The End of Microsoft Era?

May 19th, 2008 | by Jose Miguel Cansado |

So The New York Times predicts in The Computer Industry Comes With Built-In Term Limits.

The premise is that no company is able to dominate the Computer Industry spanning two technological eras. Microsoft has reigned on the PC era, as IBM did during the mainframe times. When Microsoft software monopolized personal computers in the 90s, IBM tried to catch up with Lotus acquisition to no avail.

An analogy of why even if Microsoft acquired Yahoo, chances are that Google would still dominate the Internet Era, where applications run in a browser hosted in the cloud, and the OS matter less and less.

I would add that Microsoft did beat IBM (and to some extent Apple) during the PC era based on the “openness” of Microsoft software compared to IBM OS/2 or even Mac. While Microsoft software did run on any manufacturer’s PC hardware, OS/2 was associated to proprietary IBM PS/2. IBM in the late 80s was the almighty computing company trying to impose proprietary solutions, compared to challenger Microsoft open to any HW and to thousands of developers.

In other words, Microsoft represented towards IBM in 80s and 90s, the same openness promise that Linux and Open Source represent towards Microsoft today.

Some interesting data about Microsoft on-line business (MSN) in NYT article:

  • MSN last profitable year was FY 2005 with $402m earnings, just before the MSN dial-up business was killed by broadband (as with AOL)
  • MSN loss was $74m in 2006, $732m in 2007 and $745m in the first 3 quarters of FY 2008
  • Google profits were $1.5bn in 2005, $3bn in 2006 and $4.2bn in 2007
  • MSN represents only 5% of Microsoft total revenue
  • In the last two years Google share of searches in US went from 58% to 68%. MSN went from 13% to 6%

Does Microsoft need to buy Yahoo? Yes. Will that be enough?

 

  1. 2 Responses to “The End of Microsoft Era?”

  2. By Michael on May 20, 2008 | Reply

    Great presentation of the facts. It is true and we have seen it throughout tech history that companies that don’t embrace openness eventually die out. My guess is that unless Ballmer is replaced and MS starts out on a whole new agenda, they will go the route of IBM and dare I say DEC.

  3. By Sachendra on May 20, 2008 | Reply

    This is not the first time Microsoft has been written off, I have seen Microsoft rise from the ashes twice, it’s the only big company to turn its strategy on its head and start over. This is by far the biggest challenge faced by Microsoft, let’s see how they cope. But knowing Microsoft I wouldn’t call it quits just yet.

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