Is Microsoft Going To Collapse?

There have been a lot of articles speculating on potential scenarios in which Microsoft will collapse - no, not just from Apple or Google-ites but from learned experts such as Forbes.

There are some scenarios in which Microsoft could come a cropper and there is a good slide show about 'Steve Ballmer's Nightmare' which depicts things too. I have argued that Microsoft need to be worried about some of the key industry trends and I focus on the growth of smartphone, tablets and office productivity tools in the Cloud as well as their treatment of channel but Forbes looks at the universe of Microsoft software and where the revenue comes from and argues that there are some doomsday scenarios.

The reality is that the vast majority of Microsoft revenues come from Windows and Office. The PC market as we know it is declining fast and this is Microsoft's staple income. The slack is being taken up by new wave devices like tablets and smartphones and Microsoft has has given that territory to basically Apple and Google on both counts. If the operating system is at risk, so too is Office as new waves of Cloud based software comes onto these devices and Macs for a fraction of the cost of the expensive Office products. Microsoft is not just under a barrage of attacks from alternative software but their costs too.

The demand for Cloud based office productivity tools is growing and Microsoft's Office 365 is a sham Cloud product which boasts a hosted Exchange and some tools which are too complicated and unusable for SMEs. Google is taking up slack as Google Apps for Business is a simple, flat cost per user and the arguments for a hybrid solution from Microsoft are being eroded.

If this battleground is lost by Microsoft, then its profitability is at risk and the basic tenet of arguments is that Microsoft is then at wider risk.

While this all may be calling Armageddon a little early, it has been disappointing to see Microsoft's apparent lack of creativity and innovation in the Cloud, specifically on Office products while the alleged inbred arrogance of the management is perceived as stifling alternatives for the market and threatening channel confidence. The lack of ability to tackle the smartphone and tablet market has been major manifestations of this.

Personally, I think Microsoft has plenty left in the tank. It makes enormous profits and has strength in depth. They can do more, if they try. Certainly, my observation is that it's a company that has got into the old IBM mode - it is management by upward presentation which falls in line with top level thinking. I don't see much challenge to the status quo and it's Steve Ballmer that everyone seems to want to be sure they concur with. So the slides do just that.

While that may have worked for Apple because Jobs was visionary enough to be ahead of the game, Ballmer seems to be nearing the end of his long tenure of a company that has coasted for too long off the back of a line virtual monopoly. The fact is, it seems to have lost the art of innovation and has lost the hunger to compete by anything more than loud bluster.

Certainly, the rapid changes in the market, the explosion of the Cloud, the decline of traditional computing and the rise in new devices controlled by others seems to have caught Microsoft off balance. This represents the first serious and prolonged onslaught on Microsoft's dominant position and cannot be ignored by either wishing it away or unintelligent arrogance by its employees. 

The reality is that Google and Apple have taken a significant new position in the market, from which they can attack Microsoft's heartland. And it seems as if Microsoft never saw it coming, have been slow to react and thinks it can talk its way out of trouble. All of which points to the fact that Armageddon is more something that Microsoft can do to itself rather than the market do to it.

The obvious answer is for Microsoft to change management fast at all levels to breathe new life, thought and creativity into the giant without the baggage of the past and mobilise the research and production teams to drive new innovation into the products and get costs down while dreaming up its master plan to beat Google and Apple.

It's time to walk the walk not talk the talk. And fast.

Calx Europe is Business Acceleration company which works with vendors and channel to develop and implement plans to win in the Cloud market opportunity. For more information please call +44 (0) 207 193 2356.