The State of Affairs at Microsoft

Microsoft is the modern day Roman Empire of technology as they have dominated their sector relentlessly but lately the company has struggled with analysts questioning the companies leadership including Steve Ballmer as their stock nears 52 week lows. Their various products such as the XBOX, Zune and MSN/Live have all failed to make profits and Microsoft is literally hemorrhaging cash. This is not entirely bad so long as you can bring in more cash than you are hemorrhaging as they have been able to do with their highly successful products such as Windows, Office and enterprise software. While Microsoft in the enterprise in not immediately under threat, the other two legs of their company are: Windows & Office.

Tom Reese and Paul Rubillo writes(forbes) "Microsoft Office division numbers were a disappointment. Operating earnings there only grew a disappointing 12% for the period." Of their online division they write "losses for that division doubled to $488 million from $210 million."

Henry Blodget at Yahoo Finance thinks that Microsoft's real problem is Apple as he cites "Apple shipped 1.4 million computers in the US during Q2, representing 8.5% market share and 38% year-over-year growth.Mac shipments grew 9 times faster than the overall U.S. PC market (4.2%) in Q2." "U.S. Mac sales grew by 386,000 computers year-over-year,handily beating No. 2 HP, which sold just 222,000 more computers in Q2 2008." And to his point Microsoft also recently announced that they are expanding their Apple Mac group to the largest size it's ever been, expecting more demand for MS Office on the Mac.

While an Economist Podcast compared Microsoft trying to compete with Google and Facebook akin to "watching your father try to be cool." Additionally InfoWorld reports that Apple is now the 3rd largest PC vendor in the US.

What does this all mean and how does it relate to IT? Well for years Microsoft has been able to cope with struggling products (MS Money, MSN/Live, XBox, Zune) and still pump money into new enterprise products such as BizTalk and Sharepoint for years before any profits. They were able to do all of this partially because of the tremendous amount of money made through Windows and Office.

Microsoft has also not done much to help themselves, years of making enemies in the software industry have started to haunt them. Efforts to push their own standards in many areas have faltered (HD DVD, OpenDocument). They have even abandoned much work they started with standards like BPEL.. Standards such as OpenDocument or even Microsoft's own OpenXML will end up losing them market share. Productivity applications will be using shared and common formats which will let allow transparency across platforms at the same time when cloud computing solutions like Google Enterprise offer their own productivity suite.

In a nutshell the next step in technology is about ubiquity. With cloud computing now becoming a reality with things such as Google Docs, Google Enterprise and Apple's MobileMe it will no longer matter what platform you run on as Windows, Linux, Macs and mobile devices will operate on common standards. Each of these slowly eroding the high market share Microsoft has in the desktop market and eventually in the enterprise.

Microsoft is not about to vanish but a page is being turned in the history of the company. Bill Gates has stepped down and there is much fresh blood in Microsoft with new perspectives. Don't expect Apple to become the next Microsoft, as I don't think Job's wants Apple to be the next Microsoft. Microsoft's monopoly may of helped consumers in the way that it allowed technology to saturate our life. However at this time it isn't about accessibility to a computer as computers have become passe. The next move will be towards how easy it is to get what we were looking for in a computer anyway (usability & portability).

As individuals in IT it's our responsibility to lay aside vendor loyalty and assess the situation and requirements. We will have to begin making decisions again as Microsoft has made it a little too easy for us in IT to first use what Microsoft has and later argue that it will ultimately mature. It's our responsibility to take risks to change companies which in turn help change the world. Two things I am certain of that will be part of this future: open source software and standards. The enterprises should begin embracing these solutions more often throwing off the fear of the past.