Can Emerging Competition Sink Microsoft?

Microsoft, through its lock on desktop operating systems and applications, became a very rich 800 pound gorilla. But the technology industry has seen many huge gorillas become music box monkeys. The only gorilla that has really evolved to thrive is IBM. The company created a viable PC business by separating it geographically and organizationally from the entrenched businesses that it threatened. Once the business was well established, the PC business was folded back into the mother ship. Later, a strong CEO decided to change the dominant business from hardware to services. IBM, being a tops-down firm, listened to the message and changed, selling the less profitable PC division in the process.

Now two articles in this week’s online Information Week show two contrasting views of Microsoft’s future. The first, “Microsoft Girds for Demise of PC” by Antone Gonsalves states that Microsoft’s enormous cash hoard can fund the transition and, more importantly, the company is already releasing versions of its products for the cloud. Paul McDougall in his article, “Microsoft Looking Like An End Stage Company,” cites numerous examples of Microsoft spending part of its cash with few results:

• Microsoft Live Blogging Platform – cancelled
• Mobile OS market – 5% market share
• Internet Explorer’s market share dropping
• Apple’s iPad eating into PC sales

While the technology industry dominant technology/firm cycles are faster than in many other industries, the point is still that dominant firms have to evolve or they will fail. Blockbuster vs. Netflicks for one.

Microsoft’s future has not yet been determined, but if PCs remain as a significant part of the industry—remember that IBM still sells mainframes—then Microsoft will be around although less dominant which will be good for the industry.

However, replacing Microsoft’s dominance with Google dominance (or any other firm) is not good for users and I personally hope will not happen.

Where are you in this transition; with a dominant firm, an emerging company, or user organization that wants more competition among the technology supplier base?