CNNMoney: Microsoft is a dying consumer brand

Discussion in 'Apple, Inc and Tech Industry' started by *LTD*, Oct 27, 2010.

  1. *LTD* macrumors G4

    *LTD*

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    #1
    I was surprised to see CNNMoney run this article. I never thought I'd see the day when CNN would make such a declaration about Microsoft, even given the latter's apparent success with their (now more Apple-like than ever) Windows 7. But it's a sign of the times.

    We're moving away from the paradigms Microsoft is still clinging to, and it certainly is true that MS has problems when it comes to vision and taking the initiative. SJ once remarked that Microsoft products lack "culture." Seems a bit nebulous at first, but if you do the comparisons you'll see that there is nothing quite like the Apple ecosystem, and that Apple products tend to invoke far different reactions in consumers than you'd think tech capable of. There's your "culture" in spades.

    I think the author is a bit too complimentary toward Microsoft, but you can be the judge.

    ------------------------------------------------------


    Microsoft is a dying consumer brand

    NEW YORK (CNNMoney.com) -- Consumers have turned their backs on Microsoft. A company that once symbolized the future is now living in the past.

    Microsoft has been late to the game in crucial modern technologies like mobile, search, media, gaming and tablets. It has even fallen behind in Web browsing, a market it once ruled with an iron fist.

    Outgoing Chief Software Architect Ray Ozzie called out Microsoft's lost ground in a blog post over the weekend.

    "Our early and clear vision notwithstanding, [competitors'] execution has surpassed our own in mobile experiences, in the seamless fusion of hardware & software & services, and in social networking & myriad new forms of internet-centric social interaction," he said.

    It's not like Microsoft didn't foresee the changes ahead. With a staff of almost 90,000, the company has many of the tech world's smartest minds on its payroll, and has incubated projects in a wide range of fields that later took off. Experiments like Courier (tablets), HailStorm/Passport (digital identity), and Windows Media Center (content in the cloud) show the company was ahead of the game in many areas -- but then it either failed to bring those products to market, or didn't execute.

    "In this age, the race really is to the swift. You cannot afford to be an hour late or a dollar short," says Laura DiDio, principal analyst at ITIC. "Now the biggest question is: Can they make it in the 21st century and compete with Google and Apple?"

    Some influential analysts think not. Several have downgraded Microsoft's (MSFT, Fortune 500) stock in recent weeks, as PC sales continue to slow and Microsoft struggles with its tablet strategy. The company's stock is down more than 17% this year.

    What's wrong with Microsoft

    A rundown of Microsoft's major consumer projects finds trouble in almost all of them.

    Internet Explorer's popularity has been waning for years, and one recent study showed that for the first time in more than a decade, more people are using alternative browsers. The browser is becoming the single most critical piece of software on a device -- potentially eclipsing the operating system -- but all of the major innovations of the past few years, like tabbed browsing and add-on extensions, came from outside Microsoft.

    Windows Phone 7 has promise, but Microsoft dug itself an enormous hole with the subpar Windows Mobile platform. With its market share currently sitting below 5%, developers are taking a "wait and see" approach.


    Microsoft's media platform Zune was dead on arrival.

    Bing is growing, but substantially all of that growth has come at the expense of its business partner, Yahoo -- not its archrival Google.

    Microsoft's attempts to build a social network through Windows Live have failed to gain traction. It has no real answer to Facebook.

    Six months after Apple's (AAPL, Fortune 500) release of the iPad, Microsoft still has virtually no presence in the tablet market. And its strategy for taking on Apple -- Windows 7 on a tablet, rather than a tablet-specific operating system -- is leaving potential partners cold. Lenovo's technology director recently told PC Mag that his company won't be building around the platform: "The challenge with Windows 7 is that it's based on the same paradigm as 1985 -- it's really an interface that's optimized for a mouse and keyboard."

