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.
We’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.”
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.
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.