November 16 2012

Microsoft Dominance Threatened By Internal Losses

Posted on the 11:54 am under Business,Microsoft by Darren Boyer

Hearing Stephen Sinofsky departed Nov 11,  just days after the release of Windows 8, brings up a whole range of thoughts about technology and what to prepare for in the future.  One executive leaving appears to be a big deal as the stock dropped 2.8% the next day.  That is a $5 Billion dollar drop if I did my math right.  Did one man have that much influence?  Probably.

Recently I ran across an old quote from Bill Gates who estimated much of Microsoft’s success can be attributed to a handful of very talented personnel.  In the last 2-3 years Bob Muglia left, then Ray Ozzie, Jim Allchin left a while before that, and now Sinofsky.  I sure hope Ballmer has a very deep bench of talent coming up quickly because reading how these men shaped product lines makes it seem like this highly respected handful has been depleted in a big way.

What does this mean for a business owner or pcit as a technology provider?  My estimate is disappointment, lack of vision and a poor Microsoft stock price!  Each of these estimates has a different time frame.  The disappointment will come when Microsoft misses a key technology or product that is needed in the real world and another company steps in to take over a chunk of their business.  This is probable 1-2 years away.  The lack of vision will translate to disappointment but it will also mean missed opportunities.  The stock price reflects a lot of this future expectation and this has happened already.  I know of a respected short seller who closed out of his Microsoft long position a couple months ago.  Very wise.  Some of these future predictions may seem like it has already happened but there are areas where Microsoft dominates to the point where another option makes no sense at all.  For example if you currently need a Server Operating System for a business application?  Microsoft is typically the best and only practical answer.  Unified Communications?  Microsoft.  PC Operating System?  Microsoft.  Office Software or Collaboration? Microsoft.  Business Email platform?  Microsoft.  They are a great company with great products in so many ways. 

What we will keep our eyes open for in 12 -24 months is competing solutions to these products that are even stronger and possible more competitive.  Decision makers should likely do the same by not being comfortable when only Microsoft products are offered in 2014 or 2015.

Written by Darren Boyer

Darren Boyer

Darren Boyer is the founder and president of pcit.

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