Microsoft struggles to stay relevant in face of Apple’s myriad successes

TiVo - 10% off coupon code SAVE10“The thing about Microsoft is: You can be a short-term bull and remain a long-term bear,” Gary Dvorchak writes for RealMoney. “The bear case for Microsoft is longer term, and it can be summed up in one word: Apple.”

“This isn’t to say competition from Apple is stunting Microsoft’s growth. That isn’t the case. Rather, the things Apple is doing right are the things Microsoft is not,” Dvorchak writes. “In other words: Apple’s successes have diminished Microsoft’s growth prospects.”

“The technology industry thrives on innovation. Microsoft is, and always has been, more of a ‘fast follower,’ than a product innovator,” Dvorchak writes. “In its cash-cow, historical product segments, notably the operating-system and Office software, there are few valuable new features that the company can offer to drive upgrades.”

Dvorchak writes, “In more recent growth categories, such as mobile, Microsoft generally isn’t a relevant player… Apple’s key competitive advantage — the reason it can create such great products — is the integration of hardware and software. Microsoft is somewhat stymied by the multitude of hardware platforms it must support, which inevitably creates a poor customer experience. I see a high probability of Microsoft buying a PC company — perhaps Dell — and a mobile-handheld company — maybe RIMM? — so that it can begin to offer a fully-integrated, more robust product to match Apple’s offerings.”

Dvorchak writes, “Absent such a strategic move, I believe Microsoft will continue to struggle to offer relevant products.”

Full article here.

31 Comments

  1. No matter if or what they might buy, they are still going to inflict the Windows disease on it. It will NEVER go anywhere!!! Do you really think MS would accept RIMM’s new software?? I doubt they’d know how to deal with it!

  2. that is crap windows mobile seven is going to bring us for the first time ever……facebook integr…..wait got that…Music play….wait got that……touchscre……wait got that….no no for the first time ever we will have a primarily blue home-screen…finally I can’t wait to see how long it will take apple to catch up with that.

  3. If MSFT were to buy a PC box maker the smart play would be HP’s box division. HP has a much better rep than does Dell. They have a better international presence and build a better product (hard to do in a me too market).

    This would kill (or at the very least cause a great deal of consolidation) several of the other box makers around the world.

    This would actually benefit MSFT because they would no longer be forced to support a myriad of box makers.

  4. “I see a high probability of Microsoft buying a PC company — perhaps Dell — and a mobile-handheld company — maybe RIMM? — so that it can begin to offer a fully-integrated, more robust product to match Apple’s offerings.”

    Isn’t that the Zune strategy? (And we know how well that worked.) So why would other PC vendors continue to work with Microsoft if Microsoft is now their competitor?

  5. Microsoft won’t buy Dell, it will fall back to its old habits of partnering with a company like Dell to produce some not-really-good-enough product.

    The real problem with Microsoft is that the company is too tied to its lucrative corporate OS and server systems. Microsoft believes it must continue to support systems and software that are 15 years old, or at least have some degree of compatibility there, or its customers won’t upgrade (or will upgrade to someone else’s software, like Apple or Linux).

    Microsoft also will never completely rehab Windows or Office to streamline or modernize either. Simply not in its DNA. Their OS and Office products are design by committee, except that the committee sub-groups don’t talk to one another and just make stuff they hope works with the other bits later on.

    Microsoft is all about great promises with not product, only to gut the “fantastic” new features prior to release. With those types of corporate attitudes, Microsoft will hang on as a giant simply due to its installed base and the need for Office compatibility (yes, MDN, people do need Office still). It will gradually fade away rather than suddenly folding up and dying.

    The interesting thing about Microsoft will happen when Ballmer steps down/is forced out. That will be Microsoft’s (likely last) opportunity to become relevant again, because it will still have hoards of cash and the ability to do something. If the wrong person is appointed CEO, the company may not ever become a force again.

  6. Dvorchak misses it here…if they buy Dell, they still have to support all the other PC manufacturers. Unless they all go Android or Chrome in response.

    @Gregg, there is no way HP would sell off their computer (and presumably printer) division. It’s too much of a cash cow and it feeds their services divisions. And buying HP as a whole is a terrible proposition as it spreads MSFT’s focus far too wide. It would require massive spin-offs. HP is, of course, a far, far, far, better company. I hold HP stock and MSFT (the latter for the dividend, primarily) but would never, ever, touch DELL.

    Finally, Dvorchak suggests purchasing RIMM. That’s more realistic, but Blackberry has its own OS, and the pushback against the prospect of being forced into Windows would be horrible – I’d imagine an immediate 35% loss of customer base. Purchasing PALM is probably far smarter – you get a lot of IP cheap + Rubenstein et. al. and you can needle AAPL with both of those.

  7. For the love of all that’s pure on the earth… it’s Gary *DVORCHAK*… NOT John Dvorak…

    PLEASE… learn to read ppl… ffs

    MaWo: ‘expect’. As in, ‘More of you… I do.’

    You’re better than this ppl. You are.

  8. Microsoft is a Software company, Apple is a hardware company that unlike other hardware companies, they happens to write there own software to sell there hardware. Sure, now this guy states that what Microsoft has done to get on top, it’s main and fundamental business strategy has been fundamentally flawed, and it took him more then 20 years to figure this out? It will take another 20 years for Balmer to figure this out.

  9. @bizlaw

    I actually am a bit more pessimistic about what happens at the CEO level:
    Any CEO replacing Ballmer will likely be better for Microsoft (can’t get worse than him… When you’re at the bottom, there is only one way to go);
    Any CEO following Steve Jobs’ footsteps would likely be worse for Apple (when you’re at the top, there is also only one way to go)…

    In other words, if MS does not suffer a serious melt-down, their future odds of competing with Apple are probably, and very unfortunately better. It is not the scenario I’m wishing for, but it’s what I feel is more likely to happen.

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