Consumer markets: Time for Microsoft to exit?

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Computerworld has a great story about the mother of a 13 year old girl who told Microsoft CEO Steve Ballmer how she tried to install Vista for her daughter but got so frustrated that she decided to downgrade to XP. She argued that her experience with Vista was not unusual:

“What we’re seeing and what we’re hearing from users is a very similar thing. It’s difficult to implement. What should we be seeing that we’re not seeing?”

What’s most telling is Ballmer’s response to her:

“Users appreciate the value that we put into Vista, [as with earlier operating system releases] there is always a tension between the value that end users see — and frankly, that software developers see — and the value that we can deliver to IT.”

While this exchange took place at the business-oriented Gartner Inc. Symposium ITxpo this week, it still clearly shows where Microsoft’s heart really is in: enterprise.

“There’s always a tension between the value end users see, developers see and what enterprises see. There is a lot of value in Vista. The real issue is that we have some things we want to see in shape before (customers) make that transition.”

What are the billion dollar growth opportunities Ballmer sees in the future?

“We’re already close with SharePoint, with hundreds of millions of dollars. There’s also management software, office communications and mobility could explode.”

For Microsoft, it is obvious that the needs of IT always comes before those of the consumer markets. That’s because, for Microsoft, clearly it’s where the money is. With Windows, Office and a slew of tightly-integrated business applications and infrastructure, Microsoft has had a terrific run in the IT world. In the consumer markets, not so much.

Selling directly to consumers in competitive markets has never been Microsoft’s forte. Behold:

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And, yes, financial flops like Tablet PC, PlaysForSure, Windows Media Center and XBox are included too. But I’ll spare you Smart Personal Objects Technology (SPOT) watches or ActiMates interactive toys! Do you want to bet your 401(K) on the success of Windows Home Server or Microsoft Surface? Didn’t think so. Here are three reasons:

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Are you excited yet? Compared to the current consumer market leader Apple, for example, these can only be described as insipid at best. Microsoft has proven again and again that it just doesn’t have the DNA for strategic thinking, industrial design, technology packaging and marketing in competitive consumer markets.

What works in selling in volume to enterprises doesn’t work when selling directly to individual consumers. Microsoft has tried various tactics to overcome its “not cool” handicap. It tried selling ‘platforms’ to third parties, but most of these like Tablet PC, WinCE or PlaysForSure have fallen far short of expectations. Microsoft then tried going alone, but Zune and XBox have been financial blackholes.

Microsoft doesn’t have a power-efficient, nimble OS with advanced interface functionalities that can serve as a platform for small-scale consumer devices. Its industrial design department has been humbled by the recent failures of Zune and XBox to the tune of billions.

In channeling Steve Jobs, even Ballmer isn’t oblivious to the difference between enterprise and consumer markets:

“There’s no intent to share less roadmap, but you’ll see us be a little more cautious about promising dates and schedules. For things that are really consumer targeted we won’t talk about the roadmap.”

By keeping its roadmap secret in developing ‘blockbuster’ type of consumer products in the vein of iPhone and iPod, can Microsoft outdo its close competitors Apple and Google? In Zune 2: Mediocrity grows on trees I contrasted the introduction of Zune 2 and to the iPhone. Clearly Microsoft hasn’t yet learned from the mistakes of Zune 1.

After looking at this 5-year chart, as the head of Microsoft’s board of directors would you tell Ballmer to admit reality and gracefully exit from most consumer markets? Or would you just fire him?

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You might also be interested in these related articles:

Zune 2: Mediocrity grows on trees

Bungie: Creative ’sharks’ can’t survive at Microsoft

The Hit Parade: Hollywoodization of gadgets

9 thoughts on “Consumer markets: Time for Microsoft to exit?

  1. Pingback: In the shadow of the iPod: Microsoft Zuning out of the Social « counternotions

  2. Microsoft’s real failing is with small business (3-100 users). A few sad examples:

    1. MS Server 2003; user profiles in Active Directory (AD) — the ONLY way to print out the settings for a user is screen dumps of each of the 16 AD User Properties tabs. For each user. Sheesh! This was painful in NT Server, but ridiculous in 2007!

    2. MS Win XP Pro defaults to saving everything in My Documents on the local C: drive instead of a shared (and backed-up) folder on the server. This is exactly NOT where corporate data should be! Why no simple default setting, either for all user programs, of for each application?

    3. MS Hot-Fixes often override regional settings and revert back to Locale:US, Language:English-US. Well, there’s a reason users/IT set appropriate regional settings — language choices affect spelling, sort order, currencey, time zones, database links, etc. So, run the HotFixes, then repeatedly re-set Local, Language and TimeZone! Every bloody time! D’oh!

    There are many[, many] other flash points, but using MS Win Server/XP (never mind Vista) is due to a lack of alternative, not lack of will. Like buying a second floor apartment for the view and then finding the first floor is permanently occupied by frat boys.

    About thin clients: we’re heavy Lotus Notes users and have been trialing the Lotus Symphony/Notes Productivity Tools office suite. Way cool! Even [technically] unsophisticated users love the tight integration of custom apps, messaging, office suite and contact management. And the low unit price for the small business (Lotus Domino Collaboration Express) plus no install keys makes the products an easy choice for the small IT shop. Once the Notes 8.0.2 release hits the streets we’ll be seriously looking at which OS will best support it.

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  5. Microsoft’s response to the latest set of threats from Sony, Google and Apple has been, to be charitable, lackluster. I expect them to make one more attempt, but then I think the Street will demand the heads of current management starting with Ballmer. That’s when we’ll see hasty exits from many areas the company is dabbling in.

  6. Microsoft is dependent for every cent of its profits on enterprise and PC manufacturer monopolies which are going to disappear.

    When they do it will be evident they are clumsy, tasteless and pretty nigh useless at producing anything that anyone CHOOSES to buy.

    Exit. Full stop.

  7. Hit the nail on the head. MSFT, when forced to have to compete in an open market, can’t. When are people going to realize this? It’s so obvious. And if anyone thinks the Zune 2 is going to take away market share from the iPod, let’s not forget that Windows users are moving to the Mac in droves. Are Mac users going to be able to use a Zune? No. No one seems to realize the Zune doesn’t work with a Mac. How stupid is that? MSFT totally ignores that market, and the market a lot of their users are moving to.

    Just stupid.

  8. “Selling directly to consumers in competitive markets has never been Microsoft’s forte. Behold:”

    You missed DRM. MSFT put big bucks into designing DRM systems and people chose Apple’s Fairplay instead. And the whole DRM era seems to be closing, again, thanks to Apple.

    MSFT sells LOTS of PC’s to the home market. Because PC’s have more games (which no longer matters because of game consoles) and because people steal copies of office from work.

    MSFT sells to Enterprise because business has very, very simple rudimentary needs; nothing really more complex than E-mail. And they sell direct to the easily bribeable IT stiffs who have ZERO regard for users and are not subject to any kind of relevant business or productivity metrics. In a free market, MSFT would have been dead and buried in about 1984.

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