as Office. This misses the point. Technically, a tablet isn’t as good as a laptop. But a tablet is a lot more convenient, generally lasts longer on a charge, and has capabilities that a laptop doesn’t. We are talking Disruptive Innovation.

Once is happenstance. Twice is coincidence. The third time it’s enemy action.

April 28, 2011, and article of mine appeared on SemiAccurate. I covered twelve actions that Apple had taken, which could be considered direct attacks on Microsoft.

Since then, there’ve been a couple of other things that Apple has done, which could be regarded as further attacks on Microsoft, but they were relatively small.

This is the big one. Office is Microsoft’s main money maker. It accounts for far more of Microsoft’s profits than Windows. Apple has just launched another attack against Office. In many ways this is the most serious attack yet. Consider:

  1. Classical computer (desktop/notebook) sales are dropping.
  2. Tablet sales are surging.

This puts a crimp in Microsoft’s sales of Office. By making iWork free for IOS devices, Apple has also killed Microsoft’s chance of delivering an IOS version of Office, and making a profit from it.

Microsoft’s only alternative, if Windows RT and Windows 8 tablets don’t sell in huge volumes, would be to introduce an Office version for Android. But there they face The Document Foundation’s LibreOffice port, which is rumoured to be ready for introduction in 2014.

Effectively Microsoft’s only option is to sell a hell of a lot of Windows Tablets. The problem is that Microsoft has been unable to do this. Microsoft’s primary market, the Windows desktop is shrinking, and Microsoft is unable to gain any traction in the Mobile or Tablet markets.

Back when I first started writing the Microsoft Death Watch series, what had drawn my attention was Microsoft’s reliance on only two product lines (Windows and Office) for profitability. Since then, Microsoft has finally started making money on the xBox, and while the Server and Tools Division was never flashy, it always made something (we’ll ignore the sinkhole that is Bing). But basically, Microsoft is in the same situation. Without Office and Windows, the company is moribund.

The biggest weakness was Microsoft Office. There were a variety of competing products. While it could be claimed that none of them were as good, it could also be claimed that Windows 95 wasn’t as good as the then current Mac OS.

Microsoft has worked hard at attempting to gain market share in a variety of markets. The only partial success was in game consoles. Whether or not Microsoft will be able to continue in that market is open to question. The xBox One does not appear competitive with the Playstation 4.

Windows RT was supposed to be competitive with Android and IOS. It failed. Windows 8 was supposed to be competitive with Android and IOS. It appears to have failed as well. Windows 8 on the desktop has been – interesting. I’ve helped a couple of people migrate back to Windows 7, because they hated it that much. Windows Phone is probably the biggest disappointment Microsoft has ever had.

So where does Microsoft go?

I don’t have a clue. The company still has tons of money. It still has lots of talent. What it lacks is the ability to deliver things that people want.

And until it figures out how to deliver what people want, it’s going to continue to shrink.

Back when I first started writing these articles, I got a lot of negative feedback. I was told that I was crazy, that I’d lost my mind, that Microsoft was unstoppable, and on and on. In the last year, all those complaints have stopped. I haven’t had one negative response. It appears that other people are starting to see the cracks.

Took them long enough.

Regards

Wayne Borean

Thursday September 12, 2013

 

 

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10 thoughts on “Microsoft Death Watch – OHHHH, SHINEY!

  1. You just made me see the whole new iPhone in a different light. I’m so naive, I’m actually a little stunned. Wow.

    Pages which is part of the suite or available on it’s own, is a good writing app and it converts your file to a Word document with a touch. Nice if you’re sending out an article to an editor or someone asks for your full manuscript:) I’m sure they’ll continue to perfect it so that it’s not just a good app but an awesome app that no writer can live without. Kind of like Word was back in the old days.

    Interesting times we live in. LOL Thanks for the new perspective!

    1. Pages is quite capable. Microsoft Word may have some extra capabilities, but how often does the average user need them?

      It’s the same with LibreOffice/OpenOffice/KOffice. Each of them is more than capable ot doing 90% of what Microsoft Office does, at far less cost. I personally think that Microsoft Office is going to have to be reduced in price dramatically to compete.

      The only problem is Microsoft can’t afford to reduce the price, since Office is the big money maker.

      Wayne

  2. “Kind of like Word was back in the old days.”

    You mean like they had to bundle it with Win95 to get people to buy it? You mean like they had to put landmines in Windows for WordPerfect to persuade people that Word was more reliable?

    imnsho, Word has ALWAYS been a TERRIBLE app. Unfortunately, WordPerfect has been steadily going downhill as it tries to ape it 😦

    Cheers,
    Wol

    1. Ah, but Word Perfect is a lot less expensive than Word. I know a number of people who really like it, and still use it.

      Microsoft has done well where they could leverage a monopoly position. Where they haven’t been able to leverage a monopoly position, Microsoft has suffered badly. Competition isn’t something the company is good at.

      Wayne

  3. If apple really wanted to fire a shot across the bow of Microsoft, they would have made iWork available cross platform. Even free, it is just another captive application.

    1. Why? Apple has no need to chase after the Windows Productivity Suite market, LibreOffice and OpenOffice are already doing really well.

      Besides, Apple is a lot like Microsoft. Microsoft wanted Office to only be available with Windows, to drive purchases of Windows. Apple does the same thing with Logic, Garageband, iWork, Aperture, etc.

      Wayne

  4. Apple has started competing with Microsoft. It makes sense, it’s their only way of growing any more, and growth is the only form of success that the current world economy recognizes. Bizarrely enough, a company that makes billions in profits and has a large part of the world’s population as customers can still be considered “stagnant” and scare investors away.
    Still, I liked Apple a lot better when they just ignored Microsoft and didn’t try to copy them, or at least kept up the appearance of not trying to copy them. They seemed so far ahead, and so set apart from what MS did, that they didn’t really have to care. That might have been an illusion, but their mind tricks worked just fine. Until now, at least.

    1. Apple has always competed with Microsoft, even back before Mocrosoft started doing operating systems. The main difference now is they are doing so effectively.

      For a long time Apple seemed to be taking the “Ivory Tower” approach. Since Jobs came back, Apple has been a lot more cut throat about it.

      Wayne

  5. I know it is months later, but may I also point out that Google now owns QuickOffice. QuickOffice runs on Android and iPhone/iPad. QuickOffice was a paid app, but now is free (at least on Android).

    1. Hey, no problem.

      As to Google owning QuickOffice, it was an excellent buy. Microsoft Office is one of the major factors that keeps Windows a viable platform. By providing an Office app on alternative platforms, Google is able to prevent Microsoft from using lock-in to keep users on the Windows platform.

      Microsoft’s big issue right now is that their attempts to expand beyond the PC market have met with little success. There is reason to believe that Microsoft’s Brand has become toxic with consumers, and that to a certain extent people are buying anything but Microsoft.

      When I first predicted Microsoft’s imminent demise, everyone thought I was crazy. It turns out that I was probably right, but totally wrong as to how it would play out.

      Wayne

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