Microsoft, IBM and the Price of Success

Microsoft's business is now clearly "under performing" with even the Board admitting it. Steve Ballmer has finally been pushed out. The MSFT Board could've followed IBM in 1993 and appointed an outsider, but they chose an long-term insider.

The imminent "death" of Windows-XP (8-Apr-2014, free security updates end) shows, in my mind, a clear misattribution effect by Microsoft: they've confused cause and effect, that people bought their brand, not just a "standard" commodity product.

Now Read This: Why the Munich Open Source Conversion won't be replicated in Australia.

Whichever side of the Open Source vs Proprietary Software debate you lie on, this article is a "must read". The headline take-away is: "Our goal was 'Freedom', to become independent."

How Munich rejected Steve Ballmer and kicked Microsoft out of the city, Steve Heath, 18th Nov, 2013.

Microsoft: End Games have started.

News report on a shareholder class action against the Microsoft management team and  failure of "Surface", and consequent $900MM writedown of inventory.

My reaction to the friend who sent me the link:

Microsoft: Have missed the boat on catching up to Apple & Google.

In early 2007 I started opining that Microsoft would "hit a financial pothole" around 2010. Thirty posts followed before I gave it up: the mainstream & financial press were looking seriously at the topic. [A Forbes columnist "called the game" in January.]

What prompted my view in late 2006, pre-iPhone, I'd noticed that Microsoft hadn't been able to maintain it's growth above 10%. They (legally) manipulated their figures to remove extreme volatility. Since the early 1970's, I've seen a bunch of Tech companies falter, stumble and fail. Always starting with one "off" result. When the iPhone appeared, I knew the mechanism of their "pothole".

I missed the GFC in 2008 and its effect (revenue down) and in 2012 went on record saying "I missed the date". I'm a technical person, not a financial analyst.

Software Engineering: Failed profession or not? Windows vs Linux kernel

A fascinating read by a Windows Kernel developer about the social dynamics of Linux vs Windows kernels.

MSFT: A Big Day - stock downgraded on back of PC sales 'turmoil' (15% down) and mobile offerings 'underwhelm'

This is a big day for Microsoft: it's stock has been downgraded to 'hold' from 'buy' on back of PC sales 'turmoil' (15% down) and they're criticised for "underwhelming" performance in new mobile markets.

MSFT: The Application that dare not Speak Its Name

There have been recent reports about the decline in global PC sales. Laptops replaced Desktops are the most common "PC" platform 5 or more years ago. What impact on the market will this have?

MSFT: The 'Surface' may be irrelevant, but is this the Beginning of the End for Microsoft?

Is the Microsoft Surface "too little, too late" or another Big Play that will crush the competition?
It is only, as Android devices are, similar to the iPad in design, features, construction and price, not a "must have" device.

Microsoft Troubles XVII: The full product lifecycle curve, inception to collapse

Vanity Fair have a great synopsis and article on Microsoft and their fall from the top, but not for the reasons I've looked at.

Microsoft Troubles XVII: Vanity Fair on what "Felled a Tech Giant"

The mainstream media has released an major investigative report on Microsoft.
The link is "a teaser", not the full article.

Microsoft’s Downfall: Inside the Executive E-mails and Cannibalistic Culture That Felled a Tech Giant
by Vanity Fair 12:00 AM, JULY 3 2012

Microsoft Troubles XVI: Hard Data is emerging

Horace Dediu of asymco has written two recent posts on Microsoft:

• "The evolution of the computing value chain", and
•  "Who will be Microsoft's Tim Cook?"

I find Dediu's work outstanding: he provides hard data for the points he argues...

Microsoft Troubles: XV. My prediction not fulfilled

In 2006 I looked at the Microsoft Annual Report and thought "I've seen this before, their market is being taken by newer 'substitutes'. They'll hit a 'financial pothole' within 5 years, give or take."

Well, that hasn't happened, so my prediction was wrong.

Microsoft Troubles XIV: iPhone sales bigger than total MSFT Revenues

Another interesting piece from Business Insider: "Apple's iPhone Business Alone Is Now Bigger Than All Of Microsoft".

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 Troubles XIII: "Business Insider" articles

A couple of articles discussing Microsoft's future, directly and indirectly.
Others are starting to forecast the potential for a collapse and "Microsoft 2012 == IBM 1990".

Steve Jobs Was Right: Google IS Turning Into Microsoft
(reminding us that Microsoft has tried to get into TV, cable, music and a bunch of other things)

(Larry Pages asked Steve Jobs for advice.)
Jobs told him to focus on fewer things and do them really well.

An App too far? Can Windows-8 gain enough traction.

Summary:
"last to market" worked as a strategy in the past for Microsoft.
But "everything is a PC" is probably false and theyll be sidelined in the new Mobile Devices world.

A tablet from Microsoft? It won't save the company.

Update 1: Mary Jo Foley of ZDnet tips a launch of Windows 8 next week at AllThingsSD.

---

From a Forbes blog:

Microsoft’s Windows OS For Tablets Coming Next Week?
May. 27 2011 - 12:11 pm, Agustino Fontevecchia

Microsoft Troubles XII: IBM market cap re-overtakes MSFT

Update 1. Influential hedge-fund manager, David Einhorn president of Greenlight Capital, calls for Ballmer to stand aside.

Update 2. The MSFT board stands behind Ballmer, rejects David Einhorn's call to stand aside.

Einhorn has 9M MSFT shares (0.011%). He's bought because he thinks they're undervalued.
This could just be a media beat-up by him to make some money - the share price has increased.

Whatever the cause, this is a significant milestone.
The MSFT board has had to consciously and publicly defend their continued choice of Ballmer as CEO.

Microsoft Troubles XI: APPL more profitable than MSFT

Adam Harthung at Forbes wrote Why Not All Earnings Are Equal; Microsoft Has the Wal-Mart Disease, byline is May3, 2011.

 Read the article, says more than I can, with more (economic) facts and more eloquently.

It's only ever been about the company's economic performance.
Poor products and ignoring your customers only ever have one outcome.
Sad for the employees and shareholders, though.

Please note, I am specifically saying that Microsoft products are NOT doomed, just the company.

Winders on the Corporate Desktop isn't going away anytime soon (2-3 decades to run at least).
Too much invested, too many careers tied to it and the Lemmings Rush hasn't turned elsewhere yet...

The next two Big Questions for Microsoft, the company:

• How soon before the Board notices and removes Ballmer?
• Who will be the eventual purchaser of the profitable lines-of-business - Windows and Corporate solutions?

Why Microsoft is doomed to Commercial Failure.

Microsoft doesn't understand Software, or at least how to build it at-scale and the people who create it.

Microsoft Troubles X: Ballmer as CEO being questioned

Richard Waters published a piece, "Ballmer's opportunity to prove his worth", on 12-Jan-2011 in the Financial Times. It's been picked up and reprinted - I become aware of this through an investment newsletter.  Microsoft's performance is now a concern/topic for mainstream investors. That can't be good.