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Author Topic: The Odds Are Increasing That Microsoft's Business Will Collapse Read more: http  (Read 1701 times)
nop_90
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« on: June 24, 2010, 06:14:42 PM »

The Odds Are Increasing That Microsoft's Business Will Collapse
http://www.businessinsider.com/microsofts-business-could-collapse-2010-6

A good article without hype and pro-apple/pro-google rubbish.
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nop_90
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« Reply #1 on: June 24, 2010, 06:25:54 PM »

Another good article is
Microsoft in Denial: Google Threat is Classic Disruption
http://www.businessinsider.com/2007/12/microsoft-in-denial-google-threat-is-classic-disruption

The same applies to android vs ipod.
A classic example of "disruption" in warfare is IUD in iraq/afganistan, the use of snipers in stalingrad.
The purpose is not to win, but to just cause the "enemy" to lose more then u do.

You can win against disruptive technology, but the catch is the normal rules do not apply.
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perkiset
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« Reply #2 on: June 24, 2010, 11:38:03 PM »

Weirdness - I get about 95% page load but never see any content and then The server stops.

Please thumbnail the article meng.
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« Reply #3 on: June 25, 2010, 12:19:56 AM »

The Odds Are Increasing That Microsoft's Business Will Collapse
A few weeks ago, the market delivered its verdict on the relative future prospects of Apple  and Microsoft.

Apple's prospects are better, the market said. And in the past few weeks, that vote has only become more decisive.

The market still thinks Microsoft's long-term prospects are pretty good, though.  The stock is trading at a respectable 14X P/E.  The company has cash flow gushing out of its ears.  The consensus is that Microsoft will keep growing, just more slowly.

But the odds are increasing that even this will prove to be wishful thinking.

Before we begin, a quick review of where Microsoft's revenue and profits come from.

Microsoft has a lot of different businesses, but as you can see from the chart below, the vast majority of its profits come from Windows and Office.

Microsoft Operating Profit

Image: SAI

And now on to Microsoft's predicament...

The world has changed radically in the past few years.  The Internet has continued to free app-makers from dependency on Windows or any other desktop platform (and, thus, from dependency on Microsoft).  Apple's iPhone has revolutionized the mobile business, unleashing a whole new wave of personal computing devices.  Apple's iPad seems on its way to supplanting the low-end PC business.

Importantly, none of these trends depend in any way on Microsoft's original monopoly and cash cow, Windows.  None of these trends generate so much as a dollar of revenue or profit for Microsoft.  (Microsoft is nowhere in mobile.  Or tablets.  And it is reasonable to think that, in these two huge growth businesses, nowhere is where Microsoft will always be).

Google, meanwhile, is trying to do the same thing to Apple that Microsoft did to Apple 15 years ago: Separate software and hardware and create a ubiquitous software platform for the world's developers to build on.  This is a smart strategy, and it's resonating in the developer and consumer communities: Google's Android and Chrome started slow, but they're gaining momentum rapidly.  What's more, Google is not just undercutting the alternatives on price--it's giving away its products for free.

Once again, the Chrome/Android momentum has nothing to do with Windows.  Once again, it doesn't benefit Microsoft in any way.

Now take a look at what Microsoft's biggest Windows customers--Dell, HP, and the other big PC manufacturers--are up to. Dell is in talks with Google to begin developing devices designed to run Chrome (and who can blame it--if it doesn't do this, it will be left behind in the next wave of consumer devices). And HP just bought the wreckage of Palm so that it would have a better mobile operating system with which to compete against Apple.  From Microsoft's perspective, these last two developments are disasters.

The Future Will Be PC-Centric? Only In Microsoft's Dreams

As recently as a few years ago, Microsoft was still arguing that the future would be Windows-centric.  Sure, there would be millions of connected devices, the company said, but they would all orbit around the desktop PC, which would remain the center of the personal tech universe (and, thus, remain an ongoing source of immense "platform" profits).  The explosive uptake of iPhones, iPads, and Android-based devices is increasingly making this view seem preposterous.

The desktop PC isn't the center of anyone's universe anymore. The Internet is. And the Internet doesn't require Windows.

In fact, it's not hard to envision a future in which the "desktop PC," as Microsoft currently defines it, becomes an oddity--a strange throwback to a world in which a single local hard drive (or a box of floppy disks) constituted the center of someone's work life.

(Consider the absurdity in today's world of syncing a mobile device with a single desktop PC.  What about all your other devices? What about the inconvenient location and single-point-of-failure of that single PC?  Why not just sync that PC--and every other device you own--with the cloud!  You don't need a fancy operating system to do that).

In short, the monopoly platform characteristics that have protected Windows all these years are breaking down.  The PC's relative importance in the world of personal technology is dwindling, and Microsoft has not been able to transfer Windows to other platforms. Google will soon be offering a free alternative for remaining PC-like devices, which, at the very least, will put pressure on Microsoft's margins.

Add all that together, and there's little good to say about the future of the Windows platform.

And Now On To Office

And then there's Office, the other huge source of Microsoft's profits.

Google has launched an Internet-centric version of Office: Google Apps. For now, Google Apps is inferior to Office for everything except collaboration. But it has all the hallmarks of a classic disruptive technology.

Specifically, Google Apps is cheaper, easier, and more convenient to use than Microsoft Office.  How do we know this? Because Google Apps is taking over the low-end of the market.  Google Apps is also steadily improving its features and migrating toward the middle of the market, which is what disruptive technologies do.  And it is already causing Microsoft to have to offer its own free Internet-based version of Office and cut the price of its latest version of desktop one to remain competitive.

