Windows

How the stars aligned against Microsoft at CES 2011

CES 2011 was one of the biggest and most bullish shows in years, but it was not a good one for Microsoft. See the four bad trends that conspired against Microsoft at this year's CES.

This year's Consumer Electronics Shows was one of the biggest and most substantive in years as tech companies showed off some legitimately breakthrough products and transmitted a general sense of enthusiasm about the future and the innovations that are coming down the pipeline.

However, one big player that noticeably missed the boat on the big trends and failed to generate much enthusiasm was Microsoft. That's why I put Microsoft on the losers list in my post on the biggest winners and losers of CES 2011. Some people have questioned that choice, arguing that Microsoft just had a big success with Xbox 360 Kinect and announced Windows 8 for ARM at CES.

Kinect has been a huge sales success in the video game industry (which has been dying for a hot new product), even though Kinect is very gimmicky and the gesture interface still needs a lot of work. However, Windows 8 for ARM is not a game-changer for Microsoft. This is not about Microsoft scaling Windows down to run on smartphones and tablets, but ARM chips scaling up to be able to power desktops, laptops, and servers. Microsoft has always supported alternative architectures to x86 (NT supported PowerPC and Alpha) when it made sense. ARM chips are coming on strong and Microsoft wants to make sure Windows is an option on the new generation of low-cost PCs that will be powered by ARM chips.

The bigger problem for Microsoft at CES 2011 was that there were several red-hot categories where it should have been a key player but it got virtually shut out from all of the big announcements and the hottest products. That's not a good sign for Microsoft's prospects in 2011.

Specifically, here are four of the stars that aligned against Microsoft at this year's CES:

1. Vision-less keynote

This one was all on Microsoft itself. As usual, Microsoft had the beach-front property of CES keynotes as the first keynoter on the schedule on the night before the show officially opened. Unfortunately, Microsoft and CEO Steve Ballmer completely wasted the opportunity. It spent the presentation reviewing the new products that it launched in 2010, and even worse, it re-hashed some of the same demos from those product launches. Microsoft failed to give us a compelling vision for its place in the staggering changes that are sweeping through the computing world right now, especially the rapid transformation of the PC into smartphones and tablets.

2. Partners pushed Android over WP7 phones

In the fourth quarter of 2010, Microsoft announced Windows Phone 7 devices with the help of major partners Samsung, HTC, LG, and Dell. While several of those devices just came to market or are still coming to market, those vendors spent CES touting their new Android devices. For all of them, the Windows Phone 7 devices were barely a footnote at CES.

3. No room in the spotlight for Windows machines

One of the usual features of CES is seeing the new lines of desktops and laptops from the major PC vendors. In fact, those new machines have traditionally been some of the headliners of the show by integrating the latest processors or newest hardware components (such as Blu-ray drives, etc.), or innovating with flashy new designs. That wasn't the case at CES 2011. Nearly all of the talk in the PC ecosystem was about new tablets and laptop/tablet hybrids, and nearly all of them -- with a few exceptions like the Samsung Sliding PC 7 -- were running Android. As with smartphones, Microsoft's big hardware partners were pimping Android instead of Windows

4. Nothing to show in tablets

Speaking of tablets, Microsoft had no story there. At last year's CES keynote, Steve Ballmer tried to steal Apple's thunder just a few weeks before the announcement of the iPad (the worst kept secret in tech at that point) by pre-announcing the coming of Windows Slate PCs. Other than the HP Slate 500, the tablets Ballmer touted last year never came to market due to software and battery issues. Since then, Microsoft hasn't given us anything else to believe in, as far as its tablet strategy goes. Sure, Ballmer promised financial analysts last July that Microsoft was working on an iPad rival and he told CNET in October that Microsoft was waiting for Intel's Oak Trail chips in order to create a great tablet, but talk is cheap. At CES 2011, even long-time chum Intel criticized Microsoft for waiting too long to get its act together on tablets. Ouch.

Is Microsoft doomed?

So, am I predicting the demise of Microsoft? No, I'm not saying it's over for Microsoft. The company still has plenty of great technology assets and a ton of smart people working for it. Microsoft's product quality has actually been pretty good over the last couple years. I've been impressed with the work they did on both Bing and Windows Phone 7, for example. The timing was late-to-market on both products and that will limit their success, but in both instances Microsoft showed that it can still execute.

However, Microsoft needs to figure out the vision thing, and just saying "Windows everywhere" is not the answer. Ballmer and crew also need to figure it out pretty quickly because things are accelerating faster than ever in the tech industry, and Microsoft has to stop playing catch-up and start getting out in front of some of these big trends.

Look at the Motorola Atrix, the new dual core Android smartphone that also doubles as a PC. This was a concept that Bill Gates championed over a decade ago, but who was the one who executed on it? Motorola, not Microsoft. At Motorola's press conference announcing the Atrix I just kept thinking,"How did Microsoft and Apple let Motorola beat them to the punch on this?"

