Is Microsoft in trouble?

&#62; <i>"In video game consoles, the Xbox 360 is trailing far behind the Nintendo Wii in market share, despite the fact that the Wii is using older generation technology (VGChartz, 2010)."</i><p>I was with them until here. The Xbox 360 has claimed a <i>gigantic</i> share of the market starting from <i>nothing</i> just a few short years ago.<p>Compared to Nintendo, whose sales of the Wii have slowed to a relative crawl, and whose mobile gaming market is being relentlessly gutted by smartphones.<p>The Xbox is also enjoying an attach rate that is the envy of the industry (simplified: number of games bought per console), as well as being the only one able to get away with <i>charging</i> for online services. They're also about to launch a device that (having tried it myself) makes the Wii's #1 selling point an also-ran.<p>If anything, the Xbox is stronger than ever before, and one of the few examples of markets where MS is doing just about everything right.<p>I'm convinced that J Allard's departure was a gigantic blow to Microsoft; in fact, IMHO the secret to MS's success in the consumer products space lies in the Xbox team.

As someone who works on Windows Azure, this got under my skin a bit :). In particular, I thought this was slightly lazy writing<p>(W.r.t Azure) "I suspect it’s not performing well" and "Put simply, it’s hard to imagine that Microsoft is aggressively developing or marketing Azure, since cloud computing offerings directly threaten Microsoft’s revenues and profitability in the PC market, especially its Windows and Office products. "<p>From Ballmer mentioning "we're all in" in pretty much every speech he has done recently all the way to Azure being all over the financial analyst meeting [1][2], I sometimes think there's not a day that goes by when I don't hear about Azure in some way from MSFT :)<p>[1] <a href="http://kara.allthingsd.com/20100729/liveblogging-microsofts-financial-analyst-meeting-its-a-beautiful-day/" rel="nofollow">http://kara.allthingsd.com/20100729/liveblogging-microsofts-...</a> [2] <a href="http://www.eweek.com/c/a/Cloud-Computing/Microsoft-Pushes-Cloud-at-Financial-Analyst-Meeting-675840/" rel="nofollow">http://www.eweek.com/c/a/Cloud-Computing/Microsoft-Pushes-Cl...</a>

So Microsoft is failing because Apple, Google and Nintendo is performing better in seperate markets ? What about the Nintendo Office Suite, the Apple SQL Server or the Google Zune ?

The article completely drops the ball on the Xbox. The XBox is Microsoft at it's best and it shows. I understand trying to prove a point, but lets not be disingenuous.<p>It feels like Microsoft is 1 winning product away from turning the tide, or 1 loosing product from sealing it's irrelevance. I can't help but think how this article would've been written if Windows Phone 7 turns out to be a huge success 2 years from now. It's easy to paint a gloomy picture.<p>The only trouble I see for Microsoft, is one where they are not seen as a leader. One where reactionary product after reactionary product renders them as a technology company seen by the outside world as chasing technology and not laying it's bricks.

What?<p>a) XBOX usage destroys Wii in usage, games purchased, and subscription fees all of which are better indicators of the platform' success than hardware units sold which are traditionally a loss leader. And oh yah, XBOX is wildy profitable. Meanwhile Wii sales are down 45% since last September!<p>b) They are JUST launching their mobile platform which has gotten fair to begrundgingly good reviews and is opening in 30 markets supported by HTC, DELL, LG, AT&#38;T, Verizon, etc. You can expect MSFT to be AT WORST the #3 player in an insanely huge and growing market.<p>c) BING just signed an innovative deal with Facebook, Google's copying features from them, and they're gaining traction while Google has been stagnant and slightly down year to date.<p>And that's ignoring that Windows 7 is on a tear, and a great product to boot.<p>2010 has been a huge year for MSFT, if they manage to keep executing at this level they are going to win a couple of these markets.<p>Microsoft plays loooonnnnng ball and they've got tens of billions in the bank, I certainly wouldn't say they're in trouble.<p>DATA:<p><a href="http://www.crunchgear.com/2010/10/15/uh-oh-september-wii-sales-down-45-from-last-year/" rel="nofollow">http://www.crunchgear.com/2010/10/15/uh-oh-september-wii-sal...</a><p><a href="http://www.gamespot.com/xbox360/action/halo3untitledodstgame/news.html?sid=6237794" rel="nofollow">http://www.gamespot.com/xbox360/action/halo3untitledodstgame...</a><p><a href="http://www.engadget.com/2010/10/11/microsoft-announces-ten-windows-phone-7-handsets-for-30-countrie/" rel="nofollow">http://www.engadget.com/2010/10/11/microsoft-announces-ten-w...</a><p><a href="http://www.businessinsider.com/chart-of-the-day-total-cash-and-st-investments-of-tech-companies-2010-2" rel="nofollow">http://www.businessinsider.com/chart-of-the-day-total-cash-a...</a><p><a href="http://siteanalytics.compete.com/bing.com/" rel="nofollow">http://siteanalytics.compete.com/bing.com/</a><p><a href="http://www.comscore.com/Press_Events/Press_Releases/2010/10/comScore_Releases_September_2010_U.S._Search_Engine_Rankings" rel="nofollow">http://www.comscore.com/Press_Events/Press_Releases/2010/10/...</a><p><a href="http://www.comscore.com/Press_Events/Press_Releases/2010/6/comScore_Releases_May_2010_U.S._Search_Engine_Rankings" rel="nofollow">http://www.comscore.com/Press_Events/Press_Releases/2010/6/c...</a>

