Microsoft Hasnt Changed With the Times

Opinion: With customers more willing to stand pat, Redmond needs to adapt its sales strategies and deliver must-buy products.

Its barely started, but 2005 already looks like a challenging year for Microsoft. In fact, the company faces more challenges than it ever has, and serious ones, too. No, Microsoft isnt sinking, but its not gaining very much, either.

The Microsoft that everyone used to fear no longer exists. This is in part because Microsoft hasnt thrown gobs of money into mowing down competitors, but its also a result of the companys inability to execute in new businesses.

So, things at One Microsoft Way arent going nearly as well as they used to go. But while many of the challenges are of the companys own creation, there also may have been no way around them.

Specifically:

The core issue for Microsoft is that technology adoption isnt what it used to be. Customers no longer buy just because a vendor tells them to, and Microsoft is finding it increasingly difficult to sell upgrades or deliver new software that customers want to buy. Customers are very often quite satisfied with what they already own or dont think they will be more satisfied with something else. Selling in that environment is not easy.

Its hard even selling maintenance agreements in this environment. Why invest where youre not sure what youll get in return? Perhaps Microsoft needs to sell maintenance on the basis of a certain number of future releases rather than for a specified period of time.

Any way you look at it, Microsoft has made only scant progress in shifting its revenue model to subscriptions and software-as-a-service. Accomplishing this is, however, very important to Microsofts ability to invest in new technology over the long haul.

/zimages/3/28571.gifClick here to read more from David Coursey about software as a service.

This column is based, in part, on the annual "Top 10" list of challenges published by the Directions on Microsoft newsletter. This well-regarded publication is written by a group of young Microsoft "retirees" who still want to keep track of what their old company is doing. They arent soft on the company, usually rather the opposite.

Directions list mentions the acquisition of companies in the financial software, online conferencing, and antivirus businesses as examples where Microsoft bought second-tier (perhaps because buying first-tier would have drawn unwelcome scrutiny.) But Microsoft has had a hard time turning these purchases into successes or leveraging them into the Microsoft product line and customer base.

Next Page: Confusing the customers.