Watch Microsofts Shift

 
 
By David Morgenstern  |  Posted 2006-06-05
 
 
 

From a recent string of pronouncements, Microsoft looks to be in the throes of a midlife crisis. As the company re-examines its business model, it may be making a strategic shift that, regrettably, could leave enterprise customers out in the cold.

At the Microsoft VC Summit May 11 in Mountain View, Calif., Microsoft top brass said the company is looking to reinvent itself. Instead of its traditional focus on software and tools, Microsoft would transform itself into a leader in the consumer content, entertainment and Internet advertising space.

Steve Ballmer says he sees Google and open source as Microsofts strongest competitors. Click here to read more.

With Google eating away at Microsofts mind share with investors—and taking the majority of searching and advertising revenues—executives said Microsoft will fight back by acquiring technologies from startups as well as established companies. They pointed to a list of purchases over the past 12 months that have reinforced the companys focus on these consumer and Internet markets.

At the venture event, Microsoft CEO Steve Ballmer is reported to have said that software as a service will replace his companys current core business—selling the Windows operating system, Office applications and other packaged software.

Each new announcement strengthens the impression that Microsoft is focusing its creative energy on markets 180 degrees away from the needs of the enterprise and data center.

About a half-dozen years ago, these very same Microsoft executives said the company would reinvent itself—by becoming a full-fledged enterprise computing vendor.

And, at times over the past decade, Microsoft has made additional promises that it would graduate from its dependence on channel partners in the midmarket to become an IT partner to big enterprises on a par with other enterprise vendors. But the company has never completely followed through on these resolutions.

One of Microsofts most important enterprise promises has been to provide a reliable trusted computing platform. Most of that plan has fallen by the wayside, however, and its hard to see a prominent role for that architecture in the companys new business model—including in the forthcoming Vista version of Windows. Why, for example, has Microsoft moved so slowly on token-based federated identity, despite annual expressions of support?

We dont suggest that Microsoft abandon all its products other than those for the enterprise—the companys activities in many markets can and should create beneficial development synergies. But when there are warning flags from Redmond about where the company is making its technology investments for the future, enterprise IT professionals must take note.

It is, after all, their duty to look out for the technology interests of the enterprises for which they work. If Microsoft sees its future in consumer technologies, entertainment and Internet advertising, then corporate IT pros should keep their options open by testing the waters of Linux, open-source solutions, thin-client computing and virtualization.

Tell us what you think at eweek@ziffdavis.com.

eWeeks Editorial Board consists of Jason Brooks, Larry Dignan, Stan Gibson, David Morgenstern and Scot Petersen.

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