Executive Summary:
Rather than try to compete with companies and products that fall outside its niche, Microsoft should concentrate on its historical strength—developing world-class client, server, web, cloud, and mobile device software platforms.

 

Microsoft plans to release an avalanche of new products in the next year, spending millions—if not billions—to develop and market these products. But can an IT industry hobbled by an anemic economy and penny-pinching CIOs pay for it all? I have my doubts, and not solely because of limited IT budgets.

 

The Netbook and Windows Vista: Canaries in the Coal Mine?

Remember all the stories about the success of the $300 netbook? Many attributed netbooks’ explosive sales to the poor economy, but I think that's only part of the story. As any 20-something college student can tell you, the Internet has emerged as a viable platform for software applications over the past decade. You don't need a $1,500 PC to check webmail, edit a document with Google Docs, or upload Facebook pics. On the IT side of the fence, innovative companies such as Spiceworks are leveraging the Internet to produce world class, web-based apps for IT pros.

 

Here's the rub: The industry has historically been jammed into an upgrade hamster wheel, locked into an ongoing cycle that involves purchasing new Microsoft software and hardware powerful enough to make it run acceptably. That model may have worked in the past, but the epic failure of Windows Vista shows that the model might be broken. Vista didn't offer a compelling value proposition, so many IT pros sat on their wallets and stuck with Windows XP. In an era when many people use only a fraction of the full capabilities of Office, Outlook, and SharePoint, where's the compelling motivation for IT pros to spend a fortune on new upgrades?

 

 

Although many IT pros agree that Windows 7 is superior to Vista, financial concerns still rule. According to a survey conducted by Kace Networks, 84 percent of respondents have no plans to upgrade to Windows 7 within the next 12 months; a similar survey from ScriptLogic revealed that 60 percent of IT pros don’t plan to deploy Windows 7. I'm sure many IT pros will wait until Windows 7 SP1 before making a deployment decision, but starry-eyed pundits (and Microsoft execs) expecting Windows 7 to be deployed on every desktop in every home and office by the end of the year are in for a surprise.

 

Microsoft 1.0 in a 2.0 World

Microsoft’s upcoming product fusillade is the company’s response to all these market factors, although the approach is somewhat akin to lobbing a heaping glob of spaghetti at the wall and hoping something sticks. Most IT departments can’t incur the immense cost of a dozen upgrades at once, but Microsoft knows that many will upgrade something.

 

 

Microsoft has a long history of innovation, including the addictive genius of Xbox LIVE, the ubiquity of SharePoint, and the impressive work of the Microsoft Automotive Group and the Windows Live Mesh team. Yet the company’s strategy to compete with Google and Apple seems reactive and derivative. Bing is a fine search engine, but is Microsoft really a good fit for the Internet search business? Likewise, should a software publisher try to become a brick and mortar retailer, as with Microsoft’s retail stores? Microsoft's tenacity in the face of competition is legendary—but that strength is also a weakness if the battles are fought for the wrong reasons and on the wrong battlefields.

 

 

On the development front, Microsoft's initiatives largely seem rooted in the desktop-focused, software-in-a-box mentality that the company used successfully more than a decade ago. Colleges and universities are racing to add classes devoted to iPhone app development, but not for Windows Mobile. In an effort to jumpstart mobile app development for the upcoming Windows Mobile Marketplace—Microsoft's delayed  answer to Apple's iPhone App Store—Microsoft's "Race to Market Challenge" dev contest dangles a Microsoft Surface table as the grand prize. I'm sure Microsoft Surface is a fine technology demonstrator, but is a thoroughly immobile, 200-pound piece of furniture the right way to encourage mobile app development? (Note to the Windows Mobile Marketing team: Please Google Bing the word "irony.")

 

 

As my colleague Michel Otey says, Microsoft needs a "mindset reset." I couldn't agree more. Here's my advice for Redmond: Ease off on the insane product release tempo; dump dead-end, profit-sucking distractions like the Zune and Microsoft retail stores; and focus on your strength, which is developing world-class client, server, web, cloud, and mobile device software platforms. Who else agrees with me?

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