Why Microsoft Will Rise Again
By Vitaliy Katsenelson Jun 01, 2009 1:00 pm
Vista, Bing will put Redmond's behemoth back on top.
If Susan Boyle were a stock, I’d call her a deep-value one with very low expectations (and thus a great margin of safety), selling at a discount to its fair value.
Then she opened her mouth. To everyone’s shock, she had a beautiful voice. She became an overnight sensation, and the video of her performance was YouTubed more than President Obama’s inauguration.
Then there's Microsoft. The company’s name doesn’t have the luster it once had. It's seen as middle-aged, overweight, and slow, and many believe that all its creativity retired with Bill Gates.
The sentiment is so horrible that there's almost universal expectation that it won't come up with another good product - ever. Kodak (EK) and Polaroid are now regarded as models for Microsoft’s “bright” future; Apple (AAPL) and Google (GOOG) are ostensibly the ones who will send it there.
But the ugly duckling is about to sing, and it will be a Susan Boyle-like performance.
Vista's flop will lead to Windows' success
Microsoft is releasing Windows 7 sometime in late 2009 or early 2010. Vista -- its last operating system -- was a flop. Consumers didn't care for the product, and corporations didn't upgrade.
Of course, failure is a relative term when it comes to Microsoft. At the time of its release, Vista sales were double that of XP, the previous version. Vista still commands almost 24% of market share, second only to XP’s 60% plus. Windows 7 isn't just another new release. It's really Windows Vista 2.0 - or Vista-fixed, if you like. Microsoft took Vista’s kernel -- the core of the operating system -- fixed it, made it faster, improved the interface, and added new features. Voila: a new multi-billion-dollar product.
As mentioned, many corporations stayed with XP. But the operating system is now 8 years old - a dinosaur in software years. Microsoft will eventually discontinue support and updates for XP. Unless all hackers pinky-swear that they won't try to figure out a way to hack into the 400 million computers that run XP worldwide, a running computer could be left exposed to new security attacks.
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2009-06-01 13:18:36
Microsoft creativity
Microsoft never had any creativity, a least not in technology. They copied everything, didn't invent anything (Kodak and Polaroid invented things).
Microsoft's problem is that there is nothing to copy, nothing that runs on a PC, no new must have application. They already copied the windowing multitasking (sort of) operating system, the word processor, the data base program, the spread sheet, the internet browser, what's left?
Microsoft's problem is that there is nothing to copy, nothing that runs on a PC, no new must have application. They already copied the windowing multitasking (sort of) operating system, the word processor, the data base program, the spread sheet, the internet browser, what's left?
2009-06-01 15:10:44
Microsoft creativity
Also, how does the online Microsoft Office propose to compete with free (ie Google Docs)? Google Docs is popular and well known and does what most people need it to do.
2009-06-01 15:12:50
Microsoft creativity
uh... Google's search engine and Apple's mobile platform.
Your post, although meaning to be derogatory, tells the story. What is so great about first? It's better to be second and build your solution off the knowledge the other guy accumulated for you.
Microsoft is not as creative as many companies... but what they are is ruthlessly operational. And they have rooms full of smart people who won't quit until they win.
Google has had a great run... but really... what Google product other than search can you not live without? Google Apps? Chrome? And talk about a nonexistent barrier to entry... just type "Bing" instead of "Google" in the browser? That's it?
Apple has shown the same amazing creativity that they have always had... and the same ham handed execution. Although people never like to say it; APPLE is the monopolist. They are just a FAILED monopolist as they try to control everything and kick the hell out of any partners they happen to have. Microsoft is the far easier company to work with if you are an App developer or a hardware OEM or a Hollywood/Music studio.
Reports of Mr. Softie's death have been greatly exaggerated.
Your post, although meaning to be derogatory, tells the story. What is so great about first? It's better to be second and build your solution off the knowledge the other guy accumulated for you.
Microsoft is not as creative as many companies... but what they are is ruthlessly operational. And they have rooms full of smart people who won't quit until they win.
Google has had a great run... but really... what Google product other than search can you not live without? Google Apps? Chrome? And talk about a nonexistent barrier to entry... just type "Bing" instead of "Google" in the browser? That's it?
Apple has shown the same amazing creativity that they have always had... and the same ham handed execution. Although people never like to say it; APPLE is the monopolist. They are just a FAILED monopolist as they try to control everything and kick the hell out of any partners they happen to have. Microsoft is the far easier company to work with if you are an App developer or a hardware OEM or a Hollywood/Music studio.
