Friday, 24 July 2009

Microsoft Wobbles Again

I am sure it has nothing to do with my recent purchase of a new laptop and downgrading it to XP from Vista Premium but little by little, the world is not at ease with Microsoft.

It has just announced that profits are down by almost a third in the last quarter. It has been a tough year with sales falling short for the first time in a long, long while and they took the unprecedented step of making redundancies in the first part of the calendar year. As the world did not look quite so rosy, they have seen an increase in competition from some of their main rivals. Last year, Google threw down the gauntlet by introducing their browser, Google Chrome which is neat, quick and works well. For many of us, browsers like Mozilla or Firefox have been good stand bys as I find an increasing number of websites display problems with Internet Explorer (IE) 8.

Google's strategy on Applications make use of the Cloud and Microsoft is significantly behind the pace here. Already some significant corporations are migrating to the Cloud concept of having their applications served from the web where they also store all the documents. Detractors say the web is still too unreliable but pro-campaigners are quick to point out how often corporate networks display similar problems while security is becoming less of a threat with arguably corporate networks at greater risk than parts of the web.

But it was Google's recent announcement that shook us all. Last month, Google announced it would be launching an operating system to rival Windows and already several PC manufacturers had signed pre-deals with them. The great core of Microsoft's business relies on the fact that just about every PC other than Apple Macs are shipped with a Microsoft operating system. It is the great 'cash cow' business that needs precious little selling resource and so the cost of sale is minimal compared to the vast returns.

It has also been the source of their greatest achievements in anti-competitive activities.

Famously, Microsoft killed NetScape and all other early browser vendors by adding Internet Explorer into the Windows operating system and so effectively shipping it for free. Of course, the astute amongst us would realise that no company that made a 40% net profit was actually shipping anything for free but Microsoft 'looked' as if it was playing the nice guy while snapping the necks of its competitors. AOL bought the pathetic husk of NetScape and only recently finally killed off any connection to the old browser. But it has not stopped a new wave of browsers as Microsoft showed once again that when it gets fat and complacent, it does not innovate. Particularly in the area of virus, hacking and malware, IE has shown to be very vulnerable.

But the Windows Operating system has also been the launch pad for the success in the suite of Office products such as Outlook, Word, Excel and PowerPoint. In each case, not one of those products was the best in breed - Excel in particular was a poor man's Lotus while CCmail and WordPerfect were arguably far better products in the email and word processor categories. The fact was that when every PC came with something from Microsoft actually running it, the leap to Microsoft's suite was too easy. Slowly, Microsoft strangled the competition and today we have the joy of running possibly the most cumbersome and ill-fitting suite of desktop applications for our everyday use - and it ain't cheap either at an entry point for around £210 for small business licences.

In reality, Microsoft is slowly losing its grip on the desktop. Today, a small business may have to buy a new PC with Microsoft Windows and get MS Office on it too. But when it comes to security, AVG have an excellent solution, back up from Acronis, PDF making for free, Accounts from Sage, Skype for Business, Yugma webconferencing and CRM from or ACT and you have will not have outlaid too much for best in class products, not one of them would be Microsoft-made. In fact, recently my new Office Suite arrived with Business Contacts built in. The laugh was that there was no obvious way to load my current Outlook contacts in there en masse yet it embedded itself into my Outlook. One click could export all my Outlook contacts into a file ready for or ACT which seamlessly use Outlook as its email generator. It really was a dreadful attempt to lure me to buy Microsoft, and now I can't actually find how to remove it from the Outlook interface just to make me more cheesed off!

The next two years will be crucial for Microsoft. After the disaster that has been Vista, they need to get back on track. Windows 7 needs to be inch-perfect but if IE 8 is anything to go by, Microsoft are not releasing well thought out and tested products - but many would argue that has never been their strength. Google are fast moving up on their shoulder, totally dominating the Search market from all angles and their revenues are now rivalling Microsoft's. Google's launch into the world of operating systems extends their bright faced, cool image right into the heartland of the lumbering Seattle giant. If they have got it right, then Microsoft could well have seen its zenith and is already on the slope downward.

The problem for Microsoft executives is that all those years of ill will and arrogance over users will pay a heavy price. Locally, Microsoft feel they have never had the ear of the CEOs but always the CIOs. Now this could be a massive threat as for once, the CEO may know as much about a viable competitor as the CIO and guess who outranks the other. In all the years, Microsoft never paid commissions to its sales staff and so has never had big-hitting, skilled salespeople at its fingertips but lots of people who immersed themselves in the 'Office Stack' technology and the complex world of licencing. These people have been order-takers who pre-sell massive licence deals which see customers pay for a whole load of things they never use. The only skill of the Microsoft salesperson has been to get a customer to use those items before the next licence negotiation. Little by little, thanks very much to the Vista fiasco, major corporates have played hardball and pushed back. Now there is a viable alternative to Microsoft on the horizon.

And it isn't some trumped up start-up. It's Google. You had better watch out.

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