Further thoughts on Microsoft's future

More reasons to be bullish on MSFT

In between getting two teeth pulled yesterday (joy!), I couldn't stop thinking about this Microsoft is dead thing. Maybe it is because they have been such a constant in the 20+ years I have been in the tech world that I find it hard to believe they would just curl up and disappear. I think part of my disagreement may be that for me Microsoft is a surrogate for the U.S. After an American Century, there are many who claim the U.S. is in decline and will lose its dominant position. While I recognize the world has changed, I still think the U.S. has a prime seat at the table. The same goes for Microsoft.

BACKGROUND: Is Microsoft a Dead Man Walking?

I really did try and look at the other side of this debate as espoused by Adam Hartung in Forbes. As much as I try to see that side, though, I just can't help coming back to the fact that Microsoft has too many irons in the fire to fail.

I had a brief twitter exchange with Rob Graham (@ErrataRob) yesterday as well. Rob said "the problem is the 'Mobile Device' market is already mature, making impossible for new entrants to grab market share." I said I remembered when the search market was considered mature and was dominated by companies like Excite, Infoseek and Alta Vista. Rob clarified by saying the mobile device market was redefined by Jobs, the same way Microsoft redefined the computing market from IBM. This made sense to me, but instead of thinking Microsoft is now shut out of the mobile device market, I thought, "OK now it is Microsoft's turn to redefine the mobile device market."

Redefining a market is not an easy thing to do. But I do think we are still new enough in the whole mobile market era that there is time to do so. Also, there are several factors that play into Microsoft's ability to do so.

So, in addition to what I wrote yesterday, here are a few more reasons I think Microsoft still has time to redefine the mobile market and continue to be a dominant tech company:

• Has Apple already topped out? Many are saying Apple is losing its coolness factor. I don't know about that, but one could make an argument that they haven't really come out with a new killer product since the first iPad. The last two or three versions of the iPhone have not really been "redefining." The iPad mini seemed to me to be a reaction to success of the Kindle. Really nothing new there. We haven't seen the long-rumored Apple TV product. They don't have Steve Jobs as the wizard behind the curtain. So is their run coming to an end? It has been a dizzying ride, but it can't go on forever.
• Google's Android threat. Android's dominant market share of the phone market has been an amazing accomplishment. If you take Amazon's Kindle HD numbers and add them to other Android tablets, they have made some inroads in the tablet market as well. But I found it telling in that Hartung cited the market shares of the various flavors of Windows in his critique of Microsoft yesterday, showing that Windows 8 still has only a small share. Applying the same logic to Android, one can make a similar argument. How many are actually running Jelly Bean vs. Ice Cream Sandwich? How many aren't even running ICE, but Gingerbread or Honeycomb instead? If it is good enough for Microsoft's goose, shouldn't it be good for Google's gander?

On top of this, Google faces Android being "Unixed." Between different flavors of Android by the different handset makers and then other flavors of Linux coming out with mobile versions, Android faces a battle within the Linux community which could be just the wrong thing to have when trying to battle with Apple and Microsoft. 

Also, for all of the talk and hype, Apple still has a commanding lead in the tablet market. While I think this will change over time, I think that is where the "redefining the market" opportunity resides. Devices like Lenovo's Yoga and similar hybrids from Dell and HP could redefine the idea of tablets. More than an enlarged phone, as many considered the iPad at first, Yoga and its ilk is a different kind of mobile device that better fits the needs of many users.

Windows 8 is a break from prior versions. Where Windows 7 was a better Windows Vista, Windows 8 is really a very different Windows. It is going to take time for people to really understand Live Tiles and some of the other features in Windows 8. But everyone I have spoken to who have used it says that once you get the hang of it, it really grows on you.

In addition to the above and what I wrote yesterday, there are a few other Microsoft assets that need to be mentioned. One is Skype. Skype is the de facto standard for VOIP phones over computers. Not only that, but it is available on just about every mobile platform. Additionally, it does video calls, chat, and a host of other features. While Microsoft did pay a hefty sum for it, Skype could wind up being the app that saves Microsoft.

Another area where Microsoft has a leg up on the competition is its whole server business. Whether we are talking about Microsoft's CRM, Exchange, Active Directory or any of the other plethora of Microsoft server products, they are firmly entrenched in the lucrative server market. Also, with Azure, they are already down the road of offering these server products as a service via the cloud. At the end of the day, Microsoft will still have a very strong business providing the nuts and bolts of enterprise functionality.

All of the above notwithstanding, Windows does account for something like 70% of Microsoft's revenue. With PC sales falling and not having 85% market share of the mobile market, no doubt Microsoft's revenue mix and numbers will be affected. But is it reason to write them off? Reason to think Microsoft is done? I don't think so.

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