Giant In Jeopardy: Why Microsoft Can’t See What’s Coming.

Companies who dominate a market tend to get there via ill-gotten means, forget their customer’s needs, acquire rather than innovate, focus on defending turf rather than creating new markets. It’s almost as if Bill Gates has become blind and cannot see what has happened to his company.

To be sure, Microsoft isn’t going away any time soon, despite CEO Steve Ballmer’s quotable missteps and on-stage monkey shines. There’s too much money in the bank and too many customers rely on Microsoft’s software, regardless of our personal opinions of the “quality” of said software.

I’ve been thinking about this for a few years. Microsoft’s got more money than God. Market share for both Windows and Office soared deep into the 90-percent range. The company flouted the law, bought competitors, and squashed competition as if it were a mere bug on the lawn.

Along with those tactics came an arrogance so thick it could be cut with a knife but instead found itself memorialized in print. 10 years ago, then Microsoft CEO Bill Gates had this to say about the Mac. “There was no goal even to compete with Macintosh,” Gates proclaimed. “We don’t even think of Macintosh as a competitor.”

Of course, many would say that Apple and the Mac were acting as Microsoft’s Research and Development Department more than a competitor.

My, how things have changed in 10 years. Even Apple CEO Steve Jobs says, “the desktop wars are over. Microsoft won. Get over it.”

While that’s hard to argue with, other media pundits have noted and highlighted the chinks in Microsoft’s armor. Indeed, the big ship is leaking in many areas even as it sails into the future.

Where? Microsoft is increasingly marginalized on all fronts. Linux and the Open Source movement (it’s FREE… and it’s “good enough”) on the one hand, and Apple, Mac OS X, the iPod/iTunes/iTMS, and great desktop and server products on the other end.

Microsoft’s browser market share continues to drop as Open Source browser applications gain traction.

For sheer mindshare, relatively diminutive Apple remains the top brand. Says who? None other than Gary Anthes of IDG’s ComputerWorld. His recent article “Giants In Jeopardy” points to the lay of the land:

“IT futurist Thornton May agrees, saying the Microsoft economic model is outdated. “Microsoft is running out of rich, dumb customers,” he says. “If you are technologically smart, you can replicate 80% of the functionality of Microsoft Office essentially for free.”

That’s the Linux and Open Source side rubbing up against Microsoft’s soft underbelly.

Michael Hugos, CIO of Network Services, sums it up this way: “But like IBM, Microsoft will gradually see its market share eaten away by less- expensive, less-complicated, more-responsive alternatives that use the Microsoft standards…”

The standard on the desktop is Microsoft Office, also available on Mac OS X, and file compatible with nearly free versions of Office on Linux desktops.

Microsoft marginalized? Yep.

Hugo is quoted as saying, “‘The present Microsoft culture is unable to move beyond the mind-set that they acquired during their heyday in the 1990s. If it remains in its present mind-set, Microsoft will wind up on the defensive everywhere, as in, ‘Windows is cheaper to run than Linux,’ ‘We can do search too just like Google,’ ‘We can make PDAs and iPods just as well as the next guy,’ and so on.’”

That sounds like defending turf. Not only is Microsoft unable to see exactly where it’s going, it doesn’t recognize how it got where it is (often illegally), or what is necessary to pull up out of an increasingly dangerous tailspin.

Microsoft’s stock has gone nowhere for years. Apple’s has tripled. Linux vendors are doing well and the platform may be ready for the prime time of the desktop (I’ve heard that before, though).

Who gains from Microsoft’s boatload of problems? Customers. First, those who’ve been stung by Microsoft’s high prices and marginal quality (not to mention the viruses, worms, spyware, and other security holes infesting Windows) now have secure and attractive and affordable alternatives in Mac OS X and Linux.

Click Here for a look at what others say about the Redmond “giant.”

Wait. There’s more. Second, Computerworld’s editor in chief, Don Tennant sees the same thing and pronounces that, not only is Apple back, it’s here to stay. Linux and Open Source on the left. Apple, Macs, OS X, iPods on the right.

Click Here for Don’s look at why Apple is going to be around awhile and what Microsoft doesn’t see about the future.

As Mac users we’ve come to love the rebirth of Apples, the string of digital hub products (hardware and software) that just work so well together that even Windows users are picking them up in droves. IT professionals are bringing both Linux and Mac into the back office.

Meanwhile, Microsoft struggles with the next version of Windows, Longhorn, now scheduled for a reduced offering and outing in mid 2006. Microsoft’s reputation is sullied and degraded. True, there’s plenty of money in the bank and more where that came from. But times are changing.

Microsoft is the GM of the 60s and 70s. They’re full of well-paid, smart people who’ve lost their way, making the mistakes of giants of the past, repeating the past today.

Up to the end of the 90s, Microsoft was becoming the only choice. Mistakes in security (or, non-secure) choices began to harm customers and provide opportunity for competitors.

Choice is good. Now, there’s a string of solid, dependable, quality choices in software. Now, people who’ve been fooled into buying only a single choice from a single vendor have awakened and, now can smell the coffee.

And it’s not a Microsoft brew.