Is Microsoft really doomed as one analyst predicts? Don't bet on it
I've seen some goofy headlines in my time and admittedly have even written a few myself.
But the headline I read this morning is the best of the worst I've ever seen: "Steve Ballmer's Nightmare is Coming True." I don't know who Jay Yarrw is nor have I ever stumbled onto Business Insider before but I do know that Jay Yarrow is way off base on this one. Steve Ballmer and Microsoft are doing fine. It's funny that Yahoo Finance picked up the story--not funny, Ha Ha, funny strange. The analysis is terribly flawed and I'm going to show how flawed it is by refuting Yarrow's points and hopefully school him in how the tech business and technology analysis really works. Get your pen and paper ready, Jay, it's time to get the real scoop on Microsoft.
Note: Jay's new article and this response are both based on Matt Rosoff's original article. Jay's commentary outlines his responses to those original predictions. My responses are reactions to his analysis and Matt's original assertions.
Point #1: The iPad eats the consumer PC market. Wrong. You state that, "In the third quarter of 2012, PC sales were down 8 percent on a year-over-year basis worldwide. In the U.S., sales were down 14 percent. A big chunk of the decline can be attributed to the rise of the iPad. Apple sold 14 million iPads last quarter, which is more than the top PC maker, Lenovo, which shipped 13.7 million PCs. Throw in Apple's 4.9 million Macs, and it's the top computer maker by a mile."
Seriously, you need to acquire a clue. The PC market has been declining for years and it has nothing to do with the iPad that is less than three years old. People have been buying fewer PCs for the past ten years. Lots of information about that everywhere you look. Nice try but people are hanging onto their current computers longer and simply purchasing upgrades, such as more RAM and larger hard drives. There's no mystery here. Consumers have clung to Windows XP because it worked. Vista sucked and Windows 7 scared a lot of people off in the very beginning. People are tired of the constant upgrade cycle with each new operating system. I believe Microsoft has solved this issue with Windows 8.
Sure, Apple has made sales but there's no way an iPad can replace a PC for any real productivity. They're nice to have for checking email, gaming and reading but you're not seriously going to work on one for a long period of time. What do you use to write your articles, Jay?
Point #2: Employees gradually switch away from using Windows PCs for work. Wrong. I don't know what planet you're from but in companies of any size, the PC or laptop is still what everyone uses. If you think that it's otherwise, please show me where companies are really abandoning PCs or laptops for tablets.
Tablets are not yet a replacement for laptops or PCs. They soon will be when the Microsoft Surface tablet graduates from an RT operating system to a full-blown Windows 8 or Windows 9 platform. Don't kid yourself. Microsoft isn't going anywhere where businesses are concerned.
Point #3: Windows 8 fails to stop the iPad. Wrong. They serve different markets. Sure, there's some overlap but generally speaking, they serve different markets. The Surface will be more of a business computer than the iPad, which is, I'm sorry to say, little more than an email/game system/music and video player. This is coming from someone who has an iPad and an iPhone. I like my iPad but when I need to do serious work, I reach for a full-sized laptop computer. Windows 8 is not out to stop the iPad. The statement is really a non sequitur. Windows 8 is a desktop operating system. The iPad is a gadget with a light operating system. There's a difference. I hope I don't have to explain it.
Additionally, my son, who is in college wants a Microsoft Surface for Christmas. He says that in his circles, the Surface is the tablet to get--not the iPad.
Point #4: Loyal developers start to leave the Microsoft platform. Wrong. You do leave this one open ended with, "We're not sure if this happening or not. So far, the early signs are actually positive for Microsoft. It has over 20,000 apps in its Windows app store. Windows 8 is only a month old. At the same time, Microsoft doesn't have a Facebook app for the Surface, and one of the biggest complaints from reviewers was the lack of good apps for Windows 8."
Here's a good question. Why would you really need a Facebook App when you have a capable web browser to connect to www.facebook.com? There are thousands of good Apps for Windows 8 and more coming every day. It's funny that someone would make a statement like, "...and one of the biggest complaints from reviewers was the lack of good apps for Windows 8." As you said, it's been out since October 26. Let's not jump the gun quite yet on stating that there are no good Apps.
Besides, if you see Windows 8 as a business operating system, as well as a consumer operating system, Apps are more "consumery." Businesses want full applications with lots of functionality. If you're looking for 'one hit wonders,' you don't have to go far in either App store. Windows 8 uses both full applications and Apps. Ah, the best of both worlds.
