Microsoft in deep trouble?

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Microsoft once had a near monopoly on web browsers with Explorer, so it comes almost as a shock to find that the web browser most used to access Bruceongames is Firefox 3 and that even the undermarketed Chrome has made a significant impact. When it comes to search Google always had the majority of the market but MSN now seems to have slipped away to nearly nothing. It doesn’t bring many people here.

You can forgive the above because Microsoft, famously, misunderstood the internet so came to it late. Operating systems are different though, Microsoft have owned this sector since MSDOS. But even here there are massive cracks appearing. By far the fastest growing section of the PC industry is Netbooks. And the Linux derived Ubuntu has become a great success. Microsoft have fought back by bringing XP from the grave. But they are imposing stupid maximum system specifications that attempt to defy Moore’s law.

And of course their worst operating system problem is Vista. This has been the biggest trainwreck in the history of Microsoft and they are rushing out Windows 7 to try and mitigate the disaster.

You might think that Microsoft own the market for standard applications with the Office suite of programmes that have swept all in front of them to become global standards. Even here, though, Microsoft are in big trouble from Google Docs which is free for most users and which massively reduces the IT costs for the many corporates that are now using it. Basically Microsoft didn’t see the cloud coming.

So Microsoft are having problems in many of the most important areas that made them great. But the reality was always that this was inevitable, you cannot hang on to monopolies for ever, especially in the fastest changing area of technology that the world has ever seen. And Microsoft must always have known this. Their monoplies will continue to fade away in the face of this change and new competition from agressive competitors.

So it is against this background that the Xbox/Zune/Live project makes so much sense. The gaming industry is still at its very beginning. The future growth potential is very many times the current size of the market. So it will grow to be a far bigger market than the IT markets that Microsoft have monopolised for so long. In other words Microsoft could become a bigger company because they will be in a bigger marketplace, as long as they have a significant market share.

So Microsoft are playing a long strategy in gaming (and it is growing to be a lot more than gaming). They are building market position over successive generations of platforms, both hardware and software. And they are using their massive financial and intellectual resources to win.

Applying this strategy they must have been amazed that their main competitor, Sony, decided to make so many strategic and tactical mistakes and to basically throw away their market dominance. They must also be very pleased that Nintendo chose to remain in the “toy” end of the market and so did not build the infrastructure necessary to compete in the long term.

Microsoft are in the middle of one of the biggest shifts that any major corporation has ever made. From an IT company that did a bit of gaming to a consumer media company that does a bit of IT.

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22 Comments


  1. Let’s just hope for the best not the worst, from a company like Microsoft I would expect more.


  2. 360 IN TROUBLE?
    I don’t think so!!


  3. Bruce

    Your finding that Microsoft is moving to provide more consumer services (including gaming) and less technology agrees with mine. Except that I believe Microsoft wants to own both the consumer and business services markets (not just consumer) and is uniquely positioned to do so.

    In addition your finding that Firefox is being used more often than IE to access your web site might be a revealing leading indicator of a major change in the business software market. (It also might be an indication of something unique to your content although I don’t see anything that might account for it looking quickly).

    The steps you take to get to your opinion however are based on some bad base data. Microsoft has not “owned the operating system sector since MS/DOS” and still does not. IBM owned it until the 1990s; UNIX/Linux has owned it since. Microsoft’s various operating system products have been pretty much stuck with about 40-45% server-software share this decade.

    I am guessing that you are referring to desktop operating software only. But in that market, it has been IBM/Lenovo, HP/Compaq, Dell, and so forth that have owned the market. They simply chose DOS/3.1/XP etc. because it was the only game in town when it comes to running the applications consumers want. How many of the games you follow are being ported over to Debian/Ubuntu? (Ubuntu is more Debian based than GNU/Linux based but I don’t want to get into the fractured nature of the so-called open source software market.) In comparing Google Apps to Office you are simply buying into the Google PR line; for consumers at least, the price is virtually the same: $12 per year of Office vs. “free” for Google with the delta well worth the $12. Consumers have figured that out very quickly.

    As for Microsoft “not seeing the cloud coming,” it depends on your definition of cloud (I would argue that the cloud predates the founding of Microsoft). But buying into the Google PR definition of the day, all the evidence is that Microsoft is uncharacteristically ahead of that curve–in terms of technology and implementation.