Reports of Mr. Softie's death have been greatly exaggerated.
2009-06-01 15:18:48
Microsoft creativity
yeah and Gdocs have about .1% market share.
You see, as the writer of this story suggests, home users tend not to pay for Office as they have it at work. And most workplaces are reticnet to let an outside advertising company search all their docs, spreadsheets and emails even though they have promised to "not be evil".
If you do a subscription model a person can use it where ever they are... and MS can capture that revenue.
You see, as the writer of this story suggests, home users tend not to pay for Office as they have it at work. And most workplaces are reticnet to let an outside advertising company search all their docs, spreadsheets and emails even though they have promised to "not be evil".
If you do a subscription model a person can use it where ever they are... and MS can capture that revenue.
2009-06-01 15:33:08
Microsoft creativity
If only 0.1% of office application users are interested in using an reasonable clean online interface that's free, I'm not getting how MS proposes to make a substantial amount of money off it. I don't see how corporations would be enthusiastic about letting MS store their propriety documents either, especially when they already have Word processing software that works. (Heck, it's hard to get them off of older browsers like IE 6.0)
2009-06-01 18:57:46
Microsoft creativity
Because it works with the generally accepted document standards. What do people who don't use gDocs say when you send them one? Be honest...
2009-06-02 02:22:35
Microsofts future?
Microsoft's business model is in trouble and even Bill Gate's knows it.
The model which may have been Gate's one true innovation, relied on getting a first look at applications when true innovators ported to MS operating systems but were too small to defend their intellectual property rights. Then MS would use its dominant position and corporate lawyers to crush anyone foolish enough to try and compete. That model won a dominant position but not many friends in the Tech world.
Fast forward thirty years. Everyone realized the problems with that model and so they have avoided MS platforms on all the new high margin gadgets by building their own proprietary ones. Some people would prefer bankruptcy to association with MS. Remember when Yahoo said "no thanks" rather than become a MS satellite.
If you want to look at those using MS platforms look no further than China. Remember when Gate's gave them the MS codes in the hope that they too would become addicted to MS operating system? Well guess what?; The Chinese retooled it stripped out all the hooks and marketing BS and are using it preferentially to licensed products. Microsoft Black is out there lurking to run MS applications at higher speeds less problems and without having to deal with MS.
Their applications business is under fire from the EU and others who are demanding a standardized office suite. Free downloads from any number of suppliers are available and as the young Microsoft was fond of saying when they would give product away to kill off their competition "You can't compete with free" .
Then there is the issue of cloud computing. This is apparently the one that got Bill Gates to stand up and say "This changes everything". With the advent of high speed data links the application and the software to run it can be sent to a dumb terminal and you can get rid of the MS operating system entirely. How on earth can they dominate if they aren't needed? Also, where will MS then ucerpt their ideas from?
In the mean time you have a cash rich, industry dominant company with a very healthy profit margin. . . Kind of reminds me of GM a couple of decades ago.
The model which may have been Gate's one true innovation, relied on getting a first look at applications when true innovators ported to MS operating systems but were too small to defend their intellectual property rights. Then MS would use its dominant position and corporate lawyers to crush anyone foolish enough to try and compete. That model won a dominant position but not many friends in the Tech world.
Fast forward thirty years. Everyone realized the problems with that model and so they have avoided MS platforms on all the new high margin gadgets by building their own proprietary ones. Some people would prefer bankruptcy to association with MS. Remember when Yahoo said "no thanks" rather than become a MS satellite.
If you want to look at those using MS platforms look no further than China. Remember when Gate's gave them the MS codes in the hope that they too would become addicted to MS operating system? Well guess what?; The Chinese retooled it stripped out all the hooks and marketing BS and are using it preferentially to licensed products. Microsoft Black is out there lurking to run MS applications at higher speeds less problems and without having to deal with MS.
Their applications business is under fire from the EU and others who are demanding a standardized office suite. Free downloads from any number of suppliers are available and as the young Microsoft was fond of saying when they would give product away to kill off their competition "You can't compete with free" .
Then there is the issue of cloud computing. This is apparently the one that got Bill Gates to stand up and say "This changes everything". With the advent of high speed data links the application and the software to run it can be sent to a dumb terminal and you can get rid of the MS operating system entirely. How on earth can they dominate if they aren't needed? Also, where will MS then ucerpt their ideas from?
