As long as Microsoft keeps bringing home the bacon from its business software and investing in the right markets (cloud, phones, tablets) its victories will edge out its screw-ups.
Eye on Microsoft
By Shane O'Neill, CIO
An old baseball adage goes: Sometimes you win, sometimes you lose, sometimes it rains.
And so it goes for Microsoft, whose topsy-turvy history as an elite winner and a royal screw-up is laid out in a recent slideshow from ITWorld. For every Windows 95 and Xbox Kinect there’s a Vista and anti-trust allegation hell.
Any company that’s been on the tech and business battlefield as long as Microsoft is not always going to be graceful and consistent. Failure is inevitable when you take risks — not that Microsoft takes many risks.
The slideshow cited above lists failures that include the wildly overhyped resource hog that was Windows Vista, the futile attempts to score with mobile phones, anti-trust battles that left a black mark on the company, and Steve Ballmer’s tumultuous reign as CEO (it feels like an entire army of top lieutenants have left Microsoft in the past year).
To that list of failures I would add: being a no-show in the increasingly important tablet market and the bleeding of billions of dollars from its online services business (Bing, Windows Live, etc).
Yet this wounded warrior does not self-destruct. Rather, Microsoft has managed to forge ahead, balancing its gaffes like Vista with winners like Windows 7 and Xbox and the always steady Office and Windows Server brands.
With the Vista debacle in the rearview mirror, you can’t say that Microsoft has many lemons in its current portfolio. Search engine Bing and the Windows Phone OS are definitely struggling, but Microsoft is committed to make them work. The company is kind of running comfortably in a gray zone, yet always making money. Microsoft seems to bring home the bacon no matter what. In Q1 of fiscal 2012 Microsoft pulled in record revenue of $17.37 billion for the quarter and nearly $6 billion in profit. And it did so despite a poor year for PC sales, due to the economy and the popularity of Apple’s iPad, which led to only a tiny year-over-year revenue increase for Windows OS.
But thanks to strong sales of Xbox and Xbox Kinect and the very tight grip Microsoft has on the enterprise with Office, SharePoint, Exchange, Lync and Windows Server licenses, the company always seems to land on its feet. The Microsoft Business Division reported $5.62 billion in first quarter revenue, an 8 percent increase from the prior year, which made up for the Windows division’s weak 2 percent year-over-year increase.
However, with more workers bringing their own non-Windows devices to work and more back-end technology moving to the cloud, Microsoft can’t rely on desktop software licenses forever. To that end, Redmond is making inroads with cloud services like Office 365, Dynamic CRM Online and Windows Azure. The success of these cloud services should keep the company balanced in the challenging years ahead.
The conclusion of ITWorld’s slideshow is that, like the AIGs and Goldman Sachs of the world, Microsoft is too big to fail, and its “ability to screw up massively and yet continue to survive is almost infinite.” True that, but let’s hope Microsoft never fails so big that it needs billions in government bailout money.
Yet with its massive ambition, deep pockets and ability to screw up and keep on going, Microsoft is indeed too big and too entrenched in the enterprise to fail at this point. So you can expect Microsoft to carry on being good, but not great, for the foreseeable future.
Now if it could just get people to buy those Windows Phones.