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Microsoft Five Years Down the Road

Microsoft is trying to get a grip.

They’re not in a tailspin, nothing like it, not yet anyway, but they haven’t had a vision since the release of Windows 95. They’ve had success that wasn’t visionary, the Xbox comes to mind, but that was a calculated move for market share, not a vision for the company’s future. They also helped pioneer the tablet, Bill Gates personal vision around the turn of the millennium, but they couldn’t figure out how to implement it.

Microsoft Windows logoWe’ve seen this crisis coming since the introduction of Vista, which should have been a shining moment for the company. After all, the operating system was nearly six years in the making. They botched it, releasing a much anticipated OS that was not only a resource hog but basically just didn’t work. Wow. This was just after the release of Zune, a “me too” iPod, and before the release of the Kin phones, which are so rare that they probably fetch a premium on eBay.

The desktop market is shrinking and they have no market share to speak of in mobile. Windows 8 hasn’t yet worked out well for them. So far, their biggest growth in smartphones and tablets seems to be in selling patent protection for Android devices to the likes of Samsung and HTC. This comes as they’re attempting to create the perception that their attitude toward open source has changed. The Microsoft FUD machine has been relatively quiet for some time and it’s been years since Mr. Ballmer publicly referred to open source as “communist” or claimed Linux to be “a cancer.”

This poll is closed! Poll activity:
start_date 02/10/2013 23:07:33
end_date 31/10/2013 21:24:34
Poll Results:
Which of these statements best reflects what you think the future of Microsoft will be?

Last year, Redmond even went so far as to open a subsidiary, Microsoft Open Technologies, Inc., “to advance the company’s investment in openness – including interoperability, open standards and open source.” They’ve hired Ross Gardler, President of Apache, as a Senior Technology Evangelist. He’ll be speaking for Microsoft at the All Things Open conference in Raliegh, North Carolina later this month. We’ll let you know what he has to say. His job can’t be easy.

Where is Microsoft headed? Inquiring minds want to know. What will Redmond be like five years down the road? We’ve come up with five possibilities:

The company will regain its footing and again become the dominant monopoly, not only on PCs but on mobile devices as well.

We don’t consider this too likely. Other than Windows, the company has no focus. They don’t really know what they’re doing with their other cash cow, Office, although they’re working overtime trying to figure it out these days. Otherwise, they just tinker with it to force upgrades.

As much as we’d like to think so, they haven’t necessarily missed the boat on mobile, not if they can get traction with their Nokia acquisition. Unfortunately for them, they’ll most likely have to establish Nokia as a new brand as Nokia kept ownership of the name, although Microsoft was granted some licensing rights. If they can successfully do this without falling into a “Zune” or “Kin” trap, then re-branded Nokia might eventually become the brand for other types of devices, including PCs.

It’s doubtful Microsoft could pull this off, however. About the only successful launch of a new product they’ve had since Windows 95 was the Xbox. Their corporate culture isn’t nimble and lacks direction on all sorts of levels. They need a capable leader with vision, a game plan and more. At this point, it looks as if what they’ll get is someone better than Léo Apotheker.

Microsoft will remain a major player in all aspects of computing but will not hold anything near the power it did when it was at its peak.

This appears quite likely. If they can straighten out the Windows 8 mess and keep themselves away from another Vista fiasco, they can continue to hold a dominant slice of the desktop/laptop pie, although their market share is certain to shrink somewhat due to pressure from other operating environments, such as Chrome OS. They’ll also have to adjust their pricing downward, also due to competition. They’re almost certain to gain some sort of hold on mobile, starting with low end devices. They’re already having some success in parts of Europe.

Again, however, they lack direction. Steve Ballmer did not foster a harmonious environment in Redmond, perhaps purposely. Again, they need to find a CEO who can not only inspire but who can get everybody on the same page. This won’t be an easy task after the discontent Ballmer has evidently sowed.

Microsoft, or a major part of it, will be absorbed by another tech firm.

This is probably not a possibility, not in the next five years anyway. Microsoft is sitting on a pile of cash which could be used to thwart any takeover bid. In September, the company renewed a $40 billion stock buyback. That doesn’t necessarily mean anything in the short term, as they haven’t been aggressively pursuing the buyback option recently. They spent $4.6 billion buying back their own stock in the fiscal year just ended compared with $11.5 billion the year before.

Microsoft will be split into two separate companies, one selling Windows, Office and other software and the other selling computers, smartphones and tablets.

This is definitely a possibility, especially with their acquisition of Nokia’s mobile division. The software arm, of course, would retain their enterprise business. We give this a maybe but probably not.

Its market share will continue to shrink until it becomes just another technology company.

Indeed, this could happen. If they’re unable to gain traction in mobile and desktops continue to decline, forcing them into what we’ll call “hold on” mode, they may very well just become a large operating system vendor. The big unknown here is the cloud. They’re going to have to execute better in the cloud than they have with MSN and Bing if they expect cloud services to rescue them.

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These aren’t the only possibilities, of course. They’re just what we could wrap our head around on short notice. Perhaps you have a different take on what Microsoft will look like five years in the future.

Editor’s note: This story was updated 10/2/13 at 6:48 PM EDT to remove an erroneous statement that Bill Gates owns 40% of Microsoft. In fact, Mr. Gates owns approximately 4.5% of the company.

