Microsoft in the long run

Every once in a while we hear people wondering: is the end of Microsoft near?

On the one hand there's been so many announcement of its supposedly imminent demise it's not funny anymore. On the other hand they did lose their mojo.

Microsoft has two historic cash cows: Windows (on the desktop) and Office. If since managed to successfully foray into the server market which has become another cash cow. Unfortunately for Bill Gates, his company has failed to capture any new strong revenue stream ever since.

Sure, Microsoft was able to defeat several incumbent giants in their own markets. But no market that bring enough revenue to significantly complement (let alone replace) the current cash cows. On top of that, a lot of these victories were hollow.

Microsoft wanted to overthrow Netscape in order to control the future Web standards. If it succeeded at killing Netscape it failed at imposing any Web standard. .NET never really took off and Ajax became the way to spice up Internet applications. Also, Adobe is silently but surely progressing in the Internet client space. For instance, Adobe technology is little by little replacing Windows Media Player when companies want to display videos on their websites. It started with YouTube, but didn't stop here.

Microsoft wanted to overthrow Palm to prevent it from becoming a major player. It succeeded and put a halt on any innovation on the PDA market. But that was before the Apple iPhone and its very dangerous Mac OS X embedded operating system.

Microsoft wanted to dominate the video game console market. If it was able to launch a very successful Xbox 360 and capitalize on Sony's mishaps, the Nintendo Wii came from nowhere to become the #1 seller. Plus, Microsoft is nowhere near controlling the living room electronics (the real reason why it's all of a sudden interested in video games). As a matter of fact, Apple (once again) might be better poised with their Apple TV. Steve Job's company already has an appliance that allows to watch and listen music and movies on one's TV. It wouldn't be surprising if one of these days the Apple TV allowed to also browse the Web and work as an appliance completely independent from any computer.

So that leaves Microsoft with its traditional cash cow markets. Enough to stay prosperous for decades to come, but not enough to be a mover and shaker (ala IBM in other words). Some of these markets are well protected and are not moving away anytime soon, but some might suffer from erosion.

The most endangered market is the home market. History has shown that this market can change very fast. That's how individuals in their huge majority switched very quickly to Web-based email clients instead of applications installed on their computers. Likewise, a successful Internet appliance (see above) could cater to the people who do not need a full-fledged computer and can live on Internet applications only. To that regard, Microsoft's attempt to push Vista down people's throats doesn't help. So much also for Redmond's coveted dream to rent us their operating system and office suite.

Same thing for the MS-Office suite. Ajax-based online word processors haven't exactly been impressive, but a Flex-based online office suite like Buzzword is really promising. If Microsoft fails to have its OOXML document format accepted by the ISO, competing standard ODF (already certified ISO) might win more and more ground as online office suites gain traction.

In either case, don't expect Microsoft to lose its cash cow overnight. This is a potential, gradual decline.

In the corporate world however, there is little indication of any change anytime soon. Just like banks still have mainframe computers, legacy applications are here to stay on the corporate desktop. After all, corporate users still heavily rely on Microsoft Outlook.