    Thanks for the post. I need to write an article on Azure this morning and you gave me my hook.


  4. For the majority of people, especially those that don’t know anything about your firefox, chrome, open source office, and such, Microsoft has been and will be the answer to their software needs. Microsoft is not in trouble.
    They are making money hand over fist. I wish I had that kind of trouble.


  5. Really, really sad story about Microsoft.
    But, unfortunately, I have to disagree with almost everything that war written above.
    Bruce, I respect your age and expirience, but I’m commenting your thoughts my second time here.
    Sorry my bad English, I’m Russian please be indulgent to me. I’m not going to be offensive.
    Bruce, please, get to the reality.
    First of all Windows operating system. We have to face the sad truth, but Windows is the only option on the mass-market. Almost all major computer manufacturers are forced to install Vista on their new computers. Microsoft’s main profits come from pre-installed Windows copies licensing. You may try to install a free OS instead, f.i. Linux, but you eventually find out that those wont have any demand. People are tied phycologicaly with Windows interface, it is an easy and affordable choice all around the world, including pirarted copies of it where possible. I mean 3rd world countries where people cannot spend a couple of hundred bucks for a simple disk. Some people are so get used to Windows and Word that sometimes they didnt reognise the difference between them.
    Is there any adequate rival operating system to Windows now? Yes, it may be Mac OS X with its perfectly user oriented interface and lighning speed work, but when Dell offered to preinstall it to its PCs Stiven Job rejected the proposal saying “Apple sells hardware, not software”. I dont deny that MS has problem at the OS side, but it doesnt seem to me to be a big threat to Redmond until any user-oriented, simple, compatible and adequately cheap alternative appears at the market.
    Secondly, we must say that MS’s goal is not to create a console, or a flash player, it has a much more far plans. As Ballmer defined it “We must be at every living room”. XBox 360 or Zune are just a part, just a tool of microsoft’s projected dominance at entertainment market. Nowaday there is no future at this side for MS. All investments in HD DVD burned away at jan 5, 2008 at CES 2008 when Warner Bros. anounsed about Blu-Ray exclusive support. Giving up with HD DVD as a part of common strategic plan, reduces influence of MS in video and audio manufacturing and distribution market. VC-1 codec and HDi interactive menu system left only at content distributed via Live Marketplace
    Zune doesnt seem to be a serious competitor to iPod, dominating at market. iPhone as a device combining cellular phone and flashplayer now is the perfect choice for everyone who wants a real thing for really affordable price.
    Price cuts are very nice move for costumers but pretty unpopular for manufacturers. Any price cut can highly lower profits and sometimes leads to a “zerro deals”. That means that sales dont bring any profits and sometimes even causes losses. The politics of agressive pricoing is very good at early stages of a console lifecycle when a market penetration is the main goal, but further it is justt a forced move. Why? After a series of fiascos with a few highly advertised games, such as Lost Oddysey or Infinite Undiscovery it became obvious the they wouldn’t give MS a good software sales “remission” Halo3 had done.
    That is why XBox 360, Zune etc. are pretty unprofitable segment of Microsoft’s business to become the mainstream part of its activity. From other side – XBox 360 failed to become a entertainment center of every family as it was projected – the lack of HD media drive doesn’t let it be. In other words X360 failed to reach the goal and stays pretty unprofitable. Zune sales don’t show it to become a strong rival to ipod and iphone.
    In many ways it is obvoius that it will take years to force Microsoft to reorient its business from its mainstream – software development and publishing. Yes, MS has some problems in software area, but an ordinary overage user will choose Windows+Word pair in the most cases. Existant alternatives are uncomfortable, unaffordable, or unaccessable to the bigger part of pc owners.


  6. Bruce, do you really think that microsoft’s future is focused on the gaming market business?do you think that the gaming market will be microsoft’s core business? Instead I think that microsoft as you have said before is really in deep trouble and if the future is not so bright, microsoft’s gaming department will be the first to close or at least Ms leave the gaming console market.Maybe in USA xbox360 sells very well but here in europe despite the great annuncements of MS PR the situation for the Xbox360 isn’t so good.And here microsoft’s reputation for rrod is low, very low.and the future will not change the things.


