Can Microsoft(s msft) do it again? The company that morphed from an upstart in the PC era by continuously taking on, then supplanting bigger, market-leading rivals, is in that position again — trying to make up ground in smartphones, in tablets, in cloud computing and in virtualization. In short, in almost all the categories driving modern-day computing. Where it still leads — in desktop productivity applications with Office and desktop/server operating systems with Windows, it remains king, but king of the fading realm of client-server computing.
My story earlier this week recounting Microsoft CEO Steve Ballmer’s latest vow to fight Apple(s aapl) on the streets, on the beaches, across product categories, raised a great deal of, um, skepticism among GigaOM readers. Ballmer said Microsoft on his watch would not cede any product category to Apple. Not one.
To which, commenter Harvey Lubin wrote:
This is exactly what is wrong (well one of the things, anyway) with Microsoft. They have started to compete on too many fronts, against too many competitors.They want to beat Apple at computer hardware, and mobile services. They want to beat Google at Web search.They want to beat IBM at servers. They want to beat Sony & Nintendo at gaming. By trying to do everything, they end up doing none of them very well.
He has points here, but to be fair, Microsoft has taken on multiple rivals many times before. In the early PC era it was Lotus, WordPerfect, Ashton-Tate, Novell. And it handled them all.
Hey, Microsoft! It’s not the ’80s (or even the ’90s) any more
Microsoft’s winning percentage is pretty spectacular so the question is, what’s different now?
Reader Richard Repplier wrote in to say that Microsoft’s earlier successes came in a completely different era. “This isn’t the 1990s,” he said.
“It’s a very different world now where mobile is king, the desktop is fading, and Apple has got such a lead in technology and love from the market that no one, especially not a company that is just too wedded to 15 years ago, is likely to pose much of a threat. Not that Microsoft hasn’t come up with a few modern concepts recently (I thought the colored tiles in Windows Phone 7 were a fine idea and something really fresh), but Microsoft looks through a glass that distorts everything into the view that the Windows desktop OS is the proper basis for all products, now and indefinitely into the future. (I’m exaggerating a little, but only a little.)
To put it in the simplest terms, Apple makes products that people are crazy about and will stand in line all night to buy. When was the last time you saw a Microsoft product that inspired that kind of devotion? Microsoft is strong in the enterprise, but (other than the Xbox 360) that’s pretty much all they’ve got. And even in the enterprise, BYOD is eating into Microsoft’s share to some extent.
Don Bulens knows a thing or three about competing with the Microsoft of that earlier era. He was a long-time Lotus Development Corp. exec when that company (now part of IBM(s IBM)) competed with Microsoft first on spreadsheets (Lotus 1-2-3 vs Excel), then groupware/email (Lotus Notes vs Exchange Server) and said Microsoft was duly respected for its relentlessness. “Their motto was ‘if at first you don’t succeed, it’s try, try, try, try, try again,’” said Bulens, who is now CEO of Unidesk, a desktop virtualization specialist.
Microsoft won those early battles and also later took down Netscape Communications with Internet Explorer. It also made impressive headway with SQL Server although Oracle remains the database market leader, at least in revenue. (SQL Server leads in units.)
“But most of those examples are historical – a long time ago,” Bulens said. Microsoft’s tried-and-true model of chipping away at a product category over the years until it got it right (usually around release 3) isn’t applicable in the web era of continuous updates. While Microsoft is moving to the software as a service and cloud deployment model with Office 365 and Azure, many still see it hamstrung by its need to protect cash cow on-premises products. That’s a perception Satya Nadella, president of Microsoft’s Server and tools group and the go-to Azure guy, is trying to change.
And those earlier battles were all built on Windows, an operating system that is seen as fairly irrelevant (sorry, Microsoft) in the web era.
Whether Microsoft can withstand Google – the well-funded insurgent backing Google Apps (vs Office and Exchange), is a big question. To be fair, though, Google(s GOOG) suffers from the same mixed-priority, cover-the-world strategy as Microsoft. But Apple, with its more focused approach, as we all know, has schooled Microsoft in tablets and smartphones.
Bright spots: Hyper-V, Xbox
Some caveats: First, there are signs that Microsoft — perhaps chastened by the realization that it is no longer “the” software superpower, is behaving better. Never underestimate the importance of working well with others. Second, Bulens and others say there are two areas where Microsoft has replicated its early success or is on the road to doing so. The wildly successful Xbox and Kinect franchises, have taken on Sony(s SNE) big time in consumer electronics and gaming. And Hyper-V is coming on strong, and Microsoft is using its patented bundling approach — Hyper-V is free with Windows Server — to steal share from market leader VMware(s vmw). “VMware doesn’t appear to be worried about Hyper-V but it should be,” Bulens said.
Microsoft’s Windows 8 product launch later this year, along with its smartphones and Surface, will help determine whether the company can worry Apple as well.