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Windows may have defined Microsoft since its inception, but it will be services, not software, that give the world's largest software company its claim to fame in the future, according to analysts.
Microsoft, which celebrated its 30-year anniversary Friday with a party at SafeCo Field in Seattle, fundamentally changed the computer industry with an operating system that now runs more than 90% of PCs in the market.
That ubiquity poses a problem for Microsoft, says Joe Wilcox, analyst with Jupiter Research, because it means the company faces the difficult task of trying to outdo itself. "Microsoft is at this juncture where it's the victim of its own success," he says.
Exacerbating this issue is the fact that conditions in the technology industry have changed drastically since 1975, thanks in large part to Windows. Today, it is much harder for a comparable product to become as pervasive as Microsoft's operating system, says Rob Helm, an analyst with Directions on Microsoft.
Helm says Windows was so successful because it rode the wave of two events - the invention of the PC and the arrival of the Internet. That subsequent chain of events "is not necessarily going to repeat itself in the next 30 years," he says.
Dan Kusnetzky, vice president of system software research at IDC, agrees. "The days of the killer application are long gone," he says, adding that the packaged software that helped Microsoft rise to such a position of dominance is on its way to becoming obsolete, giving way to subscription models for services that customers buy to run the software they need.
So as Microsoft tries to carve out a niche in a host of new markets it will need to come up with new tricks in order to surpass the success of Windows, Kusnetzky says.
"What we're going to see Microsoft attempt to do is move away from a packaged software model and sell everything as a service," he says. "Microsoft wants to make sure people pay Microsoft for any use of computers anywhere. It's a very clever, intricate strategy based upon control and ownership of low-level things like APIs, tools, communications protocols and file formats."
The company's recent restructuring into three divisions whose services strategy will be overseen by former Lotus guru turned Microsoft CTO Ray Ozzie shows that services are now a major focus for the vendor.
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