Microsoft isn’t going away, but they aren’t going to do a lot of things right in 2011, either. The company’s leadership is stuck, complacent, and just a bit thick. We’ve seen a lot of flux in the executive ranks reporting to CEO Steve Ballmer and I think that’s mainly because Ballmer won’t get out of the way. There is no upward mobility path so people leave. But don’t expect Ballmer to leave in 2011, either, which means more mediocrity. So Microsoft will continue to be a huge presence, but not feared in the industry the way they used to be. They’ve become the new IBM.
Windows Phone 7 is almost there, for example, but almost isn’t good enough, so it will be pummeled by Android and iPhone. Microsoft will spend a lot of marketing bucks on Win7 tablets, but those won’t be ready for prime time, either. Windows 7 isn’t really optimized for touch. It requires more horsepower to run than Android or iOS, so that means either higher prices, lower margins, or crappy performance. If tablets really takeoff it won’t be a good thing for Microsoft.
Meanwhile, Google has become the new Microsoft.
What has IBM become?
The new “GM”?
Well, IBM is at an ultimate state, so big and mundane its pervasiveness makes it undetectable. Somewhere beyond the cloud, IBM now is sublime. Has been since it left its terrestrial manifestations to Lenovo.
Unless you’re wearing a white beard and toga while playing with petty human destinies, there is no beyond that.
A member in good, or bad (depending on our view), standing of the Financial Services Community. It makes almost nothing, it just shifts money.
IBM’s two biggest money makers are software and services.
Some of their software is pretty good — backup (Tivoli Storage Manager) and database (DB2) are the first that come to mind. A lot of their software is pretty mediocre. Gone are the days of smart developers who would “wow” the market with their new and useful ideas. IBM software these days is more about periodically adding some features like scare tissue without really improving the quality of the product. Product support is getting worse by the day.
Their services business is huge and is in trouble. You’ve read Bob’s many columns on this. All of them are true. The business is being mismanaged and slowly choked to death. Services contracts last for years. Once a firm has outsourced IT, it is hard to reverse the decision. For these reasons it will take years for the world to see the full effect of the damaged being done to IBM’s best money maker.
John
IBM has abandoned the low-margin consumer market and returned to the enterprise market.
It is interesting that Bob and others have been predicting the implosion of IBM for years, and yet revenue, profit, and market cap are at an all-time high.
Accenture. ( IBM has become )
the new EDS…
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The last sentence (Google is the new Microsoft) is the strongest. It was during 2010 that – almost overnight – most of my colleagues went from ‘Google is so cool’ to ‘Google is kind of creepy’. I’m watching for Google to start fighting this image by comparing themselves to Facebook – i.e. Google is open & integrating well with other services, whereas FB is all about ‘Come Into My Parlour’.
I noticed that too. Not sure when or why but Google went from cool to kind of creepy. It’s not terrible yet but when Google is mentioned it feels like a small cloud has passed in front of the sun and you feel a little chill in the air.
True, and very true!
I wrote about the last one in August 🙂
http://future.jasonhanley.com/2010/08/google-becomes-microsoft.html
Microsoft’s announced push to move Windows to ARM at CES is a perfect example of how bad things have gotten without Bill Gates at the helm. Ballmer is running Microsoft to the ground.
If your interested in the ARM fiasco; Arstechnica has some good reads.
http://arstechnica.com/microsoft/news/2010/12/microsoft-may-be-porting-windows-to-arm-but-it-makes-no-sense.ars
and
http://arstechnica.com/microsoft/news/2011/01/windows-8-to-come-in-arm-soc-flavors.ars
and
http://arstechnica.com/microsoft/news/2011/01/windows-on-arm-official-but-leaves-many-questions-unanswered.ars
Microsoft is also now is a breeding ground for lazy and complacent employee’s that should have never been hired in the first place. –but they are because they are all temp’s, just working the system.
The whole idea of a temp agency is fundamentally flawed. Unfortunately, this is how most businesses are staffed today. This rabbit whole goes deep. I encourage you to give this one some thought.
Microsoft may continue for another few years, but it will ultimately implode.
Why? Because it is dependent on the incomes from Windows and Office to run the rest of the company. And with Android/iOS taking over the low-powered systems, Mac and Linux creeping up on the desktop (roughly 10% combined by latest estimates), and Linux taking over the server and big iron systems – there’s simply no room for Microsoft to grow.