8 comments to Microsoft Five Years Down the Road

  • shrinkingmicrosoft

    For almost 5 years I’ve been reading articles how the doom days of MS are close. It’s not even funny anymore. If you installed linux on your home machine that does not mean that MS is losing its market:)

  • W. Anderson

    The critical aspect of Microsoft difficulties “today” rests in one area – that of Windows Operating System (OS).
    For those persons involved with and/or knowledgeable about the history of computer technology from the 1970s onward, it is clear to see that Microsoft’s great ‘financial’ success had less to do with any brilliant software products or innovation, but almost everything to do with marketing opportunity and very shrewd business contracting practices of the company with Original Equipment Manufacturers (OEMs) at that time. The numerous draconian and oppressive litigations against (financially weak) rivals also played a very important part in this saga.

    I personally own an HP Tablet with Windows from the early two thousands, which showed Bill Gates’ interest in future computing, but again the poor quality and lack of any type of twenty first century innovation of Windows OS prevented tablets of that period of every shining through.

    From DOS, through Windows NT – based on DEC VMS, to latest Windows 8 and 2012 Server, Microsoft’s OS are basically revamps of older technology that are particularly ill suited to ‘modern’ Internet (Cloud, Networking, communications security), World Wide Web and Mobile technologies that dominate every aspect of our lives today.

    To whit, Microsoft still relies on the UNIX-like *BSD networking stack in 2013 for efficient and effective use of their software and services. How progressive and creative can they therefore possibly be?

    Earlier this year, in a presentation to would-be technologists that here-to-fore almost worshiped Microsoft, I names several of the company’s products – SQL Server, Active Directory, Windows GUI/pre-emptive multi-tasking/multi-threading, ResFS file system, V-Sphere, Azure and others that came directly from or were copies of other vendors products, several of which were purposely and deceitfully bandied about as Microsoft’s innovations.

    There is an old saying in society that “a chain is only as strong as it’s weakest link. The Windows OS, all of them are Microsoft’s Achilles’ heel, and no amount of money, marketing, gee-whiz products and services, bravado or dubious software patent attacks can change that fact.

  • Sonic Blast of Freedom

    I don’t give a damn what will happen to Microsoft. I do not use Microsoft’s products. I do not work for Microsoft. Microsoft has no meaning in my life. When Microsoft changes, my life doesn’t neccessarily change, too. So whatever happens to Microsoft does not matter to me.

  • Israel

    Microsoft is loosing traction everywhere except in the provate business sector. Most health care professionals either use XP(the majority) or windows 7…. none use the hiddeous Vista or 8). I know 1 person with a windows phone (only 1!). Most people have Android, or those hiddeous iPhone. People that buy new computers buy a Mac, because they are tired of viruses, or want to look like they are super artsy.
    However, in Asia, it seems that GNU/Linux (specifically Ubuntu) is being adopted, as well as in Europe. Governments fed up with the Feds spying on them, are willing to migrate to an open source OS. Citizens might want a much cheaper secure computer that can be changed (any DE I want????) and has access to a lot of great software. Plus with Thin Clients, and VM’s and Wine you can run just about anything you want (except that hiddeous iTunes) :D

  • Talib

    Two years ago, I accidentally installed Ubuntu to my hard drive which completely erased windows 7. I spent 2 weeks trying to get W7 back but gave in and learned Ubuntu. The best mistake I ever made!! I was a huge part in the PC-Mac Fan boy wars in which I was hardcore PC and Windows. I do not believe MS will disappear but I do believe that Linux shall never fall. I spread the word about Linux every where and even converted several people. I wish i could have a Linux Mobile..lol.

  • A Linux Lurker

    The problem MS has is they are a minor player currently in the most rapidly growing segments. OSes and office suites are mature products because there are no “killer” features for either that users view as “must have.” Thus, MS must find new markets to move into or new products to rejuvenate their current markets.

    How MS handles these issues will determine its fate. The new CEO is key, hire an inept retread they will die, hire a visionary who can lead their best days may be in the future. Personally I am betting on an inept retread.

  • Microsoft is following in the footsteps of the previous monopolist, IBM. Just as IBM never lost its monopoly on mainframes but mainframes gradually became irrelevant except in the largest corporations, Microsoft will probably never lose its monopoly on desktop computers but desktop computers are gradually becoming irrelevant except in the largest corporations.

    Windows, in all of its forms, is a lumbering beast of an operating system. It doesn’t have the sleek efficiency of Linux, the integration of Android, or the shininess of Apple. People buying Microsoft products today are typically risk-averse corporations who aren’t ready to trust open source or the cloud — they still cling to the old idea that they need a traditional software vendor.

    The worst of the worst of the worst is still Exchange. Now there’s a product that started out bad and gets worse every year. They’ve deliberately made it difficult to install in an attempt to sell more training. And they teach their trainees that you need at least three Exchange servers (in addition to at least two directory servers) even in the smallest organizations. Compare to the ten minutes it takes to install Citadel or some other open source groupware server, and it’s a clear indication that Microsoft’s products are already obsolete and will die off as the current generation of IT leaders begins to retire.

  • A Linux Lurker

    If the analogy to IBM or DEC is apt then MS’ survival is based on the continued use of desktops and laptops in the future. But the fact MS has been alienating OEMs puts this at risk. The OEMs and users are very comfortable with Android on tablets and smartphones. There is no real reason why a version of Android could not make the jump to the desktop. Android at its core is a highly customized Linux distro.