  7. I don’t the 360 is in trouble, but in almost every other sector, I think that Microsoft is in really deep trouble. Their going to have to make Windows 7 really a hit, and something that’s much, much better than Vista in order to gain what they used to have in the OS market.


  8. Microsoft is the generally and commonly accepted term for a single company. Even though it owns many smaller companies, the title “Microsoft” references a single parent entity. Please avoid saying “Microsoft are…” Instead, say “Microsoft is,” the word “is” being the third person singular form of “to be.” If you are trying to refer to Microsoft and any/all subsidiary companies then you need to specify said plurality so your readers don’t wonder why the hell you are using “are,” the plural form of the verb, when referencing what sounds like a single entity. What would have been an interesting read became painful. If you want to argue the arbitrary nature of the sign, that is another matter entirely, but popular understanding and usage is the single greatest determinant of correct usage and reference over time. Just observe the decision process for new word entries in the dictionary!

    Now, concerning your arguments, Microsoft IS facing new challenges and a changing industry, but still holds the largest piece of the pie for a reason. You are right when you say that holding a monopoly forever is impossible, but it will be another decade or two (or more) before we see someone truly replace Microsoft as top software dog. Internet explorer might fade to a level roughly equal with other search engines (particularly Firefox, which I am using right now), but its software will remain king for a long time.

    Xbox is doing surprisingly well and I am delighted to see it. I own a Wii, PS3, and Xbox 360 and Microsoft’s system is decidedly my favorite. The Wii needs to be recognized for the fad that it is and Sony really did blow its market dominance.


  9. Sometime business can shift their path from point to point such as windows to game industrial to keep successful to keep business surviving. Thing can be change.


  10. Your grammar is terrible.


  11. Instead, say “Microsoft is,” the word “is” being the third person singular form of “to be.”

    “Microsoft are” is British English rather than the American idiom – as Bruce is British, I think he’s in the clear here…


  12. do keep in mind the people that visit your site are probably more tech savvy than the average web browser user. If you hadn’t noticed, IE still owns the majority of the market share. Funny you even put Chrome on the list. everything Google created or is loosely related to Google gets fast traction b/c of the early adoptors. How many actually become a signifcant product? not many.


  13. Microsoft’s Xbox 360 doesn’t have a very good public image right now (33% failure rate doesn’t help) and the Zune was never going to be a huge success.

    Xbox 360 in trouble? ABSOLUTELY!!!

    It’s a good thing that Microsoft make (And will clearly continue to make) most of their money from IT software. If they relied on the 360 for income they would be bankrupt by now…………


  14. would love to be able to use another operating system for gaming :P. the only reason i stick with vista is because it has dx10 support for games. Why dont games developers get together with Linux and make their own operating system? would be nice to give microsof a kick up the ****


  15. this is a pointless debate 360 isn’t a next gen console it just an advanced xbox 360 what Microsoft did was appeal to the consumer they focused on the multi-player and ONLINE thats how they became a super power but the xbox is a peice of$hit seriously it always breaks and all it does is play games as where Sony’s Computer (PS3) really is a computer. the ps3 is a computer that happens to play games. not saying the games suck they have some of the best games on the market (LIttleBIGPlanet, resistance2, socom:confrontation) then they WILL HAVE THE BEST ONLINE once playstation home is released. my point is microsoft can’t even truly dominate one part of the electronic industry. the only reason xbox came on top is because they got the jump first. microsoft has a horrible os a horrible web-browser(probably everyone is on morzilla) and they have a horrible mp3 player, they also charge you with fees you shouldn’t have to pay like live and their os is ridiculously overpriced. they just suck period their monopoly is over


  16. This kids, is why i just bought an iMac. And i love it to death…

    Goodbye microsoft, hope i never see any of your products in my hand again.
    I’ve never actually been happy with any microsoft product. I dont mind the 360… i am, however, on my third one. Yes, its an elite.
    Once it breaks, its going in the trash. im not even gonna get the warranty on it… i’ve bought a PS3 and a Mac, i see no reason to keep buying games for that thing. Especially with its compressed audio… i cant stand the audio on it.
    Anyway, yes- Microsoft is rather screwed at the moment. The reason Vista failed is because nobody wanted a new OS. Thus, no drivers were developed. Do they really think developing ANOTHER OS is going to fix that? Seriously? The only thing anybody liked about vista was the look of it – which i personally hated. …which is why i skinned it when i had it.

