Microsoft past its prime, destined for decline?

“Two successive Microsoft chief executives have long tried, and failed, to refute what we might call the Single-Era Conjecture, the invisible law that makes it impossible for a company in the computer business to enjoy pre-eminence that spans two technological eras. Good luck to Steven A. Ballmer, the company’s chief executive since 2000, as he tries to sustain in the Internet era what his company had attained in the personal computing era,” Randall Stross reports for The New York Times.

“Empirical evidence, however, suggests that he won’t succeed. Not because of personal failings, but because Mother Nature simply won’t permit it,” Stross reports.

“Maybe this was why Mr. Ballmer flirted with Yahoo,” Stross reports. “That prize, however, seems a mirage. You can’t merge-and-acquire your way around the Single-Era Conjecture. Just ask I.B.M., which gobbled up Lotus Development Corporation to no avail.”

“It’s Google, of course, that has developed the musculature to step forward and lay claim to being Microsoft’s successor as industry leader in the Internet era,” Stross reports.

“It’s no secret that Microsoft’s online businesses have failed to gain leading market positions. But what is not widely appreciated, perhaps, is that the company’s online initiatives have lately been doing worse than ever,” Stross reports.

“In the 2006 fiscal year, Microsoft’s online services produced a $74 million loss after the previous year’s profit of $402 million. Since then, the numbers have become uglier, as Microsoft’s online segment has added employees and absorbed growing sales and marketing expenses. In the 2007 fiscal year, the online businesses lost $732 million. In the next nine months, through March 31 this year, they recorded a loss of $745 million, almost double the amount in the period a year earlier,” Stross reports.

“According to Hitwise, an Internet research firm, Google’s share of searches in the United States has increased to almost 67.9 percent in March 2008 from 58.3 percent in March 2006. During the same period, Microsoft’s share has dropped to 6.3 percent from 13.1 percent,” Stross reports.

More in the full article here.

Microsoft made its fortune on the back of general tech ignorance in the 1980’s and ’90’s. “Hey a PC is a PC, right? And besides, Joe from work told me to get one of them Dells.” That level of ignorance, Microsoft’s lifeblood, has begun drying up. Everyone who gets a Mac and tells their friends and family about it increases the evaporation rate exponentially.

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