Deer in the headlights: Microsoft completely unable to deal with market shift toward smartphones and tablets

“For the first time in 20 years, Apple’s quarterly profit exceeded Microsoft. Thus, on the face of things, the companies should be roughly equally valued. But they aren’t. This week Microsoft’s market capitalization is about $215B, while Apple’s is about $365B – about 70% higher,” Adam Hartung writes for Forbes. “The difference is, of course, growth – and how a lack of it changes management – including Microsoft.”

“When a company hits a growth stall, 93% of the time it will be unable to maintain even a 2% growth rate. 75% of the time we can expect it will fall into a no growth, or declining, revenue environment. And 70% of the time it will lose at least half its market capitalization,” Hartung writes. “That’s because the market has shifted, and the business is no longer selling what customers really want. No matter how hard management tries to recapture the past, customers have decided to move on.”

At Microsoft, we see a company that has been completely unable to deal with the market shift toward smartphones and tablets:
• The overall PC market declined by 2% last quarter
• Consumer PC shipments dropped 8% last quarter
• Netbook sales plunged 40%

When revenues stall earnings become meaningless.

Hartung writes, “Even though Microsoft earnings were up, it wasn’t because they are selling what customers really want to buy. Microsoft has caught the ‘Wal-Mart Disease’ – constantly trying to do more of what it always did, hoping it can regain old results – even as the market keeps shifting… Earnings in a declining company are, well, often worthless. Those who see this early get out while they can – before the company collapses.”

Much more in the full article, including why RIM is in the same boat (The Titanic) as Microsoft, here.

MacDailyNews Take: It’s times like this we think of times like this: “What I can’t figure out is why [Steve Jobs] is even trying [to be the CEO of Apple]? He knows he can’t win.” – Bill Gates, June 1998

[Thanks to MacDailyNews Reader “Phil M.” for the heads up.]

Related articles:
Bingleberry: Ballmer announces surprise Microsoft-RIM deal; Bing to be default search in BlackBerries – May 3, 2011
Anatomy of failure: Mobile flops from RIM, Microsoft, and Nokia can’t compete with Apple’s iPhone, iPad – April 23, 2011
Apple overtakes Nokia as world’s largest vendor of mobile handsets by revenue – April 21, 2011
Analyst cuts forecasts for Motorola on disappointing Xoom, Atrix sales – April 5, 2011
Apple makes roadkill of deer-in-the-headlights CEOs – April 1, 2011

47 Comments

    1. I have long said that Microsft in 2020 will be like IBM today. Still with us, big, important in some IT areas, but as a consumer, not one of the first names you will think of for computers and software.

      After all, in 2020 and beyond, there will still be the need for corporate and government office drones to do what they are doing now. PCs (unless we revert to terminals) will still be for retrieving and entering boring database information.

    2. I like to think of MS like an IBM. MS will “collapse” meaning it will never be the same as it once was, but it will be with us in some form for a long, long time.

  1. We’re mostly fanbois where read this website, but the reality is the above will eventually happen to Apple, in not too many years from now. The writing is on the wall. Steve Jobs has sown a characteristic of arrogance into Apple’s DNA – where they don’t listen to customers. That has worked while Steve has been at Apple, but once Steve departs the scene, that characteristic in Apple won’t change, because it will be part of Apple’s corporate culture. Now we put up with Apple’s arrogance because it gives us the products we need (mostly), like we tolerate a cute but petulant kid. But once that kid grows into a monstrous 40-something, not so cute. When Apple loses Steve, and hence its mojo, and remains arrogant, that’s the end. I’ll give it 15 years – that’s about how long it took for Microsoft to rise and start falling.

    1. All Apple has to do is come out with matte screens on all of their screened products and there you have it MM.

      Arrogance gone forever.

      P.S. You wouldn’t know arrogance if it bit you on the ass.

    2. You make a valid point, but one which misses the larger picture. M$ is in the situation it is in BECAUSE it listened to it’s enterprise customers, BECAUSE it has bought into maintaining legacy compatibility. M$ followed exactly what it’s customers were telling them.