What if Microsoft had built this kind of phone-docking technology into Windows Phone 7? I think the world would have been a lot more excited about WP7 phones. In fact, WP7 devices could have been the talk of CES as their hardware partners raced to offer the best WP7 phone + PC option. That's an example of the kind of excitement Microsoft needs to be generating. It didn't happen at this year's CES, and that's not a good sign for the former king of the computing world.

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About

Jason Hiner is the Global Editor in Chief of TechRepublic and Global Long Form Editor of ZDNet. He is an award-winning journalist who writes about the people, products, and ideas that are revolutionizing the ways we live and work in the 21st century.

21 comments
jfreedle2
jfreedle2

I feel sorry for all the people who are forced to use Android based devices or Apple's devices, as they will not be productive at all.

silikonski
silikonski

Microsoft is not missing anything they just enjoy the fruits of all the hard work they did refining the product and ideas they already have, weighting to see who has the guts to lead a new revolution so they can challenge it :)

john3347
john3347

Problem here is that all these smart people are working in marketing and not in product development. This problem now goes all the way to the very top tier. Unless Microsoft makes some huge changes, they certainly will not dry up and wither away, but they will continue to watch the market catch them and pass them by and will never again hold the spot in the software world that they have once held.

Craig_B
Craig_B

It seems Microsoft has not been an innovator so why should we expect them to be one now? The Microsoft strategy seems to be let someone else come up with the idea, wait until it becomes profitable, copy the idea with some slight variations to claim it?s new and different and then give it away for free or low cost until you capture the market.

Threv
Threv

Ballmer is blind, toothless, Dinosaur and needs to retire. Courier would have given ipad a serious run for its money and I totally agree about the Smartphone/PC combo. It seems Uncle Bill needs to let his wife take over giving his money away and come back to MS to get them back on track, becaue Ballmer is just not the man man for the job (and never was)

Guitockey
Guitockey

Microsquish has to wait until Apple, and now maybe Google/Android, invent something new before they have a vision of anything.

SerrJ215
SerrJ215

I bet Ballmer is on the phone with Gates right now asking, "So....I bet your board with that whole retierment thing...you can come back anytime you know...please?" It worked with Jobs at Apple..

crcgraphix
crcgraphix

Well, I know that Microsoft is the highest grossing computer software company in the whole world. However, their accomplishments with CES and ARM need not be integrated with the new line of Windows phones. Why? Because a new platform can still have a lot of kinks and bugs to work out, there is no telling what a smart move that the Windows Summit Developers made here. Who ever suggested that they take out the kitchen sink has lost their marbles. Besides the new ARM integrated-sub-system has some ERP and CRM feature capabilities, so why go any further with the chance of possibly infecting the whole line of Windows 8 Smart Phones?

fewiii
fewiii

And make billions doing it!

philm
philm

Many developers such as myself watch with horror as Microsoft misses opportunity after opportunity. Most of us are loyal, and have a lot invested in .Net and Windows and such, but if Google can wipe the market with Android and Apple can wipe the market with Ipad maybe we need to rethink where our learning investment is going!

CharlesG1970
CharlesG1970

First off Bill is not comming back. It is his money and he wants to spend it before he dies. Second Steve is doing his job, keep most of MS value while Bill spend his fortune. Third how can you say MS has no vision. In the past year they have created a new Phone OS WP7, that is truly novel, while iOS and Android are just coppies of the old WM phones icon on a desk (albeit better implemented). Also the only inovation in gaming in the past 2 decades has been Wii and Kinect. the rest is just a better version of Atari. forth MS has a strong history of letting others take the lead into new territory then jumping in heavy once the first gen bugs have been worked out. IE over netscape, XBOX over PS and game cube. With the turn over in phones I do not think that MS is out of the mobile market at all. At CES 2011 MS may have been boring, but they are far from out or down.

Rexxrally
Rexxrally

The cancer is spreading from the top. It started when Ballmer took over. Now, they've lost Ray Ozzie, and Bob Muglia among others. Who's next to lose the faith? Steven Sinofsky? Scott Guthrie? The ship is steered by the captain's directions, and Ballmer is slowly leading the ship onto the rocks. They need someone with vision who can see the rocks ahead and turn the ship before its too late. Microsoft is one of the two biggest software companies not because of what's it's doing now, but because of its legacy products. I only hope the board realizes they need to put someone else in the captain's chair, someone who can get Microsoft's mojo back. I also hope the people replacing the top people (who are jumping ship) will be able to recognize the trends of the future and steer Microsoft in that direction now. It takes a long time to turn a huge ocean liner. They have to start now. Re-reading my post, I realized I haven't used enough metaphors (LOL) so I'll close with one more: Microsoft is suffering death by 10,000 papercuts.

