Whither Microsoft in Critical Technologies? [opinion]
(AllAfrica Via Acquire Media NewsEdge) Who would've thought that Microsoft, once the world's number one software company, could be put in a position of impending irrelevance, with the need to start fighting for its life? After all, Microsoft owns the Windows operating system (OS), which powers desktops.
It also owns the Office suite of products like Word, PowerPoint, Excel, and others. While the Office products are still hot (there are no real competitions), the desktops are not, as consumers seem to be asking for smartphones these days. It is estimated that over eighty percent of Microsoft's revenue and income come from Windows and the Office suite. This does not sound like a good prospect for Microsoft, given the direction in which technology seems to be going these days.
Nomadism is in! So are contents. These are two areas of technology where Microsoft is seriously behind the big players and is desperately playing a catching-up game, by aggressively buying up what it needs rather than developing them in-house. Of course, industry leaders buy capabilities all the time in order to beef up, catch up, and be relevant. What is interesting in the current wave of Microsoft buy-outs and buy-ins is that the company does not seem to have in its DNA, that is, in-house, any of the cool things that are driving today's high technology - mobility and content. So, it is on a shopping spree. Of course, the big players that are giving Microsoft the runaround are Amazon, Apple, and Google.
The first sign of inadequacy in Microsoft's technology arsenal became apparent in 2009, when the company attempted to pay billions of dollars to either acquire Yahoo or power Yahoo's web search engine and share the ad revenue. Google Search was just too awesome and Microsoft's own Bing Search tool was almost irrelevant. As is well known, you are better off using Google to search for contents in Microsoft's own websites than using Bing!
Then there was the Skype deal in 2011 in which Microsoft paid over $8 billion to buy Skype in order to add video chats to its Xbox gaming software as well as Office. It's fair to say that, by all accounts, Xbox has been a successful application for Microsoft. Also in 2011, Microsoft agreed to infuse billions of dollars into Nokia, so that the cell phone company could power its smartphones with the Windows OS. Unfortunately, it does not seem that Nokia is doing well in the marketplace these days, and only the future will judge the success of Microsoft's investment in the company. Indeed, some are speculating that adopting Windows, instead of the Android OS by Google, contributed to Nokia's current problem. Although I am not entirely sure that this is the case, it does seem that the Android OS is so easy to use compared with Windows. Moreover, one is tempted to ask why the smartphone company HTC seems to be disappearing from the scene. The Taiwanese company was one of the first smartphone companies to adopt Windows to drive their smartphones. I used to buy HTC smartphones running Windows about four, five years ago. I found the phones to be extremely powerful and great for network engineers but at the same time very complicated to use. I must say that after settling in with Android in the Samsung Infuse, I did not miss HTC! The idea here is that Android appears to be a preferred OS for smartphones.
The latest move by Microsoft in the catching-up game is the investment in Nook, the e-reader developed by America's number one bookstore, Barnes and Noble. This happened a few weeks ago when Microsoft pumped $605 million into the Nook. Although Nook currently runs Android, it is expected that a version of it will soon be running on Windows. Furthermore, for its investment, Microsoft is taking a 17.6% share in Barnes and Noble's Nook e-reader business. Also, the deal secures content for Microsoft, which might help the company compete with Apple.
This column has compared e-readers (January 9, 2012), and has rated Kobo Touch Screen (Kobo), iPad2 (Apple), and Kindle Fire (Amazon) very highly. Conspicuously absent in the rating was the Nook. The criteria used were the base price of the gadget, the number of volumes in the e-bookstore, and the price points of the bestsellers in the store. When it comes to the basic e-book functionality, the Kindle Fire was rated the best in the article, and that rating is still valid today. In terms of overall functionality and glitz, iPad2 was unbeatable.
So what should we expect to see happen to the Nook with Microsoft's involvement? For sure, it's going to be tough for Microsoft to effectively compete with Apple. For example, Apple has the almighty iTunes store, with a stronghold on the existing content creators. In fact, Microsoft will need more content than that provided by Barnes and Noble in order to compete with Apple.
In all of these, a convergence of business models pioneered by Apple seems to be evolving among the key tech players. That is, the control of every aspect of gadgets, from design to software and content distribution, via manufacturing. Google's bid for Motorola Mobility and its huge content ownership via the YouTube acquisition appears to support the company's move in this direction of "total-control." For Microsoft, its record of manufacturing success hasn't been that great. Whither the Kin and the Zune? However, the Xbox gaming device was an exception, in that it was a success for Microsoft. The current buying spree by the company seems to be an attempt to match its competitors within the context of the evolving business model.
Copyright Daily Trust. Distributed by AllAfrica Global Media (allAfrica.com).
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