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. “You can fool some of the people some of the but you can’t fool all of the people all of the time”

    This pretty much sums up Micro$oft and the people are refusing to be fooled any longer.

  2. 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, sales leads on nearly a daily basis, and free sales seminars. 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. IBM didn’t have that sort of infrastructure in place when it lost the PC market. IBM does have a partner program of sorts, but it is not nearly as beneficial to the participant as Microsoft’s is.

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

  3. the guy has his history wrong, MS screwed IBM over OS/2. It had nothing to do with acceptance by MIS departments; PCs were already commonplace when OS/2 was being built (MS Multiplan was a big hit in the west australian Treasury long before OS/2, IIRC)

    if i remember my history correctly, it was all about MS building Windown 3, in secret, while promising IBM that it was all go-go for OS/2. MS and IBM were partners in the new OS/2, but before it was released MS dropped the Windows 3 bombshell.

  4. Taxi,

    OS/2 was supposed to be the successor to Windows 3. When IBM and Microsoft parted ways, Microsoft’s part of OS/2 became Windows NT.

    Windows 3 was just a shell that ran on MS-DOS and shared its limitations. OS/2 and NT were complete operating systems with user logon, a form of multitasking and other features, including the ability to use larger hard disks and more memory.

  5. taxi has it about right, I believe. MS was a partner with IBM on OS/2 then jumped and openly criticised OS/2 to the public and press, and IBM felt stabbed in the back.

    If there are any lessons in that article it’s that cheap always outsells quality. That is part of how/why MS stole the pc market from Apple in the early days. There’s more to it than that, but it is a major factor which continues to influence market share today. Apple would do well to ingest this basic truth.

  6. Ken is on the money.

    Biz can’t function w/out MS technology. Sad but true. MS’ most underrated ability is to court developers and as long as that eco system continues MS biz will not be threatened significantly.

    Because IT staff is pretty much MS only it will be hard to get Apples in there regardless of how many OSs it may be able to run.

    Apple’s best bet will continue to be consumers, small biz, and creative industries.

  7. I don’t think the loss will be as dramatic

    as that of IBM, but they are gonna lose

    some market share, hopefully soon. Maybe,

    just maybe, the competition will prompt

    MS to actually innovate something. Maybe

    the era of bullying and buy-outs will soon


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