HighTechAngel
HighTechAngel

Microsoft is missing Bill Gates. This guy Ballmer is blind and lost. Steve, do yourself and Microsoft a favor, call Bill back. Thw world needs him more at MS than with those charities that Melinda can take care of herself.

melias
melias

Much of Microsofts problems here is that more and more of the new tech coming out revolves around smart phones, which as we all know Microsoft is very weak on. Until Microsoft can get a good grasp on that, they will remain behind the curve. Part of the problem is executive leadership, a group of people who can do desktop and server, but just "don't get" smartphones and other mobile devices. And you have already covered Steve Ballmer talking the talk, but not walking the walk, in this article and others. It just might be that Microsoft is not setup to be able to compete is the fast evolving market of smart phones, where major upgrades are expected every two years, and "if player A ain't got it, B will, so see ya." This isn't the PC market, and no-one is really locked into any OS.

Vulpinemac
Vulpinemac

Ok, I agree that Bill Gates will probably not return; however, if he sees his ship heading for the reefs, he may just perform an emergency maneuver and grab the helm until he can find a sailing master who really understands what's going on. You say Steve is doing his job, but that's like saying Gil Amelio was doing his job as he aimed Apple at the rocks almost 20 years ago. Not only was the company losing value, but it was also losing its leadership role in technology--something that Jobs and Wozniak had managed to develop out of their garage of all places. WP7 is not innovative, but it is significantly better than the current iterations of Android simply because Microsoft followed Apple's lead--again--by demanding certain minimum specs on hardware quality. You cannot honestly say that iOS and Android are copies of the old WM phones icons--because WinMob was an attempt to bring a full version of Windows, a point and click interface, onto mobile devices. While it sold well in niche devices, it was also notorious for having almost all the same drawbacks that Windows itself suffered, up to and including the BSOD. iOS and Android, on the other hand, are based on Unix/Linux which in itself is inherently more stable, though Android suffers from far too much customization as each manufacturer and vendor tries to differentiate itself from the competition. Android is doing well for the moment, but many of the early contracts are close to expiring and we need to see what kind of loyalty they've developed for the platform before we can claim a full success. I think we're going to see Android stumble a bit in the near future, but will probably recover and realize a slower growth rate until the markets stabilize. Finally, Microsoft does have a strong history of letting others take the lead--like when they rushed to bring out Windows 1 just one month before Apple announced the first Mac in 1984. Then they brought out Windows 95--almost identical to the ten-year-old Mac OS. Windows 98 tried to catch up, but by then the MacOS had jumped another two levels. Windows XP , arguably the best version of Windows until Win7, came out in 2001--just as OS X is released. Vista comes out in 07 as an almost total failure until SP1 15 months later followed by Win7 about a year after that--8 years after OS X and effectively copying its style. I find it hard to believe that any company is willing to wait 5 years or more to let another company "work the first gen bugs" out--especially when that other company is up to gen 5 or 6 by then. Microsoft gained its dominance in the OS markets through one thing alone--tying itself to IBM's apron strings when they created the first enterprise desktop PCs. They took advantage of an IBM mistake in licensing and quite effectively pushed IBM right out of the market for desktop OSes and almost out of the market for desktop computers themselves. Yes, Microsoft has managed to take advantage of others' leads, but they've never managed to quite catch up to Apple when it comes to making something people want to use. Probably the only real exception to this is the XBox itself, though even now it has its issues and third parties are showing them what Kinect can really do with good software.

fewiii
fewiii

For every time someone predicted or otherwise made a statement of Microsoft's demise. I could buy Microsoft!

guardian
guardian

Apple floundered until Steve Jobs returned. If Bill Gates returns, he could turn the company around for the beeter. Maybe not the level Apple was turned around camparitively, but it would help. Tom

guardian
guardian

Microsoft Dec 31, 2002 $26.00 Microsoft Jan 13, 2011 $28.00 Market Cap $241 Billion USD Apple Dec 31, 2002 $7.00 Apple Jan 13, 2011 $346.00 Market Cap $317 Billion USD Who is making money and profiting both for themselves and their share holders? MS pays a dividend and Apple does not but your money would have been much better invested in Apple over that period. Apple does all that with justy 9.7% of the market. There is no reason why MS can't turns things around and move like Apple did. They have the reach and skill to innovate and drive in the market but appear lost yet again.... Tom

Vulpinemac
Vulpinemac

... but nobody has said that up to this point in the article or comments. All that's been said is that Microsoft is losing its direction. I have to agree that Android has really captured the public's eye and quite honestly Android was just about the only thing you heard from any of the CES reports this year. Considering that Microsoft had almost nothing concrete to show in competition, quite literally they became an afterthought to the show rather than a dominant player. In this case, Microsoft would have done better by following Apple's lead and staying out of the show entirely and set their announcements on their own schedule.

tp1488
tp1488

Ballmer's an accountant. Nuff said.

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