August 27, 2013
It’s possible, even likely, that Microsoft is about to enter the darkest period in the firm’s history. Darker, even, than July 2000, when it seemed the US government might dissolve the house that Bill built, and force the company to be split into two different companies.
The revenue Microsoft earned in the quarter ending in March 2013, $20.5 billion, probably represents a high water mark for the company, at least for the foreseeable future. In the most recent quarter, the company’s revenue missed expectations, which Microsoft blamed on ongoing weakness in the market for PCs. There is no sign that demand for PCs is going to pick up again—even Intel is projecting sales will be flat, at best—and plenty that the world’s demand for PCs, or at least the kind that run Microsoft Windows, is in terminal decline (1).
Microsoft’s problem can be distilled to this: Computing is no longer confined to personal computers, where even now Microsoft maintains a near monopoly. More than ever, people are hiring other devices to do the jobs that PCs once did: communication, entertainment, and some portion of their work. For a host of reasons, Microsoft failed to compete effectively in the two markets that are disrupting its core business: first, the mobile devices that are supplanting PCs, and second, the cloud computing resources that are essential to making those mobile devices more useful, in many cases, than PCs.
Microsoft does produce a valuable good: its operating system (2). But with the decline of the PC and the rise of the web, mobile devices, and cloud services, the company failed to anticipate or effectively dominate these alternate—and in many cases superior—means of getting computing done. We have reached out to Microsoft for comment and are awaiting response.
Read more at Quartz.
August 27, 2013