Dark clouds on the horizon

by Abhinna Shreshtha    Jun 18, 2010

For nearly two decades, Microsoft has reigned as the undisputed colossus of the technology space. Expanding into every nook and cranny, it has become the epitome of a successful software company.

But in the last few years its dominance has been shaken by new, nimbler organizations and old competitors.

Last month, arch-rival Apple, overtook the Redmond giant as the most valuable technology company, in terms of market capitalization, on NASDAQ. In spite of being miles ahead of Apple when it comes to sales, this has surely raised questions about whether Microsoft was losing its Midas touch.

To say that Microsoft is the only company that has shortcomings in its products and comes out with the occasional disasters is unfair. What is worrisome for it though is that their whole corporate ideology seems to be governed by a single idea - ‘If you can do it, I can do it and better’. They have expanded into new areas too quickly without trying to consolidate their gains first, which has resulted in a perpetual game of catch-up with the competition. An example is the failure of Zune which was introduced to counter the iPod.

Way back in September 2009, Steve Ballmer had reportedly admitted that Microsoft had messed up with Windows Mobile. Recently, market share of Windows Phone (earlier Windows Mobile) has dipped and it currently stands 4th in terms of popularity. Meanwhile, Apple’s iPhone share grew by 6.2% from 2008, moving it to No. 3 behind Symbian and RIM. Even new entrant, Google’s Android has managed to capture 7.1% of the marketshare as of January’10.

Microsoft also tried to take on Google, the big daddy of Internet search, in its own territory. The result - Bing, Microsoft’s new ‘decision engine’, after a brief spurt in popularity, really doesn’t seem to be in a position to challenge Google anytime soon. On the other hand, Google’s forays in Microsoft’s domain have met with more success. Its free, Internet-based office tools are gaining popularity and becoming a favorite with the smaller organizations.

Microsoft has also been expanding its offerings in the enterprise space, with its virtualization, PaaS offerings with Azure, CRM, ERP with Microsoft Dynamics, etc. The company’s market share here is increasing gradually, however some customers have had niggling complaints on the absence of critical components in these products.

Maybe it is too early to start composing a eulogy for the end of Microsoft’s dominance, as Windows still
remains the
most popular operating system in the world
, in spite of the severe
criticism Windows Vista received. Windows 7 has been received well by users
and it’s marketshare has been steadily increasing and is expected to grow to 24 percent globally by year-end.

Apart from Windows, the company’s gaming console Xbox has done fairly well and the highly-anticipated - Kinect (formally known as Project Natal) could prove revolutionary. Additionally, the new version of Windows Phone promises to be better than its predecessors. Microsoft Dynamics’ and Azure are seeing growth as organizations start looking for cheaper options. The partnership with Yahoo! should also aid Microsoft in creating a stronger Web presence.

The Redmond giant has become an iconic brand. Criticisms aside, it has managed to deliver innovative products from time to time, perhaps a change in attitude could help it ride the storm. One thing is sure; it is never smart to write Microsoft off too soon.