    With Xbox, Microsoft succeeded at innovating: It created a competitive video game brand for hardcore gamers. But even Xbox was outdueled by Nintendo with the Wii, which outsold Xbox by appealing to casual gamers.

    Then there's the epicenter of the Microsoft universe: Windows. Microsoft likes to point out that its operating system is its biggest consumer brand and Windows 7 has been selling rapidly. Its new version has sold 240 million licenses in a year, making it the fastest-selling OS in Microsoft's history.

    But Windows' momentum isn't from consumers. In fact, consumers are a worry for the Windows division, because they have dramatically slowed their purchases of PCs in recent months.

    Rather, the fast sales are coming from businesses, which significantly delayed their purchases of new Windows licenses because Windows Vista was bug-ridden mess. Then the recession hit. A years-overdue corporate PC refresh cycle is now happening all at once.

    Meanwhile, Microsoft's executive suite is in turmoil. CFO Chris Liddel, entertainment unit head Robbie Bach, device design leader J Allard and business division chief Stephen Elop have left within the past year. Ray Ozzie joined the exit parade last week.

    Consumers matter

    Microsoft has a lot of questions to answer, and it will have an opportunity to do so at its Professional Developers Conference in Seattle, which kicks off Thursday.

    But PDC, which used to be one of Microsoft's most important and widely attended conferences, is going to be relatively small this year, with only a few thousand people making the trip, analysts say. PDC's hottest news this year is about cloud computing -- vital to enterprises, but not exactly sexy stuff.

    So is this Microsoft's Waterloo? Will it become the next IBM (IBM, Fortune 500) -- crucially important to businesses but an afterthought for consumers?

    "Microsoft is at a transition point, and there is a risk of that happening," says Al Hilwa, analyst at IDC. "But Microsoft cares much more about consumers than IBM ever did. It's in its DNA, and it understands that it is necessary to stay relevant. I don't see Microsoft ever abandoning consumers."

    As Apple has proven, success in consumer products can fuel explosive growth. Apple surpassed Microsoft's market value earlier this year, and is on pace to eclipse the company in sales for 2010.

    And if Microsoft cedes consumer ground, it risks its enterprise stronghold. Businesses are becoming more willing to allow employees to use their personal devices for work purposes, and a growing number of those gizmos are Macs, iPads, iPhones and Android smartphones.

    So it's up to Microsoft to turn that around by being a leader, rather than a follower, in the consumer market.

    Windows Phone 7 is a good start. Internet Explorer 9 has some exciting new features that other browsers lack. And Xbox's controllerless Kinect -- the first of its kind -- is coming this holiday season.

    Microsoft just has to hope it's not too late.
     
  2. kdarling macrumors demi-god

    kdarling

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    #2
    As was pointed out in that article:

    Microsoft actually consistently works on, and even fields, quite a few items that are ahead of their time... but then they fail to polish or support them in a rapid enough manner. Sometimes they drop them for what seems like no good reason (e.g. Courier).

    Some articles suggest too much departmental in-fighting, and a lack of a clear integrated vision.

    On the other hand, they've been successful in areas that other companies avoid. Office tools. Enterprise and military hardened tablets. Servers. Embedded control systems. Automotive voice control.
     
  3. Rodimus Prime macrumors G4

    Rodimus Prime

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    #3
    One thing i have also heard about Microsoft is a good part of their R&D department will function more like a university research than a bussiness research.
    In that I mean they will research things that might now see the light of day for 10-20 years or have next to zero hope of panning.
    One example is winFS. MS had the idea and a lot of the things it needed for that back before windows 95 but they knew at the time that we did not have the processing power to have any hope of running it and they knew it would be over a decade before we would. Now 15 years later they are still working on it because it turned out to be much larger than they planned.

    I have heard things from people who have seen some of the stuff MS has demo to them in private. For example something like the iPhone was not new even when it came out. They had seen stuff like it from MS several years before hand but at the time we did not have the processing power or really the technology small enough to being able to put it in the phone but they were researching it.