Of course, it doesn’t help that their products are crappy – Win7 may be the best version of Windows yet (aside from XP) but it’s largely behind compared to Linux and Mac. Desktop innovation typically occurs on Linux first, Mac second, and then Windows – a trend that has been going on for several years already.
And it doesn’t help MS at all that the world is standardizing on ODF, as compared to OOXML or even MS Office’s legacy binary formats. Further reducing the need to have MS Office and ultimately Windows – or any of the other MS Back-Office products (e.g. SharePoint, MS SQL, etc.).
And MS is so dependent on income from Windows and Office that it simply cannot even break even if one of them goes under – let alone both at the same time.
Now, some out there are calling for MS to be gone in <5 years; but personally I think there is too much inertia still for that to happen, so I give them about 15-20 years now at best, likely 18 at most (once I adjust the 20 years for how long I've been suggesting this – yes, 2-3 years ago I wouldn't have gone under 20 years.)
The end of Microsoft is nearing. The world is waking up, and there is nothing Ballmer can do to save it. Ballmer stepping down would most likely increase the timeline, but their days are numbered.
MS will not ultimately turn into IBM. They may thrive in an IBM-like state for a while, but they will not be able to endure. IBM thrives because of how diverse the company is – a diversity which Microsoft never had. Whereas Microsoft only thrives in a Microsoft-only world – a world that is falling apart and that no one today wants. (Especially with the likes of Stuxnet out there.)
this link today pointed out a major shift in the technology marketplace.
https://www.asymco.com/2011/01/06/this-is-the-most-exciting-ces-ever/
1) Microsoft committed to building it’s flagship OS onto non Intel architectures
2) Microsoft PC and Phone (and tablet and netbook and and and) OEMs have committed to (building and/or) deliverying platforms running non MS Operating environments.
Read: Microsoft and Intel have been dethroned core ‘top feeders’ in the PC ecosystem.
This is a tectonic shift in the ‘trickle up’ economics model. And Google with it’s ‘Visa’ Model (electronic use should be free… except for ad revenue, which we will take our 30% of each impression), appears to be the new top feeder as a ‘parasite.’
Apple… hmmm, someone will have to help me with the food chain analogy. My only comparison is that they sell both the nutrition, (apps/content), and the appliance (i-Thing), Oh, shifting analogies, instead of giving away the razor and making money on the blades, Apples appear to be giving away the blades for the ‘insanely great’ razor?
— Mac and Linux creeping up on the desktop (roughly 10% combined by latest estimates), and Linux taking over the server and big iron systems – there’s simply no room for Microsoft to grow.
IF MicroSoft gets away with buying up the *nix patents from Novell, it will kill off linux. That they financed the SCOutrage is documented. They were just buying time. Now they can go after linux directly. Linux doesn’t infringe any patents, but litigation is expensive enough to kill it off. Thus is MicroSoft’s strategy.
No, Microsoft won’t kill off Linux. It =might= kill off Red Hat, Ubuntu and SuSE, but Linux (due to its open source foundation) is like a thousand ants. You can’t get ’em all.
And FreeBSD has already won court cases that it doesn’t infringe on the Unix patents.
Personally, I suspect Microsoft will go the way of Ma Bell, not IBM.
Microsoft has been struggling for years and is well aware of it’s innovation gap. It lives off it’s two cash cows and will do so for several more years. This is their Achilles Heel. They are not desperate enough to risk the company on anything truly revolutionary as they are still printing money. Windows 7 was a sure thing but their other ventures have not raised anything like the profits. Kinect is a hit but it’s also unlikely to be a gateway to more ubiquitous Xbox sales simply because it’s yet another box to buy. Windows Phone 7 has a nice UI but is on essentially the same hardware as the faster developing Android. It’s a tough problem to motivate people while the bucks are still piling up at the door. But Windows 8 and MS Office 2012 or whatever will be even more incremental. Where is the mojo?
If Microsoft is the new IBM and Google is the new Microsoft, is Apple the new Google?
Microsoft is the new IBM, Google is the new Microsoft, and Apple is still Apple.
You’re both wrong… With Apple and it’s trying to control everything IS the new Microsoft, and Google with it’s innovation is the new Apple. Microsoft is still Microsoft and is starting to change to adapt to new ideas.
Nope Google is the new Microsoft as demonstrated by the announcement that they are pulling support for H.264 from Chrome in favour of WebM because it’s “open” but is still supporting flash.
