New Formats Threaten Microsoft's Way of Life

We read (and write) it all the time: Microsoft is behind the curve in developing for new technology formats. Redmond's smartphone operating system is an also-ran. Microsoft has no tablet strategy. Google, Apple and RIM are just killing the old dinosaur in those areas.

But so what? Microsoft is still raking in money, and there's still a Windows laptop on almost every...well, lap, we suppose, or desk. The company's server products are going like gangbusters, and even Dynamics is settling into a niche. No big deal, right? Tablets, trick-pony phones and all those toys can take a back seat to real technology.

Actually, that's what we'd like Microsoft to say: that it's going to focus on enterprise technologies, operating systems and the cloud for business and leave the more consumer-oriented stuff behind. But that's not Microsoft. That's not Steve Ballmer. The company wants to be everything to everybody, so it has some sort of presence in just about every technology market in existence.

But Microsoft's roots are still in the old-fashioned desktop OS, and that's becoming a bit of a problem as users increasingly turn to smartphones and (for reasons we still don't understand) tablets, and away from laptops and especially desktops. If Microsoft wants to be everything to everybody, it's going to need to pick up its game big time.

Early returns on Windows Phone 7 suggest that, despite some clever but confusing (are we not supposed to look at our phones?) advertising from Redmond, Android is just crushing. Microsoft's mobile OS. One UK retailer says that Android sales are outpacing those of WP7 at a rate of 15 to 1. Ouch.

But the news gets worse for Microsoft: Gartner recently cut its forecast for worldwide PC shipment growth in 2011, noting that the popularity of tablets is actually cutting into PC sales. And which tablet is the most popular of them all? Well, the iPad, of course. There's not a Windows machine to be found in the tablet market right now, at least not one that's garnering any serious interest.

The tablet thing is especially disturbing because it hits Microsoft right in the financial gut -- sales of Windows on PCs. And, frankly, we at RCPU really didn't see that coming. Everybody's talking tablets now, and not just for reading books on the subway. Businesses are increasingly adopting them, and they're buying iPads. Why? We're honestly not sure, but it's happening.

So, while Microsoft tries to please all of the people all of the time, it's letting Apple (of all companies -- seriously) make a dent in its core revenues. Maybe it's time for Microsoft to shift its focus from phones -- which have never been a massive moneymaker in Redmond, anyway -- to tablets. And it's definitely time for Microsoft to stop trying to win every technology contest and figure out which areas it needs to develop -- and protect -- in order to maintain its position at (sorry, near) the top of the technology heap.

What kind of interest do you have in tablet computers? Have your say at [email protected].

Posted by Lee Pender on November 29, 2010