Steve Ballmer’s Microsoft is playing serious catchup in 4 big markets. Google search is the obvious one and despite Bing Search it is going to be a long, tough row to hoe. But the other 3 problems all have common themes. First, they involve UI innovations as a major factor. Second, they involve Microsoft coming from behind having once had a leading position. And third, they involve the issue of “trust us” when Microsoft’s trust capital may be a bit tight. Here are the issues:
1)Windows 7 still has speed, reliability, memory usage, hardware+software compatibility issues, and ease of use/learning-to-use problems versus Windows XP – hence Windows XP stays entrenched in corporates where Microsoft cannot muscle users off of Win XP like it can in the consumer market place[where consumer PC buyers cannot find XP loaded on any machines except Netbooks where Vista and Windows 7 don’t fit]. The result is the following market share:
Operating System Market Share
Meanwhile Apple MacOS and various flavors of Linux have superior basic performance, reliability and memory usage capabilities and ever improving feature sets. And with corporates wanting to break the 80-20 rule where 80% of their IT costs are spent paying for the status quo which is largely Microsoft based on the desktop – they are starting to look seriously at Macs, SaaS, Cloud Computing and even Thin Client machines. So Steve needs to get those 50% Windows XP users over to Windows 7 as cleanly and completely as possible. Now Apple and Linux both missed the 1 1/2 year opportunity that was Vista. For example, Apple sold their MacOS machines for 2-4 times as much as often more lavishly equipped Windows PCs. But I suspect that this summers round of MacBook and other offerings will be much more competitively priced like the iPad. And as for Linux, Google will be putting out both Android and ChromeOS Netbooks with boffo features and prices. So SP1 for Windows 7 and the HP Slate better be very good, because Microsoft has its most vigorous desktop competition in two decades.
2)Windows Mobile OS has now become Windows Phone 7. Previous Windows Mobile users including the recent Windows 6 and 6.5 users got bad news – very little of their tools and data will be able to move up to Windows Phone 7 except for what is provided by third parties. There is a reason for this draconian move:
eWeek – REVIEW: Windows Mobile 6.5 Improvements Leave Much to Be Desired
enGadget – Windows Phone 7 Series faces off against its Windows Mobile past
Gizmodo – Windows Mobile 6.5 Review: There’s No Excuse For This
Reviews like this have resulted in a dwindling Windows Mobile market share:
|Top Smartphone Platforms
3 Month Avg. Ending Jan. 2010 vs. 3 Month Avg. Ending Oct. 2009
Total U.S. Age 13+
Source: comScore MobiLens
|Share (%) of Smartphone Subscribers|
|Total Smartphone Subscribers||100.0%||100.0%||N/A|
Mobile Content Usage from comScore
So Microsoft had to do something drastic and it did. It brought the Zune and Xbox franchises into the Mobile Phone 7 feature-scape and added capabilities nearly equal to and sometimes greater than the smartphones it is chasing – iPhone, Android, and Palm. For its business customers, they can stick for the time being with Mobile 6.x and … well like Baidu when Google leaves China, RIM has a big opportunity . This is because Redmond, like the other mobile makers, is catering to what drives device-computing in terms of numbers and innovation – consumers. Microsoft has stopped trying to please both in Windows Mobile and has put most of its eggs into the Mobile Phone 7 consumer basket.
Redmond still has to stand and deliver with a major revision to its Mobile platform – so making holiday 2010 sales with distinction is going to be a major challenge. The opposition is moving ahead with some fighting features and solid performance; so again Microsoft is facing a huge market battle where it can not afford to be languishing behind Palm which itself is just hobbling along. Yet Palm is so good, that is a tall order.
3)Internet Explorer Browser reflects Microsoft’s ambiguity about the Web – Redmond appears constantly trying to workaround the Web such that Windows is central and the Web subordinate. For example, back in 1995 “MSN- Microsoft Network, launched along with Windows 95 on August 24, 1995. MSN was included with Windows 95 installations and promoted through Windows and other Microsoft software released at the time. …Open access to the World Wide Web was not originally included in the classic MSN service at the time of its initial launch, but Internet access was quickly offered through Microsoft’s Internet Explorer web browser, which was available as a download from the MSN service or as part of the Windows 95 Plus! package”[see here for complete reference].
This was followed by Redmond’s “Cutting off the oxygen” to Netscape and Java by respectively giving away IE browserplus IIS for free and not updating the JVM on Windows thus obsoleting Java on most PCs. The net result was the Antitrust case against Microsoft and later Civil Suit settlements costing %4billion. But by 2000, IE had a dominate 85++% market share among Web browsers and Java after many promising offerings desktop from Borland, IBM, Sun and others was languishing as a desktop Web solution while achieving better success on the server side. In August 2001, Redmond stopped upgrading the IE browser except for security fixes. This hiatus lasted until October 2006 when Windows 7 was introduced. The idea behind this hiatus in Web development was to promote the Windows Smart Client with some embedded IE capabilities as the preferred way to connect to the Internet.
Complete Table at W3CSchools
Microsoft is playing from behind in 3 major markets [4 if you consider Bing versus Google search]. But Microsoft has played from behind and won big time in desktop OS, word processing, spreadsheets, Web browsers, BI software, etc. However, with the exception of BI software, Microsoft’s come-from-behind victories are all 10 or more years old. The above 3 problems will really put Redmond to the test. In every case, Microsoft has lost its Brand advantage of positive mindshare and technology competence if not leadership. In every market, Steve Ballmer is going to have to say and convince skeptical players to “Trust us, Trust us, Trust us”.
Now Microsoft has some very anxious and needy hardware and software suppliers, a marketing team noted for chutzpah and flair, still strong corporate IT support, plus a $36 billion kitty to help “make it all so”. But unlike in the past, Microsoft does not have clientele and consumers believing the company will do the right thing – Vista, IE, and the Windows Mobile abrupt change in directions are symptoms of that malaise. But also Microsoft faces a skeptical IT Press and Gadget Media. Call it the Wall Street Hangover – people are just very, very skeptical of corporate elites who seem to be putting their own immediate profit results well above doing the right thing for customers and other company stakeholders. In the 1980’s and most of the 1990’s, Redmond would do pretty well on the “Trust Us” measure; now – not so good.
So here are my prognostications on Ballmer’s 3 problems. 1)Windows 7 will get rescued but at the cost of the rise of Apple, Linux and SaaS to 15-25% market share in and around the desktop. 2)Windows Mobile will be very lucky to make it through this next year with 10% market share [see here for just a few of the latest problems]. 3)IE 9 will help Windows 7 since Win XP will not run IE9 and certainly will stop the browser market share bleeding if delivered as specified . But Redmond, as noted above, has always been ambiguous about the Web; so I fully expect a series of gosh awful gotchas to emerge with IE9. Hence, the “Trust Us” problem recurs.