Microsoft is in trouble. The software giant was recently forced to lay off hundreds of employees in what was likely a move on the part of Microsoft to eliminate jobs in areas where divisions aren’t performing as well as they should. Microsoft’s decision to lay off employees is somewhat suspect, considering the company is still generating billions of dollars in profit every quarter.
But perhaps there is more to Microsoft’s decision to lay off employees than simply needing to free up some cash to invest in other areas. Perhaps it speaks to the company’s current inability to see what it needs to do in every area of its operation. After all, Windows Mobile is still drowning as the competition gains market share, HP has opted for WebOS over Windows in its new tablets, and the company is still battling security issues. There are other areas where it keeps making missteps. Here’s where they are.
1. The mobile market
The mobile space could be one of the biggest issues facing Microsoft. The company’s Windows Mobile platform is still toiling away in a market that’s being dominated by innovative, touch-screen platforms, like Apple’s iOS and Google’s Android operating system. Microsoft plans to release Windows Phone 7 later this year to compete with those providers, but it’s debatable just how viable the company’s platform will be. By being late to the new mobile market, and forgetting what consumers really wanted, Microsoft has some serious explaining to do when it finally delivers Windows Phone 7.
Although Steve Ballmer talked about tablets at his company’s Worldwide Partners Conference, it’s quickly becoming clear that Microsoft doesn’t have a tablet strategy in place that can even come close to rivaling Apple’s iPad. Part of the fault for that can be attributed to HP, which originally planned to offer a Windows-based HP Slate but recently announced that its tablet will run WebOS instead. Some might believe that HP’s decision to go with WebOS has more to do with its recent acquisition of Palm. But it might also tell the market that Windows isn’t as ready for tablets as Microsoft wants everyone to believe. After all, HP would have gone with the best platform it could. It may be saying that the best platform isn’t Windows.
Security continues to be one space where Microsoft misses the mark both in the consumer market and the enterprise. With each Patch Tuesday, the company is forced to deliver several updates to protect Windows users from potential harm. It has even been forced to patch Office, Internet Explorer and other software products. That’s not a good thing. And it hurts its chances of fully appealing to consumers and enterprise customers that are deeply concerned with losing important data. Security means the difference between success and failure in today’s marketplace. And so far, Microsoft isn’t doing well enough.
Innovation has always been a problem for Microsoft. Although Windows was an extremely innovative product when it first launched, Microsoft has failed to deliver anything that even comes close to matching the innovation its competitors have developed since. As much as the company wants to be considered a major player in the tech space, it will not achieve that if it continues to deliver iterative updates to products that customers don’t want. Innovation reigns supreme in today’s tech market. And it’s on Microsoft to start innovating to meet those demands.
Microsoft Needs to Meet Customers Desire for Quality
5. The consumer space
The consumer market has been one of the most perplexing sectors for Microsoft. Although Windows 7 is doing well, Microsoft’s efforts elsewhere just aren’t stacking up to what the company would like to achieve. As noted, it isn’t performing well in the mobile market, it’s failing to deliver tablets, and even its personal media player can’t compete on any level with Apple’s iPod. Microsoft’s only success in the consumer space is its Xbox 360 platform. That’s not a good thing. If Microsoft wants to stay afloat in the consumer market, the company will need to start bringing products to the market that customers actually want. Apple is doing it. Why can’t Microsoft?
6. Vendor relations
Vendor relations continue to be a major problem for Microsoft. The issues started when Windows Vista was released. At the time, vendors realized quickly that Microsoft’s operating system couldn’t compare to Windows XP. And as consumers and enterprise customers continued to opt for alternatives to Windows Vista, vendors decided to offer downgrade rights, which allows customers to use Windows XP preinstalled on the PC, rather than Vista. By doing so, it strained relations between Microsoft and vendors that have yet to be fully repaired. Until recently, customers could still opt to buy a Windows 7-capable device from a major vendor and run Windows XP instead. Realizing that, it sounds like Microsoft still has some fence-mending to do with hardware vendors and customers.
7. Financial investment
Thanks to its billions of dollars in profit, Microsoft has more than enough cash to invest in just about anything it wants. If it wants to try its luck in the hardware industry, it can. If it wants to throw money at cloud computing, it has the ability to do so. In other words, it can do whatever it wants, whenever it wants with the cash it has on-hand. And yet, Microsoft doesn’t do a thing that makes any sense with all that capital. It hasn’t invested well in the mobile market, it’s failing to deliver a viable alternative to Chrome OS, and it can’t stop its losses in other, non-software-related industries. Meanwhile, it’s acquiring second-rate firms like semantic-search service Powerset. As Microsoft continues to spend unwisely, it’s only hurting its chances of competing in the marketplace.
8. The Web
The Internet has become Microsoft’s Achilles’ heel. As more and more companies move online and Google continues to dominate, Microsoft is leaving itself vulnerable to what is sure to be a seismic shift in the way the enterprise and consumers use the Web. Rather than confront the future, Microsoft has instead played catch-up as the rest of the market capitalizes on Web services and Web applications. Microsoft’s Web strategy is not working. And the longer it tries to cling to the past, the further it will find itself behind in just a few short years.
Microsoft’s leadership has been abysmal ever since Steve Ballmer took over as CEO. Yes, Microsoft is still profitable, and the company’s stock price has stayed relatively constant over the past few years. But given where Microsoft stood in 2000 and how it’s positioned in today’s marketplace, it’s impossible to say its leadership is doing a good job of preparing it for the future. The company is a mess in far too many areas. And because of that poor leadership, people at Microsoft are losing their jobs. Microsoft needs a breath of fresh air from someone with a real vision. And it needs it soon.
10. Necessity trumps desire
For years, Microsoft has been the company that delivers the products enterprise customers and consumers need, and not what they want. For a while, that worked out well, since companies and consumers need to run, say, Windows in their homes or places of business. But that need for tech products has given way to a desire for products that do something special. Apple has capitalized heavily on that. But Microsoft, with its unending desire to be a necessity, has not. And it’s hurting the software giant. Going forward, Microsoft will need to realize that in today’s crowded tech space, desire and quality trump simple necessity.