Wednesday, August 17, 2011

Microsoft's Operating System Headaches

I read with great interest a recent Wall Street Journal article which noted that Microsoft's Windows' market share of devices, when tablets are included with PCs, has fallen to 82%- the lowest in its history. And this year's expected sales and profits from Windows are lower than last year's.

Now there's even concern about how many third-party software writers will pay much attention to Windows 8, with so many apps to write for Apple and Android devices.

Of course, had Microsoft followed my advice and broken up its empire into operating systems, applications software, gaming and online, as I suggested years ago, this may not have occurred.

Freed from each other, operating systems and applications businesses could have each developed software not intended for use with the other. A Windows division could have expanded into developing operating systems for other devices, perhaps as an outsourced vendor. The Office group could have been freed to develop apps for any platform in which it saw profit.

Instead, now even David Einhorn is echoing my years-old call for Ballmer's replacement.

This is how companies become fodder via Schumpeterian dynamics. The growth of Microsoft's main platform, the PC, has finally given way to other devices- smart phones and tablets. And so its fortunes are probably on a monotonic downward trend after treading water for the past decade.

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