They're desperate.
Really? Is that the result of reading your tea leaves or do you have an inside scoop you'd like to share?
Desperate is exaggerated in my opinion but I do think that they have problems.
I once came across an article that applies to companies like Microsoft. The article put forward the idea that when a new market opens up new companies form (like Microsoft and the software market) and old companies take a beating. The odd part of it is what happens as the new market ages. The new companies mostly fail to mature and the old companies that were mature before the new market emerged take over the market. Will Microsoft fail this way? It is one of the few remaining "new" companies of the maturing software market after all. Ashton Tate, Lotus, Visicalc and many others have fallen already will Microsoft be next or will they reach maturity? Will IBM or HP one day pick up the corpse of Microsoft at bargain prices? (Note I'm not saying it WILL happen, it does seem unlikely but it could).
Microsoft has based a lot of their financial actions on the idea that they are a premium stock yet how has their stock been doing
recently? It hasn't maintained its historic rise and stock splits. It instead has had to deplete its stockpile of cash in paying dividends to keep its price up. When they tried to buy Yahoo! they were proposing to
borrow the money, a great change for this cash rich company.
The Western world is basically a saturated market for computers so it is now a replacement market with corresponding stagnation of corporate growth for Microsoft. For further growth they must enter new markets, ideally early in the market. The XBox is one such attempt but they entered late and have not managed to dominate it even with years of taking losses on the XBox. Their big chance for market growth is in "emerging markets" which can't pay the prices that sustain the high profit margin that Microsoft historically has enjoyed.
They just laid off a large number of people (15,000?). I haven't seen any statement of WHO was laid off but if it is developers then it is bad indeed.
They have great resistance to Vista, its market uptake has been sluggish compared to past MS Operating Systems releases. This has caused them to use various ad campaigns and when they failed to cancel them. It has also made them put a lot of effort into getting a successor to Vista out quickly and play the hype machine at full speed for it. They need Windows 7 to be seen very positively by the public and CIOs of the world. They also had a lot of resistance to their prior corporate licensing change which cost them revenue.
There are also challenges in the market place. Netbooks came out with Linux and Microsoft has been forced to keep Windows XP alive to avoid ceding a surging new computer market to Linux which they have to fear would legitimize Linux with people who might never have tried it otherwise. Apple is also surging upward. Before that they repeatedly had to extend the support on Windows 98 past when they wanted to end it.
OOXML made it (with LOTS of controversy) to an ISO standard, but NO ONE not even Microsoft itself is supporting it yet. They need OOXML to hold off government and corporate adoption of ODF but without it having any products that are compliant it's a problem.
Then there are the lawsuits. The Vista Ready/Capable class action suit is on going with possible billions in payouts. There is now a stock holder lawsuit against the $8 Billion invested in research each year. The various EU anti trust suits where the EU has actually penalized Microsoft in large fines and made them open things up to competition.
There is also one that is more psychological than anything else, Bill Gates reducing his participation in running the company and handing more control over to Steve Ballmer. Believe it or not a substantial number of people think that Ballmer is more responsible for the negative aspects of Microsoft than Gates.
Finally there is the purely technological one. Vista is derived from older Windows versions through multiple generations. Generations in which marketing mandated integrating products into it for non technical terms. The core is getting old and very complex, they NEED a rewrite (like Apple did) but haven't been able to force themselves to "bite the bullet" and make it. That rewrite when it occurs will be an opening for competitors (as is the jump to 64bit) and the longer they delay it the more of an opening it will be, sort of a Catch 22.
So yes I do think that they have problems. Mostly of their own making. But I don't see them as desperate
yet. If they don't manage to handle them well then yes they may very well become desparate.
Topic: Microsoft to Open Stores (Read 9136 times)