Do You Think Microsoft Has Failed?

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[quote_right]“The problem is that you are locked in with a choice of 100% Microsoft or 0% Microsoft.”[/quote_right]I wanted to touch upon a post made by Charlie Demerjian on SemiAccurate, in which he boldy claims that Microsoft has failed. Demerjian believes that Microsoft is in trouble because its two main products lines — Windows 8 and Windows Phone — are failing. Increasing competition is also cited as a reason why Microsoft is headed downhill:

“Microsoft is largely irrelevant to computing of late, the only markets they still play in are evaporating with stunning rapidity. Their long history of circling the wagons tighter and tighter works decently as long as there is not a credible alternative, and that strategy has been the entirety of the Microsoft playbook for so long that there is nothing else now. It works, and as the walls grow higher, customer enmity builds while the value of an alternative grows. This cycle repeats as long as there is no alternative. If there is, everything unravels with frightening rapidity.”

The opinion piece goes on to add that customers flocking to competitors will do so in a snowball effect. Once a customer ditches Microsoft Office for an alternative, such as Google Docs, it starts a chain reaction of Microsoft products and services becoming unnecessary and irrelevant to that individual.

“The problem is that if you are locked in with a choice of 100% Microsoft or 0% Microsoft, once someone goes, it isn’t a baby step, they are gone. Once you start using Google Docs and the related suites, you have no need for Office. That means you, or likely your company, saves several hundred dollars a head. No need for Office means no need for Exchange. No need for Exchange means no need for Windows Server. No need for Office means no need for Windows. Once the snowball starts rolling, it picks up speed a frightening pace. And that is where we are. The barriers to exit are now even more potent barriers to entry.”

Demerjian notes that Microsoft has upset its manufacturing partners such as Acer and Hewlett-Packard by undercutting them with Windows 8 and the release of its Surface tablet. Even worse, sales of the Surface are expected to be very poor. Ballmer previously noted that Surface sales have been “modest,” but Demerjian claims that Ballmer is not one to underhype anything and, therefore, that statement means that sales have been awful. It is expected that Microsoft moved 4 million Surface tablets in one month, not accounting for the allegedly high number of returns.

“Then again, to put the number in perspective, Apple was said to sell five million iPhone 5s on the first day, mainly because they were severely supply limited, and three million iPad Minis over the first sales weekend. Modest indeed, and no word about returns which SemiAccurate hears are astoundingly high. Surface is a failure too. Apple didn’t have a massive ad campaign to back it up either, they just released the products.”

Microsoft appears to have turned a new page and created itself a new identity with Windows 8, Windows Phone 8 and the Surface, but Demerjian is not buying it — nor does he believe customers, developers, manufacturers or game publishers will or ever will. According to this critic, the death spiral is in full effect for Microsoft. Do you agree or disagree?

[SemiAcccurate]