Saturday, February 24, 2007

Is Microsoft screwed?


To put things mildly, Microsoft is so screwed. They had just been slapped with a $1.5 billion fine for a MP3 patent infringement. But the bad news doesn't just stop there.

There has been nothing but bad reviews of Vista in the news media for the last couple of months. This isn't just Net media or media that's biased to the competition. These media include every single mainstream newsprint and business publication. They're just calling it as they see it. So, Microsoft's shiny new OS isn't getting the reception that they had expected. As a result, Ballmer had re-adjusted their profit predictions for 2008 a couple of weeks ago.

Hardware support for Vista is so bad that Dell doesn't even bundle Vista on it's high end XPS line. The consumers complain that the vendors (NVidia, ATi, Creative) aren't releasing Vista drivers. This is weird as Vista had been in beta for a long time. The vendors complain that the problem lies with Microsoft WHQL.

As a result of all these problems, numerous users are jumping ship and switching over to alternative platforms such as Linux/OSX. Businesses have been announcing delayed upgrades as they need a stable platform to work on and they feel that Vista is not yet ready for deployment. Some have dubbed Vista as the world's biggest ever beta test.

Now, comes even worse news. Google had just released Google Apps Premium, which is essentially a web-based office suite with guaranteed availability and support. A friend told me yesterday that big companies won't switch. Seems like he was wrong. They are switching.

His argument was that they cannot depend on network uptime. If the network goes down, then no work can be done. I didn't want to say anything at the time, but when the network goes down these days, no work can get done anyway. Business communication goes down and transactions cannot be completed anyway. So, big businesses guarantee their network uptime by getting a dedicated pipe for their network.

However, the main problem isn't with the network. When businesses buy into a product, they're buying into a guarantee of service. With Microsoft, if there's a problem with the product (and you can be assured that there will be many), the customer files a complaint, and waits for the next 'Patch Tuesday' (which is once a month) for the quickest patch.

With Google, they have a stellar reputation for delivering excellent quality web applications. And bug fixing happens extremely quickly as well. With Google Apps Premium, they even have a guaranteed 99.9% availability of service. They're also not tied to any proprietary format and use open formats. So, it's all good for business.

In conclusion, Microsoft is in some trouble. It's one cash cow, Vista, isn't doing as well as they had hoped. It's doing so badly that they had to re-adjust their earnings prediction. It's biggest cash cow, Office, is now coming under threat as well and the threat comes from a company that has shown that it can fight Microsoft toe-to-toe and not just hold them off, but defeat them.

However, it's not all doom and gloom for Microsoft yet. They've still got wads of cash in the bank. So, they can certainly survive the fiasco that is the new Office and Vista. They will need to adapt their technology, marketing and business strategy though. It's clearly not working as well anymore and they're facing credible threats from more fronts.

2 comments:

Linda said...

I think your critic about Microsoft is too harsh. Had we both bought Microsoft stock 20 years ago, we wouldn't sit at a computer now, but in a huge villa at the Bahamas.

Shawn Tan said...

We may all be filthy rich, but it still doesn't change the facts of today.. I stand by my critism.. It's not harsh.. It's the truth..

- They did re-adjust their profit predictions.
- Lots of hardware do not work well on vista due to driver problems.
- There's been lots of bad reviews of Vista on various mainstream media and business publications.
- Companies have been adopting a 'wait and see' attitued towards new Microsoft software.
- Companies have/are switching to Google Apps.
- Patch Tuesday is a reality.
- Microsoft uses proprietary technology.

I also acknowledged that they're a strong company and need to weather this patch of trouble by changing their strategy.

So, I do not see how this is a harsh critique?