GRiddick

Microsoft and Vista: Trying To Turn Around A Supertanker

Very interesting read, Roger.

I, too, have followed Microsoft closely for years. I also worked for IBM when they took some of these same arrogant approaches to obvious market-driven trends.

From what I've seen in the last year or so, I see nothing but trouble looming ahead for the folks from Redmond. Microsoft's only salvation may turn out to be the weaknesses of their opponents (more on this in another post).

Here are just a few of the MS activities that have gotten my attention:

1. Large scale discounting. Rarely are market leaders heavy discounters. Microsoft recently discounted the price of Works, certain Office versions, and of both the X-Box and their game software from I can see. Do you really think they will make up those profits with volume ... especially when they have already had to take a huge hit due to manufacturing flaws with the X-Box?

2. Zune. Why does the market want, or need, Zune? I personally think its branding is awful, and I've been in the technology branding business for years. Now another round of discounts for Zune as well?

3. Vista. I know several friends and business associates who have tried to buy a Dell, or other computer of their choice, only to find it only available with pre-loaded Vista. This was/is an old business model squeezed into a modern day bottle. It is not going to float. All of these changes you talk about create absolute market confusion, and market confusion leads to a lowering of profit margins ... We should all know that by now.

4. Online Advertising. What do the polls say about the average consumer's trust of Microsoft? Need I say more. Regardless of what Ballmer says he wants, major advertisers will not follow Microsoft blindly into the darkness. Advertisers react to performance, not simply hype or the FUD factor (that's Fear, Uncertainty, and Doubt ... one of the few things Microsoft did learn from IBM back in the 80's).

5. Consumer products and games. Sure Halo 3 is off to a good start, but do people really associate the Microsoft brand with consumer innovation, creative or ethical leadership, and market dynamics. I don't think so.

6. Office Suites. Most of the people I know are not shelling out any real bucks for the Microsoft Office Suite 2007. I think its sales will be too closely associated with Vista to break the bank. Let alone the new competitive offerings coming out from Apple, Adobe, IBM, Sun, and others ... and, oh yeah, Google.

7. Servers. I really think this is still a strong and profitable suite for Microsoft (FUD works on many of our IT departments these days, who use some of the same techniques when dealing with their own internal executives and management), but it also has a reverse affect to a certain extent. Server tachnologies are not exactly what I call end-user friendly. In fact, I have been in this industry for over 25 years and I have never taken the time to learn how these servers really work. Why? I find it boring. It certainly is not the same market who buys creative advertising, plays games, searches the Interent for relevant topics and world news, or listens to music. Who, exactly, is Microsoft's target market? I can't name any company that has ever become "all things to all people" when "things" change this quickly.

7. Below the "tip of the iceberg". I write about this topic frequently, Roger, so I want to tell you up front I have a bias. But I'm not wrong. I have studied this VERY closely for the past 8-9 months, and even had some discussions with senior level folks from Redmond on the subject. Microsoft supports flagrant, and willful, copyright infringements through its image serach and Windows editing facilities, as well as through AdCenter. The magnitude of the problem is almost unquantifiable. We are talking about hundreds of millions of infringements .. occurring on a routine basis ... and with full knowledge of Microsoft executives. Unfortunately, the exact same thing is happening at Google, so you won't see them testifying against Microsft up in D.C. on this issue.

Once disclosed, a time that is rapidly approaching us (did you see the recent "ethics" report on Google at nlpc.org?), these piracy issues will shake the confidence of Microsouls and Googlites everywhere. Average consumers, across all markets, will be concerned ... and negatively impacted. In fact, many of them may also become liable themselves due to their close association, and usage, of the software, content, service, and download tools provided to them by Microsoft and Google.

I could go on and on about this, but keep your ears and eyes wide open on this one. You saw Viacom fire the first significant shot, but there are many, many others waiting in the wings. Some even biger than Viacom.

Once computer users lose confidence in the leadership, business ethics, morals, hypocritical positions, and corporate scandals and greed supported by the executive teams at Microsoft and Google, who knows what might happen? I, for one, have my eyes wide open looking for the next shining stars.

Please let me know what you think. Thank you.

George P. Riddick, III
Chairman/CEO
Imageline, Inc.

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