Tuesday, 29 November 2011

Microsoft fails - Apple wins?

Yesterday I explored the hypothetical case of Microsoft collapsing. While I am not a Microsoft 'Arnageddonist', as I think $60bn of cash should buy them some path to safety, I do argue in my 5 predictions for 2012 that Microsoft will see revenues and profits stall in 2012 as pressure grows on Windows sales as PC shipments continue to fall while there will be increased pressure on Office products due to corporates questioned pricing models and the rise of new alternatives plus less PC shipments to sell them on. I do believe Microsoft needs a radical change in plans and I think that requires new management throughout. It has to break out of the rut its in. It may not be so vulnerable in large corporations but in the higher margin heartland of SME and consumer, Microsoft is at extreme risk to the likes of Apple and Google.

A sobering thought - 97% of UK companies are classified as SMEs, employing the largest share of the workforce and there are millions of consumers out there. That is where Google will sustain its attack in the places where free and low cost products and services are readily accepted. Microsoft are incredibly vulnerable down there in its long tail of untouched users.

But if Microsoft were to fail, would Apple gain and become the flag bearing IT giant of the future? Right now it is the US' most valuable company with more cash than the US Treasury. Not bad for a company that almost expired around 10 years ago. So would Apple be the company to take over Microsoft's mantle of IT giant and dominant force in the IT industry?

I don't think so. However, I am a recent convert to Apple and I love the company and the products. I am fully kitted out with Macbook Pro, iPad2 and iPhone 4 with IR keypad and somewhere we still have an iPod and iPod Shuffle. Now the whole triumvirate of products are bound together by iCloud which backs me up.

The clue was in the series of products. Apple has a strong base, which is how it came up by stealth on Microsoft, in the consumer market. This can also be a curse as the need to sustain the longevity of products and find the next new ones is a ceaseless and sapping task. Smartphones has been a productive area but there is intense competition from all angles and Apple cannot always sustain it's position on mere gadgetry. Just this morning, I am experiencing battery drain on what is now my third iPhone to show the same problem. Quality needs to match usability once the fad value is over.

And iPad. What a fantastic product. In the heat of taking it on, I off loaded around 80% of my work onto the device, forsaking my PC. Full of warm feelings, I switched my PC to Apple Macbook Pro and it has been a huge success for me. So much so that I now only use my iPad2 for around 10% of my work - mainly blogging and viewing documents.

The usefulness of tablets needs to be enhanced if they are truly going to take up the long term slack in the PC market and Apple's growing market share in the business world actually threatens the iPad in the same market.

In the final analysis, Apple is a superb innovator in the user experience and will always have its place as an end device of choice amongst users. The brand is cool and the products are always one step ahead. That may change but the wave is worth riding. But beyond that, Apple has no real binding to the mainstream infrastructure that sits at the heart of networks and computing today. It doesn't make servers or network stuff, not much software for interactivity, it's pretty much an end device company only and proud of it. It's operating system is different to the standards and there is always the annoying incompatibilities at the edge of things that just irk the corporate user and makes the full user experience just short of the nirvana expected for the outlay.

Should Microsoft falter then Apple will indeed benefit but it will not be the defacto standard that Microsoft has been. But what it will do is to continually challenge the status quo and set standards on the user experience that have been sorely missing from the Microsoft world from which we are slowly emerging. I think it will also, along with Google, challenge the absurd amounts of money we have all continued to pay for ropy old office productivity products that really are not that special. In fact, there will be a real software revolution as more products appear for less cost doing more.

Steve Jobs called this the post PC era and he was right. Microsoft will stumble and it will be the mark of the management to see if it can make this just a minor slip up or whether it will be a slow decline or the collapse that some foretell. Whatever happens next has to be good for the industry and even if they do not emerge as giants, we have a great deal to thank Apple for in shaking us all out of the malaise of accepting second best as the only way.

In my other predictions for 2012, along with MS issuing a profits warning before the end of the year, I predict Groupon will fail and get bought for a fraction of its IPO price, aggregators will rise as a force in computer channels as the Cloud takes a grip, corporate AppStores will arise in the face of the BYOD phenomenon and Google will see sales of its Google Apps for Business rise to between $500m and $1bn of annualised sales by the end of 2012.

New Cloud developments? Keep a close eye on two companies called Okta and independenceIT. 

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