Steve Ballmer can't be a happy man... His competitor that almost died, but they helped save, looks like it's "done an end-run" around their business and is trouncing him convincingly.
Microsoft has in the past used a "last to Market, then beat the leaders" approach [think of the abandonment Microsoft Network and the Internet turn-around, where Internet Explorer was purchased and bundled "for free"]. That's worked for the PC market, but I can't see it working in the smartphone/consumer product market.
MSFT invented and owned the smart-phone market for nearly a decade with Windows-CE. HP produced their Win-CE device which morphed over time into a phone. First to beat Win-CE was Blackberry.
Within 5 years iPhone has not only reduced Win-CE/descendants to irrelevance (modulo the Win-8/Nokia deal), a complete outsider (GOOG) built and deployed a credible iPhone competitor, but APPL has shown/realised the underlying demand...
And people still hold MSFT shares???
The Microsoft management have demonstrated themselves to be incompetent technically and financially/business-wise...
Now, Apple's business is more than twice the size of Microsoft's -- $46 billion to $21 billion -- and more than twice as profitable: $17 billion to $8 billion.I might have been wrong in my prediction "within 5 years MSFT will hit a financial pothole", but this result says that real advances will be made elsewhere.
Can MSFT do it's usual, and come late to market then dominate??
Win-8/Nokia could be that vehicle, but it either needs to be overwhelmingly cheaper or convincingly better... The Xbox strategy of "buying market share" by subsidising device sales might exceed even the deep pockets of Microsoft.
Ballmer's ego and the Boards lack of action in correcting their stagnate share price might cause MSFT to fail spectacularly. Or they might just muddle along, continuing to "own" the corporate desktop.
Things that weren't said in the Article:
- APPL is big. Will it face anti-competitive break-up?
or does the existence of a real competitor, Android, put paid to that avenue?
- APPL follows the same business model as MSFT:
- no dividends. Has retained profits of ~$100B
- aggressive consumer lock-in... Not very nice if you want to adapt or improve your devices.