Gloom and doom forecasts about Microsoft could be a reality

Let me start this post by stating my opinion about Microsoft: I have nothing against the company: no axe to grind, no personal vendettas.

Whether I like them or not makes no difference, as it should. I actually would like to be able to report better things about the company, than “blah blah looks like [insert new product’s name] is a failure”…”Microsoft’s new OS proven to cause insanity with continued use.”

I don’t like the Dallas Cowboys, for example…but will say in the same breath that it’s a better NFL when the team plays well and can compete for a championship.

It’s just too hard to look away from the–sorry for the cliche´–train wreck that is Microsoft these days.

There are no shortages in the tech press recently about how bad/mismanaged/blundering the company is. It would be great if they had a huge hit on their hands…if for no other reason than we could all focus on things like is the BlackBerry 10 arriving too late to save the renamed company?

An article from, yes it’s true, two months ago on talks about the “nightmare scenario” it forecast for Microsoft one year ago–actually, now, fourteen months ago. Most of it, according to the story, is coming true:

Almost one year ago today, we laid out the nightmare scenario for Microsoft that could lead to its business collapsing. After laying it all out, we concluded, “Fortunately for Microsoft, none of this is going to happen.”

We were wrong.

A lot changed in the last year. Microsoft’s nightmare scenario is actually starting to take hold. We’re revisiting our slideshow from last year to see how things have played out.

Each number that follows has one piece of the nightmare scenario for Microsoft and an explanation of where Microsoft stands in comparison to that hypothetical situation.

1. The iPad eats the consumer PC market.

This is happening right now. In the third quarter of 2012, PC sales were down 8 percent on a year-over-year basis worldwide. In the U.S., sales were down 14 percent. A big chunk of the decline can be attributed to the rise of the iPad. Apple sold 14 million iPads last quarter, which is more than the top PC maker, Lenovo, which shipped 13.7 million PCs. Throw in Apple’s 4.9 million Macs, and it’s the top computer maker by a mile.

As the personal computer market goes …

2. Employees gradually switch away from using Windows PCs for work.

This trend has not played out that dramatically in 2012. However, British bank Barclays bought 8,500 iPads at employees’ insistence this year.

And a recent survey showed that the iPhone has overtaken RIM as the smartphone of choice for enterprises. As more people get comfortable with Apple’s mobile products at work, Microsoft will have to worry about them converting their Windows-based computers to Macs at work, too.

Microsoft has a plan to combat this but …

3. Windows 8 fails to stop the iPad.

Gulp. It’s still early, but every most data points say Windows 8 is not going to make a dent in the iPad.

— NPD says Windows tablet sales were “nonexistent” between 10/21 and 11/17.
— It also says Windows sales were down 21 percent over that period on a year-over-year basis.
— Piper analyst Gene Munster was in a Microsoft store for two hours on Black Friday and saw zero Surface sales.
— Microsoft reportedly cut its Surface order in half.
— Ballmer said Surface sales were “modest.”

Meanwhile, we can’t think of any analyst who has cut his or her iPad estimate for the quarter based on Surface sales. In Microsoft’s defense, it says it sold 40 million licenses, which it says is out pacing Windows 7. There’s a chance analysts are wrong.

4. Loyal developers start to leave the Microsoft platform.

We’re not sure if this happening or not. So far, the early signs are actually positive for Microsoft. It has over 20,000 apps in its Windows app store. Windows 8 is only a month old. At the same time, Microsoft doesn’t have a Facebook app for the Surface, and one of the biggest complaints from reviewers was the lack of good apps for Windows 8.

Windows Phone has over 100,000 apps, but iOS has 700,000 apps, with 275,000 made specifically for the iPad.

The rest of the story includes these topics:

  • 5. Windows Phone gets no traction despite the Nokia deal and RIM’s collapse.
  • 6. Office loses relevance.
  • 7. Microsoft’s other business applications start to erode.
  • 8. The platform business collapses.
  • 9. The Xbox was never going to make up the slack, and Microsoft can no longer afford to keep investing in it.
  • 10. Microsoft suffers a huge quarterly loss. Ballmer retires to play golf.

Yeah, if he’s not thrown out first.

The article concludes:

Is this just a bad dream?

Last year, we concluded by saying, “Fortunately for Microsoft, none of this is going to happen. Windows 8 will reassert the dominance of the Windows PC. Office and other business products will remain corporate necessities, and developers will never be able to ignore Microsoft. Windows Phone will become a viable third mobile platform, the Xbox will continue to dominate the living room, and new products will surprise the pundits who thought Microsoft couldn’t innovate. Even Bing will finally make a profit someday.”

This year, it’s a lot harder to say much of that. Windows 8 doesn’t seem to be reasserting the dominance of the PC. Windows Phone is not a viable third platform. Bing is still burning money. The Microsoft nightmare scenario is actually becoming a reality.

Replacing CEOs is not in any way a new occurrence in the tech business. HP has had a couple in the last few years replaced for different reasons. Yahoo! has seen its share of revolving-door CEOs, and Research in Motion (now BlackBerry) finally removed its two-headed CEO monster last year. Hey, even Steve Jobs got the boot from Apple in 1985.

By most accounts, Ballmer has his good points…but among them is not being the CEO of Microsoft. Bill Gates chose Ballmer as his replacement, but he didn’t believe spam would last, either. He’s capable of making mistakes.


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