Week in Review: Rough Times in Redmond

It was bad enough that last week, Google and Capgemeni got together to try to rope and tie Microsoft's cash cow, Office. Now, though, Google appears to be going after Outlook, too, and it's not the only competitor trying to carve out a bigger slice of the e-mail pie. Nor is Google the only Microsoft rival to take a fresh run at Office, now that IBM has a free suite of its own.

But, hey, that's competition, and if it leads to innovation (and, in turn, increased investment in new and improved technologies), it'll be a good thing in the long run for partners, users and the industry as a whole. Google's Capgemini link seems to be by far the biggest threat to Office in particular and to Microsoft in general, but the main theme here is that Microsoft is going to need to adapt in order to keep Office dominant -- come up with a true SaaS version of the suite or at least a lighter, (much) cheaper alternative to the current monster. The proverbial ball is in Redmond's posh, well-manicured court. We await Steve Ballmer's -- or perhaps Ray Ozzie's -- forehand.

Then there was the real blow of the week, Microsoft's loss in its appeal of ridiculous antitrust fines imposed by the European Union. It wasn't exactly unexpected, and it's not as though Microsoft can't afford to pay for what the EU and a European court determined to be its anti-competitive sins.

But it does complicate matters for Microsoft, its partners and even its users, given that Microsoft's effort to sell multiple versions of Windows with various products (such as Windows Media Player) cut out of certain versions wasn't enough to placate the EU hunger for eating successful American companies alive. What now? Well, perhaps another appeal from Redmond -- or perhaps a big check sent from Seattle to Brussels and another 15 versions of Windows launched in the EU. We'll see.

All of this bad news, of course, has the press (generally an anti-Microsoft lot, honestly, which doesn't do much for impressions of objectivity) absolutely drooling and gleefully throwing together "this is the death of Microsoft" articles. Of course, Microsoft lives, and it's got more money than ever before. And it won't go away, just as IBM didn't go away after falling off its industry perch in the 1980s. But the question now is whether Microsoft can continue to be the software industry heavyweight or whether it'll slip into being just another big player. Everybody's asking that question, so we know that we're stating the obvious here. But still, it's a question worth asking.

We're not going to make any predictions on that front, except to say that standing pat (which Microsoft doesn't appear to be doing) is the worst thing Redmond can do. What we wonder is whether Microsoft is going in the right directions: With huge investments in search, advertising, video game consoles, portable music players and other non-core efforts, will Redmond be able to circle back around and defend its home turf of Office (still the company's big revenue generator) and Windows and keep the revenues pouring into its channel? Stay tuned.

Have any thoughts on anything that happened this week? Or last? Or might happen next week? Send them to me at [email protected].

Posted by Lee Pender on September 21, 2007