The impressive news last week that Microsoft Corp. had its "first ever" decline
in year-over-year quarterly sales - the third quarter of the current fiscal year
for Microsoft was worse than the same period last fiscal year - and that revenues
fell six percent, has set many tongues wagging in the tech world.
"Microsoft's Model is Not Working Anymore," thundered trade journal
InformationWeek. "Netbooks hammer Windows revenues for second straight
quarter," declared Greg Keizer of ComputerWorld, another respected trade
The netbook phenomenon is interesting: the tiny little portable computers, with
eight- to ten-inch screens, run either a low-cost version of Microsoft's Windows
XP operating system (lower in licensing price than any of the Windows Vista
configurations) or some flavor of the open-source Linux operating system, which is
either free or much, much cheaper than even Windows XP. Either way, a lower-cost or
no-cost operating system on a netbook means a dig into Microsoft's revenue stream.
Other consequences flow from that, however. If you have a tiny portable with, say,
limited RAM and a small-ish hard disc drive of 120 Gigabytes or so, you're
not as likely to fill it up with some of the "bloatware" typically found on
notebook and desktop PCs, some of which may bear the Microsoft name. Instead of the
Office 2007 "suite," you might go for Microsoft Works, which includes an older
version of Microsoft Word, a simpler spreadsheet, and so on. Or, you'll jump to
OpenOffice.org's office suite, which is free. There's no tech support number to
call, but you can find answers online.
Another scenario involves using Web-based tools such as Google's Documents suite
to create word processing and spreadsheet files, or Adobe's Buzzword, or ThinkFree
Office, all online tools, of which there are a growing number. Do your computing
"in the cloud," as they say, and you're not buying Microsoft's software,
While such scenarios may not be attractive in many large enterprise settings,
consumers are finding them more and more attractive, it seems, otherwise why would
there be a drop in Microsoft's sales and revenues?
The more important question is what can Microsoft do to change things? I'm no
insider, but I have a couple of decades' experience with the firm and its products
under my belt. Some educated guesses and ideas follow.
First, the company needs to get Windows 7 out there as soon as possible. This has
been discussed here twice in the past month; suffice it to say there's a lot of
enthusiasm for a Windows OS that isn't crash-and-problem prone.
Second, move Office online, and soon. There have been some elementary moves towards
this: Microsoft Exchange users can access a version of the Outlook e-mail client
online via a Web browser, and what used to be Microsoft Publisher is essentially an
What I'd like to see, however - and what I might pay for - is a feature-rich,
full-spectrum office suite online, and, while we're at it, let's make it browser
independent, please. Example: if you use Microsoft's Internet Explorer to access
Outlook/Exchange via the Web, you get more-or-less the "complete" desktop
Outlook experience. Use Mozilla's Firefox or Apple's Safari, you get a
Microsoft does this, I'm guessing, to drive users towards Internet Explorer. Fair
enough, but as we've seen with Vista-versus-netbooks, it's a losing strategy.
Better still to engineer a robust Web-based experience and charge a little more,
than cut corners and upset your customer base.
By contrast, for example Kerio Mail Server, which runs on Windows, Mac and Linux
servers, offers what seems to be a rather consistent user experience across
platforms: it looks, and acts, the same in any Web browser, on Mac or Windows.
The final thing Microsoft should do is buy something, and quick: outbid Oracle for
Sun Microsystems and they'd get an entrée into open-source markets; buy Adobe
and, after dodging antitrust concerns, they could beef up Office into an unstoppable
I'm not a Microsoft insider, but I'm guessing there's hard work going on at
the Redmond, Washington, headquarters of the firm, seeking ways to avoid oblivion.
It's been a great ride for Microsoft, and I don't think they want to stop just