    This compared to Apple's R&D which is Apple will not do something unless they can see a road to profitability in the short term. Other wise they just do not do it. While Apple method is great for making profits it is not so much at pushing the brand new tech. Apple will tech technology already made and put it together in a new way or grab some of the newest stuff on the market. Apple does not really bring any new technology into play.
     
  4. maflynn Moderator

    maflynn

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    #4
    From what I've read in various articles, MS employees over a 135,000 employees and thanks in part to the antitrust lawsuit, there's a high level of bureaucracy. Throw in turf wars in the company and you see why MS has trouble being nimble.

    Apple conversely has set themselves up like start ups being small and targeted so they're able to react quickly to current conditions.

    Microsoft has a lot of talented people and has a lot of great products, and in a number of cases vision of where the future lies.

    They were spot on with the tablet, heck they were at the tablet party too early. The problem they faced was that they tried to use windows as the OS and of course its UI was not designed for touch screen, plus departmental warefare where the MS office department went out of their way to make office extremely tablet unfriendly.

    MS has two aging revenue streams, office and windows. They need to find others and they made a good start of if with the win7 phones. I've heard very good things regarding the win7 phones.
     
  5. Melrose Suspended

    Melrose

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    #5
    The people that work at Microsoft are very capable of coming up with good idea; it's the way the company as a whole tries to execute those ideas that make it fail.
     
  6. c0ff macrumors newbie

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    #6
    Ideas are cheap. The devil is in the details.
    It's the attention to details which brings Apple where they are.
     
  7. Satori macrumors 6502a

    Satori

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    #7
    It's a bit early to be pronouncing on MS... they are still a very profitable company and they have proved that they can but their way into consumer markets with the x-box (zune - not so much!).

    To see how things can change compare Apple's market position in the mid 90s to now.
     
  8. Melrose Suspended

    Melrose

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    #8
    ...and seriously LTD: You think Windows Phone 7 is very Apple-like? I don't, at all. I think for once MS took a (relatively) new look at mobile Operating Systems. I don't think it will be successful, but I applaud the company for not simply doing what everyone else is doing. Your comment is an insult to both platforms.

    Or is "very Apple-like" using a touchscreen? I'm confused... :p
     
  9. roadbloc macrumors G3

    roadbloc

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    #9
    Yet another *LTD* "Ifitaintappleitsux" thread.
     
  10. fcortese macrumors demi-god

    fcortese

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    #10
    Both of these comments are spot on. I totally agree. after years and years of PCs and windows OSs, I made the switch to Apple-world and I am stillwondering why I didn't do it sooner. I have to use with windows in my work world, but once I get home and jump on my MBP it's like night and day.
     
  11. Mike225 macrumors 6502a

    Mike225

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    #11
    As big of an Apple fanboy as LTD is, he sure has a hard-on for Microsoft.

    LTD, saying something doesn't make it true. ;)
     
  12. kernkraft macrumors 68020

    kernkraft

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    #12
    I don't know about Microsoft, but it seems that some people have real issues with the brand *LTD*.
     
  13. notjustjay macrumors 603

    notjustjay

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    #13
    And in Apple's case they often have very clear direction (for better or for worse) from Steve Jobs, who clearly still has lots of hands-on involvement in the major projects and decision-making. There's no way for projects to butt heads or develop turf wars or "play politics" because Steve won't let it happen.

    I'm not saying this is the RIGHT way to run a company -- there are surely some major frustrations that arise every time Steve has one of his famous fits!
     
  14. Mike225 macrumors 6502a

    Mike225

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    #14
    I think you are pretty accurate.

    Microsoft lost direction for a number of year and only lately started creating the eco-system that Apple has been working on under Steve Jobs. (Windows Live, XBOX Live, Windows, and the cloud)

    I wonder how much of today's eco system Steve Job's anticipated in 2007.

