Microsoft’s Future?

Windows 8 is battling to get traction. And it’s not surprising. Microsoft is a bit behind the curve of Blackberry’s catastrophic decline, but the underlying causes are the same.

I remain unconvinced of touch screens for the desktop. On a recent plane trip, I tried a game on the entertainment system that used touch, and reaching the distance comfortable for viewing the screen was uncomfortable after a while, and touching the screen obscures your vision of the detail in a way that using a touch pad or mouse doesn’t.

Just because tablets are outselling desktops it doesn’t mean desktops should work like tablets. In some parts of the world bicycles outsell cars: should we replace the steering wheel by handlebars?

Microsoft is in an unenviable position. When you hold 95% of a market and it tips away from you, what do you do? Try to tip it back, or go the new direction and lose your status as a leader? Think US auto makers when the Japanese first started to make inroads. They’ve never recovered.

British-style interior

US-style interior

British-style exterior

US-style exterior

At the time, I wondered why the US car manufacturers did not simply adopt their own European designs, some of which were quite good, to US conditions – with minimal changes. For example, putting them through additional ruggedness testing for higher distances and worse roads typical of US driving would really have been enough. To the extent that they tried this, they made the wrong changes. Instead of focussing on reliability, they changed the exteriors to look more American (fatter) and interiors so they looked like folded cardboard, in keeping with domestic designs. The Japanese, meanwhile, forged ahead, keeping their designs consistent across all markets and working on reliability – useful in all markets.

Source: WikiPedia (retrieved 5 July 2013: RIM=Blackberry)

So what is Microsoft to do? Their position is inenviable. Almost anything they do is going to be wrong. If they break away from Windows compatibility in mobile devices, they have no edge to grab attention from the dominant players, Android and iOS. Ask Blackberry how well it works to be late in a market that you used to dominate, then let others redefine the user experience before you end up playing catch up. If they stick with Windows as their starting point, no one wants their devices – except hard-core fans. I tried playing with Microsoft’s Surface range on a recent overseas trip, where I finally found some set up for demo in a shop. They keyboard covers are not brilliant to type on, and one I tried was unreliable in its connection to the device. Putting them on a counter-top to demo illustrates exactly the point I’ve made earlier, that it’s a portable device that you can only use comfortably in a fixed environment – a laptop you can’t use on your lap. If an iPad or Android tablet is set up for demo, you naturally pick it up – the way you would usually use it. I saw no one pick up a Surface and if you did, the keyboard cover and kickstand arrangement would make it awkward to hold.

Apple had it relatively easy. At the time they launched the iPod, the start of their current trajectory, the Mac wasn’t doing particularly well, so launching into a whole new niche that had the potential to leave the Mac behind wasn’t a huge risk. The fact that the iPad ultimately has had the momentum to outsell the Mac by a huge margin wasn’t planned, but it also wasn’t hindered by a desire to bring along the Mac base. That indicates where Microsoft is going wrong: they are obsessed with bringing their base along with any major new platform. As long as Windows dominates the desktop, you can see why. But the desktop is fast shrinking to a minority market – even if it remains large in absolute terms.

The real paradigm shift that could eventually be the killer blow is the shift from corporate-defined equipment purchase to consumer-defined choice. Apple failed in the business market not because the IBM PC was superior, but because business buyers wanted to buy from a trusted source. IBM remains one of the most trusted players because they look after their customers – no one ever got fired for buying IBM, as the saying goes. Microsoft rode in on IBM’s coattails. The problem is, in the consumer space, that sort of preference doesn’t apply, and now that devices have become so cheap that anyone (on a salary) can afford one, they have the same purchase status as buying a pen of a watch. With that paradigm shift, Blackberry and Microsoft, to survive, have to appeal directly to the consumer not to the corporate buyer.

Microsoft has demonstrated that capability to some extent with Xbox, and Blackberry with selling to consumers in lower-income countries on the basis of providing cheap Internet access – but both have yet to show that they can leverage those successes in the broader consumer space. As long as they primarily see themselves as owning the corporate space in their respective segments, they will have a block against shifting to the consumer space. And the fear of losing their major advantage over outsiders in the corporate space further exacerbates that block.