Microsoft makes a lot of money. Sure, its not "sexy", but it has a solid hold on the enterprise. Nothing seems to be taking any significant market share away from Office. People just seem to expect one company to own 90% of the market and that really isn't going to happen with cellphones. Heck, the iPod, probably one of the more dominant devices in a consumer market, didn't get above 75%.<p>Microsoft, like DEC with the mini to micro transition, is having a tad bit of trouble jumping from PCs driven by corporate sales to mobile devices driven by consumer sales. This is being mitigated by their experience with the XBox line in the consumer market. They make a lot of cash and probably will be one of the big cellphone / portable device operating systems. They also have a very large chest of patents to help with positioning.

Microsoft is not in trouble yet. They still make huge amounts of cash so they can keep trying to gain share in these "disruptive" markets. Though they have failed time and again they have the money to keep trying and they just need to be successful once and that cash and brand can solidify their postion.

I have no idea why you think that (paid, subscription-based) cloud computing offerings threaten Microsoft's revenues. In fact they've been trying to get people to move to a subscription model for like a decade now - which is understandable, since competition with their own previous versions and keeping people on the upgrade cycle has always been one of their biggest problems - and they are definitely aggressively promoting it (considering that this year's and the last two years' PDCs are largely focused around it).<p>They are threatened in the consumer space by the trend towards web applications, they're not threatened in the enterprise space by the trend towards subscription-based cloud services (which is overhyped - including by Microsoft! anyway, but that's another story) - they welcome it. I guess people are conflating the two.<p>(Since you posted a version of this article in another HN thread, I've reposted my response from that thread here.)

Three and a half years ago: <a href="http://paulgraham.com/microsoft.html" rel="nofollow">http://paulgraham.com/microsoft.html</a>

I'm not sure I follow the logic of the article that Microsoft <i>has</i> to develop these other segments of its business to be a leader in the future. What's going to touch Windows and Office?

If you put it this way, yes they are in trouble. But the thing is.. they are in trouble for some years, and they still make awesome revenue. Turns out it's not only about the bleeding edge technology, it's about keeping the current user group, about marketing, lobbying, etc...

Microsoft in the recent decade, has tried to indulge itself on different domains of IT. Obviously, it has failed on all of them, as stated by the author of this article.<p>IMO, on contrary to the author, MS should stick to desktop/laptop Operating Systems. Desktop usage might have decreased but laptop is not going anywhere. There is so much market untapped in the world, I can't see the end of desktop OS.<p>I don't see not using my laptop fo at least a decade. And yes, I don't want to use iOS or Android on my laptop. I like the old school Linux, Windows or OSX.<p>Microsoft is not in trouble until they make products like Windows 7.

The biggest threat to Microsoft is their lack of a clear vision and message about where Office is going. I guess there's some strange service at officelive.com where I can maybe store, maybe edit documents online, but possibly I need a license for Office to do so, and I still get the impression that its meant to be supplementary to the desktop offering. The lack of an actual full-on web-based product - whether Silverlight or HTML - seems like a huge failure on their part. They need to create something real here and then market it in a clear and direct way.

I stayed in MS research for a little while. Their research department is really really strong and they have a lot of cool stuff. If they can better transfer them into products, things will be different.

Yes. They've been in trouble for years.<p>There are several key points in the growth (or lack thereof) of a company. There is the initial inflection point where the rate of growth is positive (the company begins growing at a faster than linear pace). There is the inflection point where the rate of growth becomes negative (the company may still be growing, but slower and slower). Then there is the point where the effects of that 2nd inflection point become readily apparent, the peak, when growth stops and then begins to reverse. Then there is the point where the company has shrunk to a shell of what it once was.<p>MS has passed that 2nd inflection point, but the peak and the fall are still ahead of them. With the amount of marketshare, locked in business, and cash-on-hand they have they'll be a long time falling but the writing is on the wall, unless something changes.

Microsoft isn't dead yet, and its future depends upon how effectively it can leave its traditional revenue stream behind (Windows and Office). So far it has been lacklustre in the mobile and search markets, but done well in games.<p>Despite setbacks (Vista) Microsoft held its own in terms of operating systems and office productivity software over the previous decade, but in the next decade I think it's going to be more than overtaken in these areas.

They're obviously way too robust and have too much momentum to be in trouble any time soon.<p>That being said, visit any college campus and most people are using Apples. The younger generations are growing up with the perception that Microsoft is for old people in suits and Apple is creative and classy.

I think the problem is that MS used to sell everyone Windows for $300 and Office for $300. Then everyone had to buy them again at work. I'm not sure how they can make this up licensing a phone OS. What can they charge? Ten dollars?

I'll never bet against a company with huge, established, consistent revenues and a strong research culture. That combination gives a large chance of being able to bring breakthrough technology to market.