(Pause for a moment and consider that: The only way Microsoft can compete with the free version of Google Apps is to offer a free version of Microsoft Office to match it.  Even if Microsoft Office were indisputably superior to Google Apps, which not one review we've read has suggested, how is that going to help Microsoft preserve its massive Office profits?)

Big companies are starting to ditch Microsoft Office for Google Apps.  If this becomes a trend, Microsoft's second huge cash cow will be under immediate threat.

When will that happen?

Maybe not this year or next year.  But in all likelihood soon.

So, Remind Us Again What There Is To Be Excited About In Microsoft's Future?

Microsoft Operating Profit

Image: SAI
Take another look at the chart of Microsoft's operating profit. The vast, vast majority of that profit comes from two businesses that are under aggressive attack.

What's more, Microsoft has no obvious way to parry that attack.

One of its two huge competitors, Apple, is miles ahead of it in the growth of the most exciting and fastest-growing segment of the market, mobile devices. The other--Google--is giving away its competitive products for free.  Microsoft will NEVER be able to do that.

(Analysts are applauding and stomping their feet for the 4 percentage points of search market share Microsoft has clawed back in the past year. What they're overlooking is how much Microsoft has PAID to gain those share points.  The odds are that Microsoft will never be able to build a large, profitable search business of any kind, let alone one that could fund a complete transformation of its business model into giving away Windows and Office for free.)

Right now, the investors are concluding that Microsoft will gradually become the equivalent of a technology utility--a boring but necessary provider of the software that runs the world's business community.  A smaller, more optimistic crowd is still arguing that, one day, Microsoft will be able to turn its fortunes around, and fight its way back into an industry leadership position.

What almost no one is talking about is a third possibility, one that becomes more likely by the day: The possibility that, a couple of years down the road, Microsoft's business may just completely collapse.

Read more: http://www.businessinsider.com/microsofts-business-could-collapse-2010-6#ixzz0rqZha6us
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nop_90
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« Reply #4 on: June 25, 2010, 12:22:59 AM »

This article is old from 2007
I would say that it is applicable to apple and M$.
Google has nothing to gain from Apps, but they have a lot to lose if anyone gets a monopoly. So all they want to do is be "disruptive"

Microsoft in Denial: Google Threat is Classic Disruption
To understand why Google is such a threat to Microsoft--and why Microsoft's pooh-poohing of this threat is, at best, a smokescreen--you need to understand how technology disruption works.

Disruptive technologies do not destroy existing market leaders overnight. They do not get adopted by the entire market at the same time. They do not initially seem to be "better" products (in fact, in the early going, they are often distinctly "worse.") They are not initially a viable option for mainstream users. They do not win head-to-head feature tests. Initially, they do not even seem to be a threat.

Disruptive technologies take advantage of a new manufacturing/business process or technology to provide a cheaper, more convenient, simpler solution that meets the needs of the low end of the market.  Low-end users don't need all the features in the Incumbent's product, so they rapidly adopt the  simpler solution. Meanwhile, the Incumbent canvasses its mainstream customers, reassures itself that they want the feature-rich products, and dismisses the Disruptor as a niche player in an undesirable market segment. The Incumbent may dabble with the new technology or process, but only in service of its existing business model.

jeffraikes.jpg
Then the Disruptor improves its products, adding more features while keeping the convenience and low cost. Now the product appeals to more mainstream users, who adopt it not because it's "better" but because it's simpler and cheaper. Seeing this, the Incumbent continues adding ever more features and functionality to its core product to try to maintain its value proposition for higher end customers. And so on. Eventually, the Incumbent's product overshoots the needs of the mass market, the Disruptor grabs the mainstream customers, and, lo and behold, the technology has been "disrupted."

Why is this relevant to Google vs. Microsoft? Because this is exactly what is happening in the office application market.

Microsoft makes most of its money selling applications that Google now gives away for free (or nearly free)--applications that contain hundreds of features that the vast majority of customers will never use. Google's web-based versions aren't as feature rich as Microsoft Office, but they are simple, cheap, and convenient, and, for many users (SAI, for example), they get the job done.

For now, as Microsoft's Jeff Raikes observes in this weekend's New York Times, most mainstream customers still say they want what Microsoft is selling. For now. But some former Microsoft customers have made the switch and others are now considering it. And Google's products are getting better all the time.

larryandsergey.jpg
Importantly, the problem here is not Microsoft stupidity. If it were easy for incumbents to resist the onslaught of disruptive technologies, there wouldn't be disruptive technologies. Jeff Raikes, Steve Ballmer & Co. have presumably read The Innovator's Dilemma (Clayton Christensen's book that analyzes the phenomenon), and they almost certainly know what is going on. The question is what, if anything, they can do about it. (Topic of a future piece.)

Handcuffed by the awesome profitability of their existing products, Ballmer, Raikes & Co. are in a really tough spot. And if history is any guide, the Google threat will end badly for Microsoft.

Read more: http://www.businessinsider.com/2007/12/microsoft-in-denial-google-threat-is-classic-disruption#ixzz0rqaIj4nl
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« Reply #5 on: June 25, 2010, 03:49:54 PM »

Of course, the Internet itself is considered to be a "disruptive technology," and it made hamburger out of near instantly antiquated technologies such as sending all of your letters to friends in the mail.  Other industries such as travel and press are still suffocating slowly. 

I believe the thing that's required is to continually evaluate the playing field, unemotionally, and adjust appropriately when whatever you do is logically history, sooner or later. For example, if what you sell is digital, throw in the towel - unless you begin to construct a business plan around that which is not digital, such as the servicing of that digital content, or something else that can't wind up completely free as anything digital will inevitably become 
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