Microsoft about to lose the software business just as IBM lost the PC business in ‘80s

“Microsoft is about to lose the software business the same way that IBM lost the PC business in the 1980s,” Carl Howe (Blackfriars Communications) writes for SeekingAlpha.

“Now, for those of you who didn’t live through it, a quick refresher: In the 1980s, it wasn’t Microsoft who dominated PCs, it was IBM. The IBM PC was the fastest-selling product IBM ever had, and it was the gold standard for desktop machines. But even so, MIS departments (Management Information Systems organizations, what IT was called in those days) still called PCs “toys” and snidely thought that they would never be able to handle ‘real’ work like their IBM mainframes and minicomputers,” Howe writes.

“IBM planned to change all that with OS/2, which would be its best and most compatible system. And best of all, it would work seamlessly with the rest of IBM’s systems and be supported by the IT department. It was complex and needed the latest and greatest hardware (the IBM PS/2) to run, but it worked,” Howe writes.

“Trouble was, OS/2 was too late. The PC ‘toys’ powered by Microsoft software took over — they could be bought off the shelf and snuck into the business without the approval of MIS. And despite the fact they were less capable, no one except MIS cared; they did the job for people who wanted to do a few simple things and who couldn’t wait for MIS. And the PCs got better and better until MIS had to embrace them or become irrelevant,” Howe writes.

“That same process is happening right now, except this time, it’s Microsoft and Microsoft-centric IT departments calling Internet services and non-Windows PCs ‘toys.’ They call Google’s spreadsheet a toy that is nowhere as powerful as Microsoft Excel. They insist Apple’s Macs will never be accepted in corporations. And they insist Linux is just too difficult to work for real business. And besides, Windows Vista and the new Microsoft Office — complete with a completely new interface designed to befuddle users used to the old one — will work so much better and more seamlessly with all other things Redmond. Everyone just has to upgrade, and life will be grand,” Howe writes.

“The only problem with Microsoft’s story is that just as with IBM’s story in the 1980s, there’s now competition from ‘toys.’ The ‘toys’ made by competitors just do stuff that users want. And they do it fast. And the users vote with their dollars,” Howe writes. “Look at Apple. In the time since Windows XP was released, Apple has released five versions of its Mac OS X operating system, which, of course, run on Macintoshes, computers IT considers toys. Each one has gotten better than the last. Today, if you go to a developer’s conference, the cool kids have Mac OS X laptops. Why? They evolved faster than Microsoft-powered laptops, to the point where both the laptops and the OS are fashion statements.”

Much more in the full article here.

MacDailyNews Take: Mac hardware and software night be fashion statements, but, oh, they are also so much more! Developers don’t tote them around just to make a fashion statement. Mac hardware is very fast and Mac OS X is extremely powerful, too. That they look nice while working is just icing on the cake.


  1. I’ve always loved the PC fanboys statement that Macs are ‘toys’. Then usually the next thing out of their mouths are “there aren’t any games for Macs”.

    I’ve also always found it funny that people think Macs are great at graphics, a task that’s exponentially more difficult than word processing, yet they somehow lack the power to do anything in the ‘real world’.

  2. More than fashion statements they are sign of someone who got it: Powerful, reliable hw, reliable sw and OS, flexible, versatile.

    And since they can run everything, natively or via virtualization having any other computer (especially laptops) tells you are behind the curve: why wasting money on other computers that do not give you anything more, actually give you a lot less for the same money (sometimes ever for way more money since the MacBook was released).

    One can run everything, develop and contribute to the OpenSource efforts, have among the most powerful platforms available today, enjoy Mac OS X on top of it. Why wasting money on anything less?

  3. There is another division that it is very profitable: The MacBU.

    Puts lots of meat on the table. BTW, with Windows installed on it one can use a Mac at Redmond too and not get fired anymore ” width=”19″ height=”19″ alt=”wink” style=”border:0;” /> FINALLY!

  4. Yes, OSX is more functional. But that is only half the appeal and potential. In an web/image driven society aesthetics and fashion are huge. Apples owns in that realm. When I go to local coffee shop I open up my G3 ibook and the artsy high school kids gape and awe over it, they don’t even see the Window’s notebooks. These kids are the future market, they’re the ones that are going decide with their dollars in the coming decade.

  5. It’s not going to happen any time soon.

    Microsoft is deeply embedded in the enterprise and the cost of conversion is immense for large organizations, like the military. It also has products for which there is no easy replacement on other platforms. Microsoft also has an extensive partner network, in which hardware and software companies receive software, beta releases, technical help, support, insight into Microsoft’s future direction, and sales leads. Microsoft runs a “dating service” for small companies so they can find partners to pursue busines and it also acts as a subcontractor to them.

    Microsoft has built up a huge, complex non-software infrastructure that isn’t coming down any time soon, because it is too profitable for everyone involved in it.

    Microsoft could lose the consumer market (where Apple has its primary residence) and still be wildly profitable.

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