Microsoft had an inauspicious 2011. The company watched as its chief rivals, Google and Apple, continued to report rapid growth while it struggled to gain traction in the mobile technology market. Windows, while still popular, was under attack from all sides as Mac OS X’s star rose and Google delivered Chrome OS in the hopes of eventually dislodging Windows’ position as the world’s standard desktop operating system.
In some cases, Microsoft’s troubles during the year were through no fault of its own. Its competitors simply found a way to offer products that had greater appeal to consumers and enterprise users.
But it wasn’t all the competition’s fault. Microsoft this year made a host of major mistakes that hurt its ability to gain ground across the many markets it does business in. Going into 2012, the company will need to work as hard to correct these mistakes as it does responding to a host of competitive challenges.
Here is a sampling of the many dumb things Microsoft did over the last 12 months.
1. Where were the tablets?
Going into 2011, Microsoft needed to offer tablets to consumers and enterprise users. But by the end of the year, it hadn’t done so. Now, Microsoft is saying that it will bring Windows 8-based tablets to the market in 2012. But based on its history, many critics are wondering if it will follow through on that promise.
2. Let Google cement its lead online
Throughout the year, Microsoft knew all too well that the Web was vastly important to its future success. And yet, the company did little to dramatically improve Bing market position. Furthermore its online-advertising platform is second-rate compared with Google’s. Microsoft effectively allowed Google to cement its lead online.
3. Failing to acquire a handset maker
With Windows Phone 7 in jeopardy and handset makers offering Android on their best designs, it would have been prudent of Microsoft to acquire a hardware vendor. By doing so, it could control both software and hardware and finally get Windows Phone 7 on the map. Instead, Microsoft signed a poorly crafted deal with Nokia (more on that in a bit).
4. Let Android get away
Android saw its market share grow substantially in 2011. Microsoft, meanwhile, saw its market share slip during the year, as people appeared to ignore Windows Phone 7 devices in favor of the iPhone and Android units. Part of the problem was likely that carriers weren’t offering a lot of Windows Phone handsets. It was a sobering year for Microsoft’s mobile division. But it didn’t necessarily help itself in any way. The company failed to take the fight to Android and show a clear distinction between the platforms. It was a huge mistake on Microsoft’s part.
Microsofts Missteps Exacerbate the Multiple Market Changes It Faces
5. An odd Nokia partnership
As mentioned, Microsoft’s Nokia deal was poorly conceived and could hurt the company in the long run. According to reports, Microsoft dropped a huge sum of cash just to secure its deal with Nokia. Combine that with the fact that Nokia’s market share has plummeted and fewer people around the globe even want its products, and it’s clear to see that the deal might not have been in the software company’s best interests.
6. Failing to wrap up the living room
With the Xbox 360 and Microsoft Kinect, it would appear that the software giant truly understands what it takes to entertain people in the living room. However, at no point did Redmond find a way to corner the living room this year. Now, there are hints that Apple will be launching a television next year that will come with a host of integrated services. This development may significantly limit Microsoft’s growth opportunities in the living-room-entertainment market during 2012.
7. Retaining Steve Ballmer as CEO
Steve Ballmer has been running Microsoft for a long time. But he hasn’t made the insightful decisions that would have allowed the company to regain its former robust growth pace. This calls into question whether he should remain Microsoft’s top decision maker. Over the last 10 years, Microsoft’s stock price has dropped, its financials aren’t as strong as they should be and its position across the industry has been marginalized. Add that to Microsoft’s mobile troubles, and it quickly becomes clear that Ballmer might not be the best person for the CEO job. Unfortunately for Microsoft, in 2011 it made the dumb mistake of letting him keep his job.
8. Overpaid for Skype
Microsoft paid $8.5 billion for Skype. Although the acquisition was a good one that should help the software giant compete against Apple’s FaceTime, the company overpaid for the voice over IP provider. Skype is a company that has historically failed to generate respectable revenue and profits. With a largely free-to-use business model, it’s hard to see how Microsoft will see a positive return on its investment. Microsoft paid too much for Skype. And it’s time everyone realizes that.
9. Tipped its Windows 8 hand too early
Although rumors were running rampant earlier this year that Microsoft was launching Windows 8 in 2012, the software giant allowed that information to slip too soon. By effectively pre-announcing Windows 8, Microsoft put many enterprise road maps on hold as IT decision makers consider whether they should go forward with plans to deploy Windows 7 PCs or wait for the next operating system. Consumers, meanwhile, are also likely to wait on buying a new PC until Windows 8 is out. Microsoft should have waited until 2012 to show off Windows 8.
10. Failing to make the mobile space about security
Microsoft this year tried to play too nicely with its mobile competitors. In the meantime, it hurt its standing in that market. One of Microsoft’s key strengths in the mobile space is security. Unlike Android, which has been hit hard by security woes, experts agree that Windows Phone 7 can hold up to the vast majority of threats. Why not make that a talking point and draw a clear distinction between both platforms?