Are we missing something?
In less than a year Apple blew past Microsoft as the most valuable technology in the company in the world and Google and IBM are fast poised to overtake them as well. Even though Microsoft just reported massive profit growth, there is a feeling that Microsoft’s best days are behind them.
But within the ECRM industry Microsoft continues to rack up impressive gains with SharePoint and the entire industry has become confused over whether they co-exist or compete with SharePoint . (Hint: both.) SharePoint has some limitations, but it is still king in a market where unstructured data is not only growing, but accelerating in growth. Indeed SharePoint was recently cited as one reason for Microsoft’s giant profits, but can it truly be that the company convicted of anti-trust behavior has fallen so far as to be – gasp – irrelevant.
No. Microsoft is still the dominant player in our market but IBM, EMC, OpenText, Oracle, and HP all are finding new ways to compete and be relevant. Apple’s iPad threatens to break the juggernaut when it comes to truly personal computing and has already eclipsed the number of PCs running Linux. Google is banking that the cloud and their boot-on-demand computers that run applications in the cloud might mean that you never have a Windows PC again. Google is even rumored to look at using their vast experience at building computers (they are the world’s largest manufacturer of PCs but use them all for their own internal needs) and combine them with an ad-model to provide the PCs for free. These PCs would run Google’s Chrome operating system and prevent the sales of Windows that funds so many of Google’s other initiatives.
Part of Microsoft’s problem is that they try to do too many things and the result is a lot of mediocre products with some winners and some failures. Microsoft Kinetic was a multi-billion home run, but Bing lost $726M in the quarter. Internet Explorer used to have more than 90% market share, but almost everyone complains about it and the result has been a fractured marketplace of Firefox, Chrome (the browser, not the Operating System), and Safari pushing Microsoft’s market share to its lowest level in more than 15 years. Microsoft makes products for companies and consumers ranging from the desktop to the server to even the mouse for the PC and the cloud to host the applications. Apple, meanwhile, continues to relentlessly focus on the consumer with their easy-to-use products and vast ecosystem. The result has been an impressive adoption into the corporate side and users drag their Apple technology into the enterprise. That doesn’t happen to Microsoft in reverse when users used to use a pirated copy of Outlook to access their personal email. Now a user is more likely to use Gmail or the Exchange support on their iPhone.
We’ve seen this before: a market leader makes their products too complex and fails to present compelling reasons for users to buy their new products. The industry is littered with technology companies who burst into relevance and then faded. Are we watching Microsoft in their initial stages of going supernovae?
Hardly. Microsoft still has one of the largest R&D budgets in the world. Despite some brain drain, they have a significant pool of very smart talent. And their management team understands that a few markets are going to be key to staying relevant. Microsoft still is dominant in the enterprise and while they might not own cloud computing like they own the desktop operating system, the Azure platform is a big enough investment that Microsoft is going to be a player. And Microsoft has significant breadth to bring to the market. An ad-supported version of Microsoft Office is now available. Microsoft brought Bing to the iPhone. They bought their way into replacing Yahoo search and preventing Google from getting even bigger. No company has a bigger presence for the data center when it comes to servers, security, databases, and more. Microsoft has always had competitors in these areas, but as companies reduce the number of vendors and increasingly move to the cloud these will play to Microsoft’s strengths.
So what could Microsoft do to help immediately, especially in the ECRM space? Well, the first thing would be to provide better SharePoint support for mobile devices like the iPhone and Android. Users are increasingly accessing their content through their mobile devices. Microsoft wants Mobile Windows to be relevant (and signed a smart deal with Nokia to do so), but success is not only unsure but unlikely. If Microsoft loses the “portal” to the content they run the risk of truly becoming irrelevant. Mobile Windows needs to stand on its own and Microsoft’s other technologies need to be present today on the competitive platforms.
Microsoft could also bring more cloud efforts directly to the content management space. Combining records management with data storage would be profitable business for Microsoft to capture vast amounts of data and dollars: ECRM systems store more content than any other application.
Better integration to public infrastructure might be another area. Microsoft did a good job with single sign-on through Active Directory, but increasingly users need to interact with the public infrastructure for things like Facebook, Google, Twitter, Travelocity, Amazon, and other environments. Most of us maintain a bewildering array of userids and passwords – the rest of you risk your security by using the same one for every site. Microsoft’s reach could provide a way to uniquely and securely identify yourself to a wide variety of sites. And since these sites increasingly include content, Microsoft tools like SharePoint could be used to access and manage them.
The next two years will be critical for Microsoft. There are challenges, but Microsoft is likely to find their niches and be a powerful – if more focused – competitor and strong force in the industry.
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