Microsoft has made some decisions in 2011 that have the potential to pay off nicely, if the company can keep its focus and deliver on its promises.
As we come to the end of 2011, those of us in the U.S. can't help but notice that 2012 is an election year, when we'll be going to the polls to decide who will lead our country for the next four years. But it's not just in the arena of national politics that the populace will be making important decisions.
Thomas Mann said "Everything is politics," and in the world of technology, we vote with our wallets. Just as only one person can be president at a given time, only one company can be at the top of the tech heap (well, theoretically). Two companies could have exactly the same market cap, net profits, total revenues, cash-on-hand, or whatever measure you use to compare the value of entities within the industry.
Microsoft was long valued as the top technology company, until Apple unseated it in the spring of 2010. But the public is a fickle beast — just ask all the politicians who have lost the race after running at the top of the polls. Being the current incumbent doesn't guarantee anything; remember Jimmy Carter? And just because you lost once, it doesn't mean you won't bounce back, as Bill Clinton (or, for that matter, Richard Nixon) would attest.
Technology is always changing, and today's must-have, oh-so-cool gadget or device can quickly become yesterday's news. Are there signs that the shine is wearing off the nicely polished Apple? And if that is true, will Microsoft seize the window of opportunity to stage its own transformation into tomorrow's "comeback kid"?
Is Apple losing its cool?
I can't claim credit for originating the question; the New York Times was asking it as far back as May 2010, even as Apple was being crowned the King of Market Cap. Since then, the iPad has taken off with many millions of sales and the iPhone has continued to show strong sales figures, although on the desktop, Macs still hold single digit percentages of market share against Windows' 86 percent. But some say the desktop is all but dead and the future of computing is in tablets and smart phones.
While I don't agree that desktops and full-featured laptops are going to disappear anytime soon, even if it's true, there are some indications that Apple's "walled garden" approach is being to wear thin with some of its customers.
Last April, Nielsen reported that its research showed Android, not iOS, to be the most desired smartphone operating system. Then in August, the iPhone lost its spot at the top of the smart phone mountain when sales of Android devices surpassed those of the iPhone, and just last week, the number of daily active users of Facebook on Android went past the number of Facebook users of the iPhone app.
One could look at those figures and ask why that's good news for Microsoft. After all, it's the competition from Google that seems to be cutting into Apple's market shares. But, aside from the fact that Microsoft makes money every time an Android device is sold (as I discussed last week in my "patent wars" article), the defection of some of Apple's fan base to Android also suggests that there are customers looking for alternatives to the iDevices — and that's an opportunity for Microsoft to pick up at least some of those customers.
A series of bad decisions?
Microsoft made a number of decisions in the last decade (mainly 2005-2010) that were seen by many as blunders: the release and then almost immediate discontinuation of the ill-fated Kin, the killing of the eagerly anticipated Courier tablet, the Seinfeld ad campaign, the failed acquisition of Yahoo, and more. Perhaps the biggest of all was the release of Vista, which garnered the scorn of many previously loyal Windows users and gave Apple the ammunition for its relentless barrage of Mac Guy/PC Guy commercials ridiculing the unfortunate OS.
What Microsoft did right in 2011
What hasn't gotten quite as much attention, perhaps, is the fact that Microsoft has made some decisions in 2011 that have the potential to pay off nicely. The acquisition of Skype earlier this year is timed right — at a period when many are abandoning their landlines and dissatisfied with their cell phone carriers. The time is ripe for an explosion in Internet-based calling, and Skype is already one of the most popular applications for that. If Microsoft integrates it seamlessly into Windows 8 and manages to get it onto the Windows phones as an alternative to using expensive cellular minutes, it could be a fantastic feather in the company's cap.
Kinect was launched near the end of 2010 and has been a big success for the company in 2011. Microsoft's decision to take it, and the Xbox, beyond gaming and make it the basis of their "next generation of TV entertainment" puts Microsoft in a very strong position against products like Google TV and Apple TV that were introduced with much hype and hullabaloo but haven't sold very well.
After creating a solid operating system in Windows 7 that has convinced even many XP die-hards to upgrade, Microsoft is taking a huge gamble on Windows 8. The decision to release a developer preview a few months ago opened the company up to much criticism about the completely overhauled GUI. But given the rising popularity of tablets in the consumer space, building a new interface that's truly touch-friendly (and not just a "touchable" version of the old familiar desktop) wasn't only the right decision, but it was the only logical decision.
What the people want — and don't
What we want in our leaders — whether they're political figures or companies — is the ability to think big, to exude confidence, and to take control. In other words, we want them to act like leaders, to get out there and lead. That's what Apple has been doing for the past several years. And it's not just about the products.
Steve Jobs's arrogance is infamous, but it's also a common characteristic in a strong leader. He — and by extension, Apple — never showed a hint of uncertainty or self-doubt. He dared to use words such as "magical" and "revolutionary" to describe his products, and he did it with an absolute conviction that made people believe it was true. Old-time comedian George Burns said "Sincerity — if you fake that, you've got it made." Jobs was either truly sincere in his belief that Apple was the best, or he was a master at faking it.
Once upon a time, Microsoft exhibited the same kind of arrogant self-assurance, but then it lost that attitude. Perhaps all those battles with various governments, all those mocking commercials from Apple, all that hatred pouring from the Microsoft-bashers in the press beat the company down for a while and broke its spirit. Microsoft started to come off as uncertain, wish-washy, and thus undependable.
The PC Guy started to look like that desperate kid in high school who wants everybody to like him and keeps trying on different personas that never work. Rushing products to market and then dropping them like hot potatoes didn't make the company look like a leader; it made Microsoft look unfocused and unsure. It didn't come across as a deliberate strategy (like Google's "come up with a bunch of ideas and throw them against the wall to see what sticks" model), but more like a flip-flopping politician who changes his position on the issues every time there's a shift in the polls.
What's ahead in 2012
That was then and this is now. In the past year, Microsoft seems to have found its footing again. The strong sales of Windows 7 and Xbox/Kinect seem to have gone a long way toward resolving its self-esteem problem. The mostly positive reception for Windows Phone — despite less than glowing sales — and the flush of anticipation for Windows 8 tablets seem to have given it back some of its old fighting spirit. The company just might be ready to step up and be the leader we're looking for in a post-iPad world. The big question, then, is whether the company will continue to rally in the coming year, or will it fall back into the same sort of stop/start, uncertain, faltering lockstep in which it has seemed to be stuck for a few years.
If we look at the political arena, individuals who make dramatic comebacks usually do so either because they make fundamental changes in themselves or because there is a fundamental change in the voting populace (sometimes both). Microsoft can't control its "voting" public, so it has to look to making internal changes. And there have been plenty of those recently. Political analysts say that in order for a political party to come back from defeat, it must find a way to embody new ideas and/or repackage the old ones. And that's what Microsoft must do in order to earn the title of "Comeback Kid" in 2012.