In the mean time you have a cash rich, industry dominant company with a very healthy profit margin. . . Kind of reminds me of GM a couple of decades ago.
2009-06-02 13:42:03
Microsoft creativity
Google's search engine and Apple's mobile platform aren't PC apps (search is accessed with a PC but is not a PC app), so MSFT cannot use it's monopoly power to its advantage.
MSFT has been almost always second (or 3rd) but never seemed to build an advantage "off the knowledge the other guy accumulated for you. " MFST did not beat Netscape, Lotus, Borland, WordPerfect (and WordStar or (AshtonTate) because of superior design, they won because ":you can't compete with free" (or almost free). Word and Excel were not superior products when first introduced, they were inferior. The same can be said about the windowing operating system, they won because DOS was dominant (and that only because IBM beat Apple). The first versions of Windows were horrible, junk compared to almost anything that went before it. You do remember pre Windows '95?
In areas where MFST cannot leverage its operating system monopoly, the story is different. They have a tough time competing with Apple in music players and Nintendo in game consoles. And the same will happen in search and mobile.
May sales:
Nintendo Wii: 338,278
PlayStation 2 187,765
Xbox 360: 154,932
PlayStation 3: 81,604
MSFT has been almost always second (or 3rd) but never seemed to build an advantage "off the knowledge the other guy accumulated for you. " MFST did not beat Netscape, Lotus, Borland, WordPerfect (and WordStar or (AshtonTate) because of superior design, they won because ":you can't compete with free" (or almost free). Word and Excel were not superior products when first introduced, they were inferior. The same can be said about the windowing operating system, they won because DOS was dominant (and that only because IBM beat Apple). The first versions of Windows were horrible, junk compared to almost anything that went before it. You do remember pre Windows '95?
In areas where MFST cannot leverage its operating system monopoly, the story is different. They have a tough time competing with Apple in music players and Nintendo in game consoles. And the same will happen in search and mobile.
May sales:
Nintendo Wii: 338,278
PlayStation 2 187,765
Xbox 360: 154,932
PlayStation 3: 81,604
2009-06-02 17:09:31
Microsofts future?
MS Black is here... It is called Windows 7. And much like Windows 95 it will change everything.
Good luck tilting at windmills... This time next year MSFT will be @ 40+
Good luck tilting at windmills... This time next year MSFT will be @ 40+
2009-06-02 17:20:32
Microsoft creativity
Don't forget the 20 million subscribers on Xbox Live.
Here is the thing... MSFT is player in every area... games/music/video, Apps, Severs, The Cloud, and Search as well as OS. What other company has a better chance at tying this all together for the next generation computing experience? And as far as the OS being dead... lets make a deal; once every other competing OS option (linux, mac, android or any other 'cloud' OS) accounts for more than 50% of the market THEN we can start playing taps. Hard for me to currently worry about what? 15%?
This company is a power house that is under valued in the short and long term.
Here is the thing... MSFT is player in every area... games/music/video, Apps, Severs, The Cloud, and Search as well as OS. What other company has a better chance at tying this all together for the next generation computing experience? And as far as the OS being dead... lets make a deal; once every other competing OS option (linux, mac, android or any other 'cloud' OS) accounts for more than 50% of the market THEN we can start playing taps. Hard for me to currently worry about what? 15%?
This company is a power house that is under valued in the short and long term.
2009-06-05 03:28:18
Microsofts future?
I am hardly tilting at windmills and I am not saying that MS won't be at $40 next year. What I am also not saying is what $40 will be worth next year.
What I am trying to do is expose the underlying issues that are affecting MS stock price. MS black is not Windows 7. Rather Windows 7 is the MS attempt to clean up the unpopular Vista and to head off loss of market share a free Chinese version of Windows.
They also need to kill off XP which for most applications people found adequate and often requested that it be back loaded onto computers preferentially to Vista. But if you know anything about computers you already know all of this. Then I have to wonder why you would try to gloss over the facts?
Most people in the Ville are pretty objective about such subjects.
What I am trying to do is expose the underlying issues that are affecting MS stock price. MS black is not Windows 7. Rather Windows 7 is the MS attempt to clean up the unpopular Vista and to head off loss of market share a free Chinese version of Windows.
They also need to kill off XP which for most applications people found adequate and often requested that it be back loaded onto computers preferentially to Vista. But if you know anything about computers you already know all of this. Then I have to wonder why you would try to gloss over the facts?
Most people in the Ville are pretty objective about such subjects.
2009-11-23 19:27:05
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