Microsoft Is Out of Touch

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Microsoft (NASDAQ: MSFT  ) CEO Steve Ballmer just announced the company's restructuring plan late last week, and if you had enough caffeine in your system to stay awake while reading it. you noticed that a handful of new engineering departments were set up, but not much else.

What's more interesting is what Microsoft's COO Kevin Turner said last week at the Worldwide Partner Conference: "We have high respect but no fear of competitors. ... We are doubling down and making sure we are fighting and evangelizing our story."

A healthy dose of confidence is always welcomed -- and necessary -- in the tech world. But Microsoft should definitely be scared of the competition. Actually, every tech company should be a little scared of the competition. I don't care if you're Google, you should be looking over your shoulder at the guys behind you and checking to see if their product or service is better than yours.

It's no secret Microsoft was late to the both the smartphone and tablet markets and sales of its Surface tablet and Nokia phones running its Windows Phone 8 OS are not doing great. Microsoft was No. 5 in the worldwide tablet vendor space in the first quarter of 2013, making up just 1.8% of tablet shipments market share. Nokia is No. 2 in mobile phone shipments, but even doesn't make the top five smartphone list right now. That's obviously bad news for Microsoft's mobile products and one more reason the company should be scared of its competitors.

Which leads us to the next statement from Turner: "If you bet on Microsoft, you are not going to ask anymore, 'Hey, where is the innovation?' The challenge going forward is how do we keep up with it."

Again, confidence is good. Overconfidence is not. Sure, Turner was talking with a group of Microsoft partners (as the conference name suggests), but the idea that Microsoft is some sort of fast-paced innovator is hard to fathom. The problem is that some people -- namely investors -- are betting on Microsoft. Some are happy with the results they're getting because the company's stock is up 29% since the beginning of the year, but consumers -- the people who actually buy products -- are scratching their heads at Microsoft hinting that it's a top innovator. A skeptic needs to look no further than Surface tablets that people aren't buying, a desktop OS that people aren't happy with, and a mobile OS that's taking about 3% of the U.S. market share.

Too soon
Microsoft needs to build investor confidence and draw in consumers with its latest products -- not with overconfidence. I still believe that Microsoft can pull this off, but it's going to take a long time to gain mobile customers and convince users that its software and devices are worth trying. To the company's credit, Microsoft's products and services do show the company is trying hard, but if the company believes its innovations are top notch right now, it has a real problem. Compare Microsoft's innovations to Google's Glass, Android, Chrome, Search, Ad services, maps, and autonomous cars, and it's easy to see what a true innovator looks like.

I'm being a bit tough on Microsoft, but it's because I think the company can truly be a major mobile player going forward -- if it can get its products and services right. The challenge for Microsoft is that there's a long list of other tech companies already dominating the market. To help investors figure out "Who Will Win the War Between the 5 Biggest Tech Stocks?" The Motley Fool has put together a free report on specifics. Find out who the competition is -- as well as their strengths and weaknesses -- by clicking here now.

Read/Post Comments (7) | Recommend This Article (2)

Comments from our Foolish Readers

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  • Report this Comment On July 15, 2013, at 9:25 PM, tjc206 wrote:

    I love windows 8, it is much faster. Microsoft will soon have all their devices running on the same OS (including mobile), which will be awesome.

  • Report this Comment On July 15, 2013, at 9:40 PM, VegasSmitty wrote:

    Who pays the writers at the Motley Fool to constantly bad mouth Microsoft?

  • Report this Comment On July 15, 2013, at 9:45 PM, dasdsa wrote:

    I started with windows 8 on my new laptop and I have to say I love it!

    It's great because more and more people are transitioning to linux and wondering what it's like.

    Thank you Microsoft for pushing a OS completely different then previous ones. It's helping people break away and enjoying what you can do with linux. Dual booting and it's a faster boot time, more responsive and more enjoyable with touchscreen (or not) I'd erase windows if developers would transition to linux faster.

    I work in retail at the moment, and it's great hearing more people say how fed up they are with windows and this windows 8 and looking for other options and be able to say hey, ever try linux mint? or ubuntu?

  • Report this Comment On July 15, 2013, at 9:52 PM, pilotdan1 wrote:

    This is a ridiculous statement from a company that is a leader in the industry and worried about maintain their number one position.

    A very long time ago the Chairman of U.S. Steel made another stupid statement he said: "All they wanted was a reasonable share". Now look at where U.S. Steel is today.

    I was interested in buying stock in Microsoft, but not after hearing that lack of concern by one of there top executives regarding their plans or lack of them to maintain their lead going forward.

  • Report this Comment On July 15, 2013, at 9:53 PM, joe12m wrote:

    I am a Computer equipment designer and Engineer. I installed Win 8 in two of my computers in February. I found several usability problems that drove me to go back to Windows 7 within a few months. Here are a few: 1) Many system function and setup names had been changed and locations moved without reason. This made adjustments to many normally simple setup items difficult and time consuming. 2) using the Metro interface with a mouse and keyboard generally took about twice the time and mouse clicks to start or stop program operations as compared with Windows 7. Even with the touchscreen on our HP desktop, bringing up search, settings, etc., took extra effort compared with Win 7. 3) Many functions such as the boot program list (F12) was removed from Win 8 and no alternative was provided. 4) While it is quite easy to UPgrade to Windows 8 from Windows 7, there is absolutely NO provision to easily "go back" to Windows 7`unless you have made a complete image backup of your old OS.

    I sent a 26 point list of such problems to Microsoft, but received no response.

    My conclusion is that Microsoft has made another "Vista Blunder" but will probably recover in Windows 9. So far, Windows 8.1 is a bit better, but is still far off the mark in my opinion as far as usage ease is concerned.

  • Report this Comment On July 16, 2013, at 12:30 AM, techy46 wrote:

    Microsoft is nOT a consumer electronics enterprise like Apple or Samsung. Microsoft is an application software engineering enterprise and Apple and Google are not. Microsoft provides enterprises with the software and services that provide for inceased productivity not increased entertainment like Apple and Google. Motley and Wall Street fools need to quit knocking Microsoft and get screwed by Apple and Google like good little consumers.

  • Report this Comment On July 16, 2013, at 2:02 PM, workformoney wrote:

    Lets see, so you can buy 2 rock solid W/8 desktops or laptops for half the price of an Apple.

    Or you could buy, oopps there are really no other options for a real business computer.

    I run Windows 8.1, it's a tool not a toy. Stable and accessible while also having most of my business world apps also on my phone. What is it the media doesn't get.

    From my original Windows 3.1 desktop over 20 years ago to 8.1 today I would not have been in business with out a Windows desktop.

    I only wish I had 8.1 back then. Can't wait for the next step in the evolution.

    Maybe the pc slowdown can be attributed to the quality of the products built before, Hello they just last longer.

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