      In the fast paced world of technology, you can’t let your customers trap you into enhancing where you have been, it’s all about going where you need to go. And yes that is very painful, and yes that is exactly why Apple hasn’t any focus on the enterprise. Apple really doesn’t want that enterprise giant whispering in it’s ear about what it wants. Enterprise want’s to protect its investments, Apple want’s to deliver great products. Apple has shown an unwavering courage to replace existing products with better products that don’t hue to the legacy product.

      When Technology matures and it’s rate of development slows, thats the time to cozy up to enterprise and consumers and protect assets and past investments. Today, Apple has the right course of action for the state of Technology today and the foreseeable future.

    3. “We are trying to give our customers the best experience possible.”

      How does that spell arrogance? What is it? You dont like the way he smiles?

      I wish I could buy everything from companies who are forward thinking AND care about their customers. If it remains that way after Jobs then I dont see your point.

    4. LOL, you my friend are no “fanboi”. The only frigtards who mention Apple’s arrogance are the ones who believe in open this, open that, waiting for Linux to take over, which hasn’t happened.

      For the average Apple user, we’ve been putting up with the arrogance of PC-tards forever. Why didn’t you point that out?

      1. “For the average Apple user, we’ve been putting up with the arrogance of PC-tards forever. Why didn’t you point that out?”

        well said.

        I would further add, if windows machines are so much better than apple computers then why i am also getting asked Windows troubleshooting questions?

        I

    5. “Apple’s DNA – where they don’t listen to customers”
      “Now we put up with Apple’s arrogance because it gives us the products we need”

      They don’t listen but they give us what we need.

      You sound confused.

    1. Thanks for the link. One question, though: Why are so many comments “Deleted by author”? Does that refer to the author of the blog or the author of the comment?

      1. The commenters say something that could come back to bite them on the ass. Jobs are hard to find.

        The blog owner gets them to resubmit anonymously and avoid termination. Ballmer just gets to throw chairs and not employees.

  2. It’s times like this we think of times like this: “What I can’t figure out is why [Steve Jobs] is even trying [to be the CEO of Apple]? He knows he can’t win.” – Bill Gates, June 1998

    Bill, he’s not playing the same game as you, duh!

  3. It just goes to show you it’s not the size of the bank account that matters, it’s what you do with what you’ve got. Microsoft has many resources, and yet, has trouble in some areas. Microsoft is so large it has nothing to worry about, other than it’s fear of losing a percentage of it’s market share to somebody else.

  4. MS’s biggest issue, as pointed out some articles published in the last 6 months is that you have an echelon of guys at the company who make all the decisions and these guys are entrenched in Windows.

    MS Research produces some amazing stuff, I did a stint there and it was jaw dropping some of the things they came up with, however taking those things and actually making them into a product usually falls flat when the ‘good fellas’ don’t see the potential product as being a part of “Windows”, or they can’t figure out to tie it into windows.

    Look at Mobile, J Allard’s team was forced to basically trash everything they came up with and start over with the goal of making the product a ‘windows’ product. He left the company over it.

    If they get the right change of upper management (not likely) they have the talent and resources to become a powerhouse again.

    I think they’ll fall a long way before the necessary changes are made.

  5. Please please, for any readers of this item who are also board members or stockholders of msft, be assured that Steve Ballmer is doing a great job. What these writers don’t understand is that Mr. Ballmer, like Mr. Gates before him, is just letting Apple take all the risks and over-extend itself. In the meantime your microsoft leader is gathering strength. He’s tanned, rested, and ready to sweep away the toys out of Cupertino. Steve Ballmer needs to continue his insightful leadership of your magnificent company for as long as it takes.

  6. even if microsoft SUCCEEDS in moving into mobile it’s going to LOSE anyhow

    because as it probably charges way less for a win mo license then a win desktop license.

    win mo traditionally only costs $8-15 a license. And Apple doesn’t charge for updates for iOS (it’s built into the price of the phone) so Msft probably can’t charge for updates either. Win desktop updates (a big money earner for msft ) earns msft approx $75-200 each

    so if Msft succeeds in mobile and gets PC people to move to phones, tablets etc slowing down PC desktop sales it’s going to lose money,
    (there is not much lee way to eke out more from mobile licenses as Android is ‘free’ )

    easy to see why Msft is so slow into mobile and like a Deer caught in Headlights.

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