10 Reasons Why Microsoft's Decline Is Good for the Company

 
 
By Don Reisinger  |  Posted 2010-05-27 Email Print this article Print
 
 
 
 
 
 
 

News Analysis: Microsoft is on the decline. For the first time, Apple has beaten the software giant as the most valuable company in the industry. For its part, Microsoft is shrugging it off. But it should embrace the news. It's good for the company.

Microsoft is no longer the most valuable technology company in the industry. Earlier this week, Microsoft's market capitalization fell below Apple's for the first time. Currently, Microsoft's market cap sits at $219 billion. It was at more than $500 billion before Steve Ballmer took over at Microsoft in 2000. Meanwhile, Apple's market cap has grown rapidly. The company's market cap currently sits at $222 billion.

To some, including Ballmer, that might not mean much. Market capitalization changes all the time, and it's entirely possible that Microsoft will regain its standing as the industry's most valuable company within days. But it highlights a major issue: Microsoft is on the decline. And until Microsoft starts accepting that, things might only get worse.

But perhaps there is a silver lining to the news of Microsoft's declining fortunes. Call it a wake-up call or a swift kick. Either way, it's an opportunity for the software giant to evaluate what's really happening in its operation and, based on that knowledge, capitalize to better its operation. Believe it or not, Microsoft's decline is actually good for the company. Here's why:

1. The pressure is off

When Microsoft was the industry's biggest company, it faced unprecedented pressure. The company was looked at as the firm that would bully all others. It also had a target on its back that no other company in the space had. All the while, investors wanted to ensure that the company they owned was staying atop the industry. It was stressful and it caused Microsoft to make some suspect moves simply because it wanted to maintain its standing in the market. But now that's over. And Microsoft needs to embrace that.

2. It's a wake-up call

At the same time, it's a good wake-up call for Microsoft. It was making poor decisions that negatively affected its business. At the same time, Apple, Google and other top competitors were finding new ways to attract consumers. By losing the top position in the industry, Microsoft might have finally gotten the wake-up call it needed. The company can no longer rely on software and believe that it will be the leader indefinitely. Since Ballmer took over, the tech business has been changing rapidly. Meanwhile, Microsoft's operation has stayed relatively constant. That can't happen anymore.

3. It makes the company look at Apple

If nothing else, Microsoft's decline makes the software giant evaluate Apple even more than it has in the past. What is Apple doing right? What kind of products is Apple offering that's helping the company grow so rapidly? Is there something that Microsoft can do to stymie Apple's growth and steal market share for itself? These are just some of the many questions that Microsoft should be asking itself right now. Apple is now the industry's most valuable company. And until Microsoft starts accepting that and looks toward Apple for inspiration, things won't get any better for the company.

4. It could help its reputation

One of Microsoft's biggest problems is its reputation. As the industry's biggest tech firm, the company has faced criticism over its size and dominance in the marketplace. In the past, some have called the company a "monopoly." Even Bill Gates got a pie to the face, simply because Microsoft had become what it was. But all that has changed. Microsoft is no longer the industry's most valuable company, and it can't be looked at as the dominant firm that will destroy everything. Microsoft is the underdog now. And it should embrace that.



 
 
 
 
Don Reisinger is a freelance technology columnist. He started writing about technology for Ziff-Davis' Gearlog.com. Since then, he has written extremely popular columns for CNET.com, Computerworld, InformationWeek, and others. He has appeared numerous times on national television to share his expertise with viewers. You can follow his every move at http://twitter.com/donreisinger.
 
 
 
 
 
 
 

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