    That said if Microsoft continues with whats it's working on at the moment (I just saw a Windows Live/"Cloud" commercial yesterday) and doesn't screw it up, it may change its image.

    If the world moves into the cloud, I think Microsoft will become a leader again as it and Google are more heavily invested in the cloud than Apple as far as I can tell.


    Here's one, which I found while looking for the other on facebook. The one I was taking about uses Windows Live Photo Gallery to change a face of one of the son's in a photo because they cant get a good one.
    http://www.youtube.com/watch?v=Lel3...3979136-4156-47E1-97A1-7C5212C20817&WT.srch=1

    I think their attempt at branding "the cloud" and Windows in the consumer mind shows their mindset.
     
  15. kdarling macrumors demi-god

    kdarling

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    #15
    A couple of more comments:

    Even though I fought against MS myself for years, I like their openness. Not only can you often email directly with a developer, but Microsoft's R&D division publishes papers on their research. Contrast that to Apple's secrecy.

    At least MS tries new areas, even if they fail. As mentioned, Apple now waits until the time is "right" before jumping in. For example, while Apple waited, other companies paid dearly to design, build and create the world's cellular network and phone chips. And they often had to keep backward compatibility with some pretty early devices.

    While waiting makes great financial sense, it doesn't win any award for bravery in my book.
     
  16. kernkraft macrumors 68020

    kernkraft

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  17. maflynn Moderator

    maflynn

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    #17
    I agree, apple is appearing more tentative and more aversion of risk. They
    re playing it safe.

    To put it another way, playing not to lose instead of playing to win.
     
  18. Eidorian macrumors Penryn

    Eidorian

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    #18
    I lost my flowchart. :(
     
  19. Rodimus Prime macrumors G4

    Rodimus Prime

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    #19
    Yeah but apple really does not bring any new technology to the table. I would not exactly call Apple an innovator any more. MS is much more of a innovator and coming up with new technology and takes much much high risk.
    Apple on the other hand has become a rather low risk company
     
  20. KingYaba macrumors 68040

    KingYaba

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    #20
    I don't see Microsoft's grasp on office software going anywhere any time soon. They need to come out with something that wows people, though.
     
  21. maflynn Moderator

    maflynn

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    #21
    The problem MS is facing is upgrades, there's less and less reason for people and enterprises to upgrade. Heck my company is still on XP and office 2003. Not because they're unable to, but the cost associated to upgrading computers so high, it makes little sense
     
  22. Rodimus Prime macrumors G4

    Rodimus Prime

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    #22
    Well they will have to soon. Mainstream support for XP was dropped over the summer and extended suport ended in 2014. Right now the only updates XP will even see are security updates as for everything else MS is done with XP. But in the next 2-3 years most companies will be completely switch. This based on computer are replace about every 3 years and 7 is on every new computer.
     
  23. R94N macrumors 68020

    R94N

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    #23
    Good on Microsoft for doing this. They shouldn't have to keep supporting the older products just because that's where the users are.
     
  24. Rodimus Prime macrumors G4

    Rodimus Prime

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    #24
    XP mainstream was extended multiple times. It was supposed to end like 2006 but it got extended threw year after windows 7.
    I like MS system much much more than Apple's which drops almost all support just months before the next OS is released. It does not even make it to the next replacement and zero transition time.
    But that is just another reason why Apple will never really make it in business.
     
  25. Mike225 macrumors 6502a

    Mike225

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    #25
    http://money.cnn.com/2010/10/28/technology/microsoft_earnings/index.htm

    NEW YORK (CNNMoney.com) -- Microsoft's first-quarter sales of $16.2 billion rose 25% from last year, thanks to strong showings from Office 2010, Windows 7 and Xbox 360.

    Sales of Xbox 360 video game consoles grew 38% and outsold every competing console in the U.S. for each of the past four months, Microsoft said.
     

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