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Microsoft remains one of the richest, most powerful and fascinating companies in the technology space. When one looks at its financials, the software giant is nothing short of impressive. It generates billions of dollars in revenue and profits each year and is easily one of the most dominant firms in the world.
However, a deeper glimpse into Microsoft’s operation reveals that, behind all of those dollars, it’s a company that seems uncertain about where to go next. The majority of its revenue and profit is generated from its flagship Windows and Office products. Beyond that, it’s having a difficult time keeping up with the rapidly changing times that are a-changin’.
It’s time for Microsoft tostart thinking beyond Windows and Office. Read on to find out why:
1. The stock price problem
Microsoft is undoubtedly doing a fine job at generating boatloads of cash off Windows and Office, but it’s proving to not be enough. As a public company, Microsoft’s job is to maximize shareholder value. That typically happens through improving the stock price. Over the last several years, however, Microsoft’s shares have been stagnant, with its shares languishing between about $15 and $35 a pop. That’s not a sign of a healthy company. The time has come for Microsoft to take some risks, think beyond Windows and Office, and try to get its stock price moving again.
2. The cloud is a threat
Microsoft can bank on Office and Windows all it wants, but until the software giant acknowledges that the cloud could be the future, it will find itself in deep trouble. Google, the quintessential cloud-computing company, is committed to extending its reach into the enterprise-applications market with its Chrome OS and Google Docs app. Those programs won’t hurt Microsoft in the short-term, but, over time, if they can improve and begin to really compete with Microsoft’s options,Steve Ballmer might have a serious problem on his hands.
3. Android is the Trojan horse
Although Microsoft likes to keep a brave face in its battle with Google, make no mistake that Android has proven to be Google’s Trojan horse as it tries to take the software giant down. Through Android success, Google is improving its relationships with consumers and enterprise customers. Most important, it’s playing nice with vendors. All that could combine to become a major issue if Microsoft doesn’t start to focus its efforts in other markets.
4. Vendors are straying
Speaking of vendors,companies like Dell and HP have proven extremely important to Microsoft’s success. Without their support, Windows wouldn’t be Windows. But as HP prepares to bring WebOS to its line of PCs and Dell cozies up to Google, Microsoft is facing more threats from vendors than ever. The time has come for Microsoft to find a business that doesn’t require it to rely so heavily upon other companies.
Microsoft Must Find a Way to Innovate Again
5. Microsoft’s brand is still not where it needs to be
Microsoft has worked hard over the last several years to improve its brand image, especially its identity as the “Evil Empire” of the software industry. However, now Microsoft is in danger of being viewed as a plodding, monolithic entity that lacks insight into the new world. Its generally poor performance in the mobile space as companies like Apple and Google succeed is only further proof of that. Rather than spend so much time on Windows and Office, maybe Microsoft needs to think of other products that can help it redefine its brand as a go-to provider of something special.
6. It has the cash to do something now
Microsoft has a unique luxury that it must take advantage of as quickly as possible: the boatloads of cash that it has on-hand. In the tech space today, companies need more and more cash to deliver a product that customers are after. But if Microsoft continues to focus on Windows and Office, there’s no telling how much longer that trove of cash will be around. The smart move is to invest in new technologies-namely the mobile market and the Web-as soon as possible. After all, in a few years, there’s no telling if it will still be there.
7. Apple is more of a threat than ever
Prior to the launch of the iPhone,few believed that Apple was much of a threat to Microsoft. Sure, the company had the iPod and it was offering nice computers, but it was in no way a serious competitor for Microsoft. After the launch of the iPhone, all that has changed. Now, consumers are buying iPhones in droves as Windows Phone 7-based devices are languishing on store shelves. If nothing else, Apple’s mobile threat should be enough for Microsoft to start thinking beyond its typical Windows and Office mindset.
8. Tablet makers aren’t coming around
Aside from it selling PC accessories and some consumer electronics devices, Microsoft is a confirmed software provider. But that might need to change. As the company waits for more Windows 7-based tablet vendors to come around, a host of companies are investing in Android-based devices. HP has its own tablet operating system, even though it was one of the first to say that it wanted to work with Microsoft in the tablet market. Considering the importance of the tablet space, it might be time for Microsoft to think seriously about building its own tablet and trying its luck as an Apple-like company. It simply cannot be left behind in the tablet space because of its desire to follow the same, tired model with Windows 7 in the tablet market.
9. It can’t afford to trail in smartphones, either
It’s not just tablets. In the smartphone space, Microsoft was late to the game. While Apple and Google were delivering unique ways for consumers to interact with software, Microsoft’s operating system, Windows Mobile, was still delivering an outdated experience. If that’s not a good enough reason to think beyond Windows and Office, what is? Windows Phone 7 is a good start, but it’s just the tip of the iceberg. Microsoft needs to start focusing a significant amount of its time, cash, and effort on the smartphone space or it might lose that market-and the accompanying advertising dollars that go with it.
10. They’re becoming the only worthwhile options
Beyond the Xbox 360, which Microsoft products,other than Windows and Office, are really still the hands-down choice for a majority of customers? It’s tough to say. Microsoft has major competitors in every applications category. The debate on the market position of every single product one might mention would be heated. That’s an issue for Microsoft. A company of Microsoft’s size should have more than two (or three) big winners. Until Microsoft acknowledges that fact, realizes that it’s in trouble online and in the mobile space, and sets out to change its luck, bad times might be ahead for the software giant.