Blog Post

Can Microsoft recover its super powers? Doubts persist

Stay on Top of Emerging Technology Trends

Get updates impacting your industry from our GigaOm Research Community
Join the Community!

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.

Photo courtesy of Flickr user ToddABishop

19 Responses to “Can Microsoft recover its super powers? Doubts persist”

  1. Harald Engels

    I think this is nonsense. If you want to succeed you have to fight on all fronts. Microsoft is just not longer good enough, made many wrong decisions and is definitively too slow for the IT market in the 21st century. The corporate culture is the problem. A fish stinks from the head down.

  2. pk22901

    “In the early PC era it was Lotus, WordPerfect, Ashton-Tate, Novell. And it handled them all.”

    Why ‘forget’ Netscape? MS defeated adversaries through the advantage of owning the dominant platform they were built on. (Novell being the exception. MS defeated IBM OS2 in blatant partner killing.) Eventually, the DOJ stopped some of their thuggish behavior, but then, iOS, Java, Android and Linux made it inconsequential.

    Today, Windows is NOT your father’s Windows; it’s just one platform among many.

    Perhaps MSs special gift in the old days was just not being embarrassed about using Windows to kill off competitors.

    Reading the news, MS still has its rape and pillage act in place: Nokia and Yahoo come to mind.

    Somehow I think, MS needs to deliver on innovation in a world that gives them one shot, not three. This is a ‘new’ ball game for them.

    Could they do it? Maybe, we’ll see. There’s no rush. I think a year from now, we’ll see how strong MS really is.

    • microsoft had a great run, esp for a tech co. totally lacking in ideas and talent. What they lacked, they more than made up for with aggressive marketing and disregard for ethics, law and morals. microsoft NEEDS to go away. They stand in the way of innovation and progress.

      It pains me to read that there are people who not only believe they were “innovators” but that they are still capable of doing it.

  3. Jeff Putz

    Why is it that people are always knocking the company for competing with too many things? The company has 90,000 employees and about as many contractors and vendors. Why do they have to be one thing and win at every single one of them?

  4. Deanna Glaze

    While the question of whether Microsoft can effectively compete is a very fair question, some of the arguments posed are dull and tied to a perspective that has become a cliche. Microsoft is competing on too many fronts? Have you been paying attention to Apple, Google, and Amazon? Apple took on Amazon with ebooks, Amazon is rumored to be coming out with a phone, and Google…well, Google is all over the place. I don’t think Microsoft is competing on too many fronts. In fact, I would argue that they are dead in the water if they can’t go big and own the ecosystem. We’ll see.

    • you make a great point. I should have mentioned amazon in this story as well bec. clearly it is becoming a more direct competitor to msft as well. As i tried to point out, microsoft has a history in fighting multi-front wars…
      thanks for the comment.

      • I don’t think they have fought against competitors like these. These are all companies that have cash, brand-name and credibility. Novell, notes, wordperfect and ashton-tate ? Are you $hittting me ?

        Apple has more cash than m$ and is generating more every quarter than m$. Moreover, their partner OEMs like DELL, HP, IBM etc are not the channel partners for apple, google and amazon. m$ can neither use arm-twisting nor legal shenanigans to uproot the competition, though they are trying it with google. Nor can they just steal code from their competitors and start selling as their own ( heck, they didn’t even change the product’s name from sqlserver after they stole it from sybase).

        It is a whole another ball-game and m$ is not only without a bat, its not even wearing any pants, as we will all see in a couple of years.

    • Google is all over the place, and Microsoft is all over the place, and they’ve both had a lot of failures. Microsoft has had little success in mobile for 10 years. What’s *your* explanation for that?

      • Deanna Glaze

        It isn’t my job to explain or make excuses for Microsoft. Yeah, they’ve had failures and so has Google and so has Apple…I suspect brand perception has a great deal to do with why Win7 phone (who’s UI is so much more refined than iPhone, IMHO) has not done better. They have made some interesting shifts and I’m curious to see if and how they tie it all together.

  5. Most people’s opinions are somewhat short-sighted. Everyone seems to enjoy this 10-20 year old game of bashing Microsoft at every opportunity, not-so-elegantly ignoring facts that don’t sit well with their arguments.

    “an operating system that is seen as fairly irrelevant in the web era”
    Yes, all the tech blogs feed off of Apple’s marketing and silly “post-PC” hype, but that’s hardly the case. I’m not denying the shift to mobile computing, but just look at the numbers of Windows 7 licences sold in the past year, backed by the huge profits Microsoft makes from them. A revenue source of tens of billions of dollars annually is not “irrelevant”, even if it were declining, which may or may not be the case.

    2. As admitted in the article, Microsoft sometimes enter a market late, but in many cases that hasn’t stopped them from succeeding. The mobile landscape is shifting so quickly, that it’s quite plausible that Win8, WinRT and Win Phone 8 will capture a significant portion of the tablet and smartphone market in a couple of years. Not to mention the money they make on Android licences…

    3. Desktop productivity isn’t going anywhere. The fact that people buy more smartphones and that there’s a lot (to put it mildly) money in that segment does not imply that people suddenly have no more need for Office software and related services. What I’m really saying is, this isn’t a zero-sum game. Since the entire consumer technology market is growing fast, Microsoft can keep raking in billions every quarter for the foreseeable future even if its *relative* slice in the pie is smaller.

    4. Partly due to the points above, Microsoft can afford to push hard in several new areas, and if you look at their offerings from Xbox, Azure, WinRT etc., they are at least competitive with anything else out there, if not superior. It just doesn’t look like they’re spreading themselves thin.

    Just to be clear, I have absolutely no connection to Microsoft, I simply appreciate some of the things they do lately yet fail to generate positive hype around.

  6. “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.”

    Pick your battles carefully Microsoft!!! Surface is the right step!!!