I’ve been in this business 30 years and there are a few things I’ve noticed:
1) These predictions often prove wrong
2) The focus of the writer or the commenters are almost always very narrow
3) Anyone who invests their hope in technology will be disappointed ultimately
What’s the point of this “prediction?” Microsoft doesn’t have the dominant position it once had. Big deal. Ditto IBM. Very soon, ditto Google and Apple.
Nobody is going to be as near monopolistically powerful as IBM and Microsoft once were. Get over it.
The purpose of this prediction is to satisfy readers who demanded I write annual predictions.
You’re too late with this one, Bob. Two years ago this would have been a prediction. Now it’s an observation.
Microsoft has already conquered the Enterprise software scene, so there is not a whole lot more functionality they can add. I suspect they will begin to revert to their tools base and start expanding that business more into the Mac and *NIX space.
Likewise, IBM has already reverted to their mainframe base, and the only software they successfully sell supports their mainframe sales. Their enterprise server line is great but lacking in eyeballs. HP is still king (with Dell bringing up the ‘value’ banner).
II see Microsoft and IBM creating more divestitures, with Microsoft spinning off the entertainment division and IBM spinning off the IBM Global Services chunk.
This is more like it.
But you could swap out all the Microsoft names and products for Yahoo ones and this would be the right prediction for Yahoo as well. cf my post in the Yahoo comments.
You shouldn’t underestimate the XBox and Kinect which is an exciting new product which has sold like hot cakes and that they will probably ultimately screw up – but it shows they still have some little bit of mojo left (if they just keep it away form the big man).
Microsoft does not get it. Even Bill missed it in the first edition of “The Road Ahead.” It’s a networked world – a many to many network in fact. In that respect Apple does not get it either. Who wants to join the new cult of Apple content and get whatever Steve determines is in their best interest? People want to interact with each other, not with Steve. Even though he is fun and interesting to listen too, he’s not a deity yet . . .
This is why Microsoft will fail.
http://arstechnica.com/microsoft/news/2010/12/microsoft-may-be-porting-windows-to-arm-but-it-makes-no-sense.ars
and
http://arstechnica.com/microsoft/news/2011/01/windows-8-to-come-in-arm-soc-flavors.ars
and
http://arstechnica.com/microsoft/news/2011/01/windows-on-arm-official-but-leaves-many-questions-unanswered.ars
No! No! and Double No!
You all don’t understand … this is all about games, and wizards and fancy little personal gadgets!
Oh come on … “Microsoft has already conquered the Enterprise software scene” … that’s just a joke. Hardly. At the desktop, but certainly not at the business operations level. IBM, Oracle, SAP … those are the Enterprise Software kings. Not Microsoft.
“Likewise, IBM has already reverted to their mainframe base, and the only software they successfully sell supports their mainframe sales. Their enterprise server line is great but lacking in eyeballs. HP is still king (with Dell bringing up the ‘value’ banner).” … that’s just plain mis-informed.
I’m sick of this crap. Y’all are dweebs. Go jack off into your pillowcases. Goodnight.
I’ve been saying this for years!
great post, very informative. I wonder why the other experts of this sector do not notice this. You must continue your writing. I’m sure, you’ve a great readers’ base already!
I’m 23 years into this so far and with three young sons to feed I’m hardly about to stop now.
Another one bites the dust . . .
http://online.wsj.com/article/SB10001424052748703779704576073962170078524.html
Their services business is huge and is in trouble. You’ve read Bob’s many columns on this.
All of them are true.
I think it is totally ironic that Microsoft is becoming the very thing they overcame in the 80s – a bloated, paralyzed company, devoid of innovation. They drank the Vista kool-ad for years before it dawned on them that they DON’T run the world. It will be interesting to see who has the chops to be the next Microsoft.
Microsoft is a company called ‘me too’. They’ve just entered the business phone last year…
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Kinect Xbox 360…
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I predicted this about six years ago. My friend, a total programmer geek who is immersed in technology in ways I will never be and could never be, looked at me disdainfully and said I didn’t know what I was talking about. That sort of attitude—writ large—is exactly *why* MS is the new IBM. Now Apple had better watch its ass…riding high now, but the iPhone is five years old and the iPad is already entering the mature phase, believe it or not. Cook has to, um, cook up something new and impressive in a year or so. Things move quickly today. No longer can a company manufacture nothing but sugar water in a shiny red can and stay at the forefront of the beverage industry for decades and decades.
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