Point #5: Windows Phone gets no traction despite the Nokia deal and RIM's collapse. The new Windows phones are very new--newer than Windows 8 itself. Frankly, I think Microsoft offers a phone because it's an industry trend. I don't think Microsoft is really going to bank their existence on a phone. They sell a lot of them to be sure but it isn't the main thrust of their business. So, in a word, I'm sure they don't really care that much. Besides that, phone customers are the least loyal of any I've seen. In the past few years, I've had a Blackberry, a two Windows phones, an iPhone and an Android phone.
People's minds change with the wind on phones. Today, it's the iPhone, tomorrow it's the Windows phone and two days from now, it's the Android.
Point #6: Office loses relevance. Wrong. That's never going to happen. Microsoft Office is THE corporate choice for office suites. Apple users have enjoyed Microsoft Office for going on 30 years. It's here to stay. The author admits that this hasn't happened and it won't. Office is the standard by which we all live. I've said many times that if Microsoft ever stops making Excel, the entire world will cease to do business. People use Excel for everything. Most of the time, they use it in ways that it was never designed to be used. It's crazy what people use Excel for. Big companies and small companies alike use Office for everything. Microsoft could survive another 50 years just on Office alone.
Point #7: Microsoft's other business applications start to erode. Wrong. You seem to forget that Microsoft's business is software. They know software better than any other company on the face of the earth. Microsoft is software. Operating systems, games, office suites, support software, enterprise applications, virtualization and just about everything that we use is Microsoft.
Even as much as I, myself, claimed for years that open source operating systems and open source software would be the downfall of Microsoft, they're not worried. They've lost a small amount of revenue from Apple and open source software but it's likely that those people wouldn't have bought into Microsoft's software anyway. There are always the renegades who want to buck the mainstream, accepted way of doing things and go off on their tangents. I tend to be one of them. However, when it comes to productivity, I use Microsoft. This article is being typed into the Chrome browser (See? I told you I was a renegade.) on Windows 7.
Point #8: The platform business collapses. Wrong. Businesses will never stop buying Microsoft products. To say that they will is just silly. Sorry, this one is just too far-fetched to really even justify it with a comment at all.
Point #9: The Xbox was never going to make up the slack, and Microsoft can no longer afford to keep investing in it. Wrong. Yeah, another bad prediction. There's one thing that you can say for sure about Microsoft, "They learn from their mistakes." For whatever problems and issues they had originally with the Xbox platform, they have been resolved. The Xbox is now the most sought after game console. Who doesn't want to play Halo?
I'd love to have one but unfortunately we chose the Wii instead because of some early issues with the Xbox concerning security and hardware.
The Xbox platform is an awesome gaming platform. I love it. My nephew had one and he used to allow me to play Halo on it. Unfortunately too, the controller was awkward for me and he didn't let me change the settings nor get used to it, so it was a fail for me. Still fun, though.
Point 10: Microsoft suffers a huge quarterly loss. Ballmer retires to play golf. Wrong. Sure, Microsoft had to write down $6 billion because of aQuantive but hey, you win some, you lose some and some get rained out. That's the nature of doing business. Microsoft's stock price has remained relatively unchanged for the past ten years with the exception of a high of $37-ish in November 2007 to a low of $15-ish in March 2009. Today, it's hovering above $26 per share. It's no Apple but it's keeping pace with Oracle and no one's predicting Oracle's untimely demise.
I think predictions such as Rosoff's are gambles at best. Yarrow's commentary is more balanced but still a bit anti-Microsoft. Actually, I should have given Rosoff the hard time, since Yarrow was only providing an updated commentary to Rosoff's position. Still, neither article gives any real insight to Microsoft's strength but both writers probably got enough hits to earn some extra Christmas money.
Seriously guys (Rosoff and Yarrow), Microsoft isn't going anywhere except to the bank with their big deposits. They serve the corporate world, which isn't fickle. Businesses want reliability. Businesses want stability. Businesses want a company behind the products they use. Yes, Apple is a big company but they're more consumer-oriented and consumers are fickle. Trust me, if Apple doesn't continue to deliver, it could only take one Vista for their gaggle of loyal fans to turn and run elsewhere.
What do you think of predictions of doom and gloom for Microsoft? Talk back and let me know.