Sunday, March 14, 2010

Did Microsoft Just Surrender as a 'Desktop OS' Monopoly?

That's what I'm now wondering after reading this article about Microsoft's latest announcement about it's future. It's 2010 and Microsoft has dominated the desktop OS business as a virtual monopoly for over 20 years. But last week Steve Ballmer was quoted saying something that could be read as Microsoft as much as admitting that the PC desktop OS technology, and the desktop marketplace, are part of the Microsoft past and present but NOT part of it's the future.

In the strongest language yet, Ballmer signaled the Redmond software company's total embrace of cloud computing, the evolution from a company still primarily known for its PC software Windows and Office to a cloud computing company. His comments came in speech to University of Washington students where Ballmer said... "This is the bet for the company," Ballmer said. "For the cloud, we're all in."

Given the growing use of cloud computing services it's not a big surprise that Microsoft has finally decided to make this commitment.  They have now been dabbling in cloud solutions since Ray Ozzie's famous "Internet Services Disruption" internal memo he wrote in late 2005 so they have had plenty of time to make this committment. The big question for them though is, are they already too late to be able to compete effectively on the cloud computing "playing field". In this new market they are a late comer and now an underdog. For the last 20 years with Windows, Office and Exchange they have had the luxury to be the dominant, even de facto, desktop software solutions both for home and business users. But in the cloud computing marketplace that is about to mushroom, they have big challenges to overcome.

The biggest challenge I see for them entering the cloud computing arena is they can't just dump the responsibility of their exisitng desktop and server software products and customers and move all their resources into cloud-focused services and customers. So although Steve Ballmer may say Microsoft is "all in", the fact is most all of Microsoft's resources have to continue to be dedicated to the software solutions of their past and present.  Microsoft will be supportings 100s of millions of licenses for the last 3 windows OS variants (XP, Vista and Win7) and their last 3 or so releases of Exchange and the Office Suite for many years to come. On top of that they have all the products and solutions they offer in gaming, smartphones, collaboration(Sharepoint), telephony(OCS 2010), HW devices("Zune", "Xbox" and soon "Courier") and all the Non-Office desktop "fat" application software products.

With all this responsibility of a vast and deep product portfolio and customer base to watch over can Microsoft really go "All in" on cloud computing? Can they really compete to win against Google and the other cloud solution providers? Or is this "All in" statement more hype than reality.

Are we on the verge of Microsoft starting to fragment and lose it's leadership position in computing. We've seen giant near-monopolies fall before (IBM). Is Microsoft about to go down the same path  to the technology "tar pits" IBM went down back in the early 80s? And if so will they be able to find a way to survive at least as well as IBM?  IBM crashed hard and fast and was lucky to get in a CEO that led a bold restructuring of IBM's entire business model. Can Steve Ballmer and Ray Ozzie teach the Microsoft elephants to dance the way Lou Gerstner did at IBM and remake itself into a cloud computing contender/winner? It's possible, but I have serious doubts.

What do you think?
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