Microsoft's (NASDAQ: MSFT ) , Windows has long been the default operating system for PCs, with its Office suite an absolute necessity for corporations worldwide. Microsoft, for decades, has been an indispensable part of everyone's daily life.
Microsoft owned a dominant economic moat, and ran up profits galore and a huge corporate war-chest.
Then came Apple's (NASDAQ: AAPL ) resurgence, which first began taking a toll on Microsoft with the release of the iPhone. Microsoft CEO Steve Ballmer laughed at the offering originally, but the iPhone was beyond a smash hit. The iPhone, along with the successful subsequent release of the iPad, vaulted Apple to the position of world's most valuable company.
People who once only used Microsoft's ubiquitous operating system were now getting ingrained into the Apple ecosystem, using apps on their cell phones and enjoying the experience, some so much they purchased more expensive MacBooks.
Google (NASDAQ: GOOG ) developed, and gave away its Android operating system, and now runs 80% of the world's cell phones. For the majority of the developing world, who've rarely, if ever, had access to a PC, Android has been their introduction to computing, making them less likely to adopt Microsoft products.
The truth, in today's connected world, both Google and Apple are counting on generating revenues by having consumers immersed in their ecosystems. The days of paying for operating systems and common software are fading fast.
It was years before Microsoft developed a compelling product that could compete. The Nokia/ Windows phone garnered excellent reviews, but even with Microsoft's deep pockets and marketing clout has thus far only achieved a distant 3rd place finish.
Microsoft understands the problem it faces. Windows 8 was designed to be one OS for both PCs and mobile products. The problem is, as mentioned above, the public has become not only used to, but enamored with using iOS and Android. To put it simply, Windows, while relevant, is no longer necessary.
The corporate trench
To be sure, Microsoft still runs hot in corporate IT departments. Microsoft handles the back-end paperwork, saving corporations much of the trouble. Massive numbers of spreadsheets, docs, and presentations have been created using Office, adding massive resistance to switching from the status-quo. Some of my friends in the corporate world swear there is no chance their company would switch.
While there will certainly be hold outs, it will likely be akin to global warming melting through ice, slow at first, and then rapidly picking up steam. Young entrepreneurs today have developed a taste for iOS, MacBooks, and Chrome/ Android. Given the fact that Apple recently announced it was giving away its productivity suite, iWorks, for free, as the younger generation become CEOs, how long before they command their reluctant IT department to switch?
Unfortunately, outside of the gaming world (Halo, Xbox, and Kinect), Microsoft has really nothing to get excited about. Microsoft appears to be a value trap right now, with its long-term profit centers coming under continued erosion and unabated attack, it's time to sell Mr. Softy.
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