    Again, i love my mac. I even have Windows XP on it so i can play all windows games i feel like playing. Any programs i want to run – whether it be for mac or windows – can be run on the mac using parallels. I really see no reason to own a PC…
    I also have linux on my PS3. I cant figure out how to use it for shit though, so it pretty much never gets touched. haha.

    So yup. Goodbye Microsoft. I enjoy watching your users switch to better products.


  17. I hope both Microsoft and Apple burn to the ground because I don’t like buying a computer with a useful windows operating system that comes with a ton of bugs that you have to pay extra to get rid of (Microsoft) or a useless windows system that is without bugs (Apple).


  18. By pointing out all the services Microsoft has to offer, it makes sense they can afford to lose one of them, mainly Internet Explorer. Firefox and Chrome are slaughtering them right now, and I haven’t heard a peep from Microsoft on how they’ll fight back. IE8 is a laughable contender.

    The Windows platform and 360 are their strongest points right now, despite Vista’s failure. Windows 7 will do pretty good, and the 360 is right where Microsoft wants it to be(on top). Both have great potential, so long as MS doesn’t f*ck up.

    Microsoft is in a pretty good spot right now if you ask me.


  19. I see it like this.

    MS has it’s core products as Windows and Office, Windows as a server is becoming old hat, as a lot of major companies are swapping to a linux server/windows end user setup, it’s the server software that brings in the cash not the end user product as you can charge a few 1,000 for the server software and then X amount per year for IT support.

    because a lot of major companies are slowly turning to linux for the server they are also looking at the Openoffice software for the office side of things.

    in terms of broswers it’s hard to say I perfer IE over most then Opera then what ever else is out there.

    The Zune died last year and MS shut down that area completely, any sold today would be left overs from this section.

    The 360 is selling in the USA but the software sales side doesn’t seem to be working for a lot of companies EA actually makes alot more money off PS3 titles than 360 titles.

    The major problem for MS is that it’s core sections Windows/Office are being killed off pretty quickly a lot quicker than expected from MS, and they are now trying to sure it up by doing MS business loans etc to buy their products.

    While their core product markets are shirking they will be working out what to keep and get rid off, I’m think the 360 section will be killed off.

    In terms of pure sales Sony actually out sells MS 360 3 to 5 times the amount per week, you need to look at product share Sony has 3 products and MS only has 1 a lot of people are missing this by thinking it’s just PS3 and 360, Sony won’t be looking at the market in this way.

    All Sony has to do is drop the PS2 and PS3 sales get a boost as people get the hint it’s time to swap to the PS3.

    Personnaly I’m thinking MS will try for 1 to 2 years then probably kill off the 360 product as they will have been forced into protecting their core markets, this has already begun but everything they have tried isn’t working for them.


  20. Oh delicious. I certaintly hope this is true.
    I am a bit supprised OpenOffice hasn’t been mentioned. OpenOffice is far ehead of GoogleDocs, and doesn’t has the nasty habit of making your stuff into it’s stuff (The Google EULA is just cruel).

    Also, ubuntu is not serious competitor for Windows. While GNU/Linux is ages ahead of Windows, ubuntu is on of the more flawed and buggy versions of GNU/Linux yet. If anyone hope to seriously overtrow th Micro$oft monopoly (like myself) we need to refer people to WORKING operating systems, such as Debian -GNU/Linux, Fedora, OpenSUSE, Gentoo, and so on. Evene trow OpenBSD in the mix, their approach to security is unparalleled.

    As for the 360, Zune, and the like: Those were jokes. They seriously cannot compete with the serious offers out there. Also, GNU/Linux has long dominated the server marked, and is rising to be THE embedded OS.

    Long live Free Software. 😛


  22. Basically Microsoft is to software world quite the same that Soviet Union was to world democracy, economic development, culture and freedom.

    And as much as Breznev was man of future, Steve Ballmer is a man for great future of Microsoft.

    Die Microsoft, die soon. Nobody really miss you.

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