MS has a few problems, and they all seem to be tied together.
1) They are too big for their own good. They remind me of the federal government. There are too many layers of bureaucracy and too much in-fighting to be effective. One example is the Courier tablet project. I have heard that one reason it got canceled is because there was too much internal bickering over who would control it: the Xbox team, the Windows Phone team, or the Windows team. This type of stuff reportedly happens quite often.
2) Lack of direction. They sat back while the iPod became a huge seller, and by the time they did enter the market, it was too late. The Zune technically is as good or better than any iPod, but by the time it hit the market, Apple was already dominating the market. In the mobile phone market, they slept while RIM dominated enterprise, and Apple and Android starting taking over the consumer smartphone market. Windows Phone 7 may be good, but will it be too late?
3) Their marketing, especially in the consumer market, is terrible. Does anybody remember those Bill Gates/Jerry Sienfeld commercials? As I said before, the Zune is every bit as good as an iPod, but nobody has ever heard of it. They offer 25GB of free online storage (Skydrive), but nobody knows about it. They offer a very good and free antimalware program (Security Essentials), but nobody knows about it.
Basically, because they are so entrenched in the enterprise market, they will continue to do well. But they are terrible in the consumer market.
