Over the past four months, Microsoft hasn't spent too much time in the headlines. For the most part, the company has been in the shadows of Apple, Google, Twitter and other prominent tech companies that have done a better job of grabbing the spotlight.
But that doesn't mean all those headlines don't have a direct impact on Microsoft and how it will conduct its business over the coming months. Quite the contrary, most of the big news that has broken so far this year is a direct challenge to several of Microsoft's businesses. And the onus is now on Redmond to respond.
How it will respond to those challenges is slowly becoming clearer. The company has said it plans to release Windows Phone 7 later this year, its online efforts are getting stronger and, with the help of its Kin smartphones, it hopes to become a more prominent player in the social networking market. But the challenges that it faces are extremely dangerous and if it's not successful at fending off attacks from all sides, Microsoft might emerge from 2010 a far less powerful and influential company than it was coming into this year.
Let's take a look at 10 challenges Microsoft needs to overcome this year:
1. The iPhone onslaught
Microsoft arguably waited too long to release a mobile operating system that could compete with the iPhone. The company stuck with Windows Mobile for so long, it witnessed a significant drop in market share. Regaining that market share will be extremely difficult. But at this point, it has no choice. Microsoft needs to invest heavily in Windows Phone 7 and try to show consumers that what it offers is superior to anything they can get from Apple. Achieving such a feat will be difficult for sure, but the longer Apple dominates the market and Microsoft can't regain lost share, the worse it will be for the software giant.
Tablets could be one of the biggest issues Microsoft faces in 2010. Currently, the company isn't offering any devices that can compete on the same level as the iPad. And since it's content to offer software, rather than hardware, it can only hope that some of the vendors it has partnered with, like HP, will be able to supplant Apple as the top tablet maker in the industry. That will be difficult. Microsoft can't simply mimic its strategy in the netbook space and muscle its way to dominance. Apple has set the tone in that market, and unless Windows 7 can offer a substantial increase in value over the iPad's operating system, Microsoft could be kept out.
3. Chrome OS
As Apple's iPad and iPhone OS have gained much of the limelight, some have forgotten about Google's upcoming Web-based operating system, Chrome OS. Hopefully Microsoft hasn't. Chrome OS promises to be one of the biggest operating system launches in recent history. And based on how it's received by consumers, it's entirely possible that Microsoft will lose some of its hard-fought market share to Google's new alternative. Luckily for Microsoft, it has Azure in its corner, which should help it fend off early attacks from Chrome OS. But if Google's operating system can gain traction, it'll be yet another headache that Ballmer and Company need to deal with.
4. The social conundrum
Microsoft is in a strange position when it comes to social networking. It doesn't operate a social network, but it owns a small slice of Facebook. It's unwilling to deliver a Twitter-like service, but it provides access to tweets through its Bing search engine. It's on the periphery of a broad, profitable market. Perhaps that's why Microsoft has decided to invest in its Kin smartphones. The devices will boast social networking features to appeal to hipster college kids and those just starting their careers. But was it a smart move? Neither Kin device seems all that unique or innovative, and we can't forget that with the help of third-party apps, the iPhone can be just as social. Microsoft might have a tough time dealing with social networks in 2010.