Bonum Certa Men Certa

Another Tough Weekend for Microsoft

In recent posts about the secret pains of Microsoft we had identified growing weaknesses in the 'Cash Cow' departments [1, 2]. Well, in the past couple of days alone, the same problems persisted. Here is just a quick roundup that serves as another sample.

Office Business



As new signs of future trouble, consider the strong new push in China for a Microsoft Office replacement. Citing Red Flag Linux, crtiics would argue it's a bargaining card, but once you look closely, it doesn't quite seem so. They bypass Microsoft at formats level and the software looks impressive.

Ren predicts that the UOF standard will be promoted in at least six ministries in China by the end of 2008 and then might become compulsory among other Chinese entities. This should ruffle some feathers at Sun, IBM, and Microsoft.


In response, Microsoft changes its proprietary formats again and makes them competition-hostile. It claims to have changed the legal terms though. This happened at the end of last week.

Expect more margin erosion as Microsoft fights back. In response to competition on-line and on the desktop (chiefly OpenOffice.org), prices continue to drop. Here is a new report:

"This is also part of our Unlimited Potential program," added Rivera-Moreno. Microsoft's Unlimited Potential is a global program aimed at helping the middle and bottom of the world's economic pyramid of about 5 billion people, the software company's website stated.


Microsoft will of course blame what it calls "piracy", but it should be very clear what is happening here. Even in wealthier countries, Office and Exchange (along with adjacent layers in the network and stack) are gradually being replaced. Here is the latest such story. Now it's the Telegraph's turn.

Might the news that the Telegraph Media Group (TMG) is moving to Google Apps and phasing out Microsoft Office and Exchange be in future remembered as the end of the Microsoft desktop arm-lock? Probably not, but the stakes are so high that it's worth a little speculation.


Databases



Microsoft recently called MySQL a "biggest competitor". Watch this new article from The Register. [language warning]

Sun Microsystems is about to *** the database world, and nobody sees it coming. Imagine a SQL database that can support the absurd level of concurrency promised by HyTM. Conveniently, Sun owns one of the most popular relational databases in the world: MySQL. If MySQL on a single Rock based system can outperform Oracle or Microsoft spread across many systems, then DBAs worldwide would gladly tell Larry Ellison or Steve Ballmer where to shove it.


Direction



The departure of Johnson appears to be worse than it initially seemed. It was possibly fast and impulsive, suggesting that there may have have been something to escape, something to run away from.

Johnson's departure from Microsoft probably abrupt



[...]

Remarks from Chief Executive Steve Ballmer at that meeting certainly indicate the move was a surprise.


There's more to indicate confusion and lack of focus. From Friday:

1. Ballmer: Big Plans, Few Options

Ballmer was emphatic, if not frustrated. If he said it once, he said it a thousand times: A bid to buy Yahoo!, or just its search business, was off the table.


2. Microsoft may need an IBM moment of clarity

Microsoft could use some of that focus. It’s not that Microsoft is forgetting the enterprise business. In fact, Microsoft is hellbent on being the No. 1 enterprise software company. The problem: That enterprise windfall is funding things like Live Search and Xbox. I credit Microsoft for its willingness to invest and be tenacious, but you have to wonder about the returns here.


3. As other companies cut back, Microsoft keeps spending

His goal isn't to cut spending but "to convince you that we are investing money wisely."


They try to acquire rather than earn more and more sources of revenue. Savings may be down, but they need to impress investors to keep momentum going. The analysts don't exactly buy that because it is not sustainable. Microsoft may be approaching debt if it starts another round of buybacks.

The inability to evolve and desire to evolve is showing. For quite some time now (no more than several years) Microsoft has seen some of its margins declining and it thought about transitioning to other sectors, including chip production. It seems like Microsoft has just been dealt a blow by the FCC, which turns to some other suppliers after Microsoft's repeated technical failures.

An early prototype built by Microsoft failed to operate in the FCC's lab. Microsoft later determined the device was broken.

The FCC is now testing other prototypes built by Philips and Motorola as well as Silicon Valley startup Adaptrum and Singapore-based Institute for Infocomm Research.

The Motorola device connects to a database of TV stations operating within 125 miles and scans the airwaves nearly every second for other signals that may pop up unexpectedly, such as a wireless microphone.


Music players is another niche that made Microsoft envious, particularly because these player soon evolved to become phones and portable computers.

Even Microsoft's biggest of fans are outraged by their lies and inability to penetrate the portable music players business (dominated primarily by Apple at the moment).

We didn’t want to post MSZuneFan’s “last video” because of the hard language but we’re more than happy to report it now has been removed from YouTube.


There are some more details here.

You've probably heard by now that the infamous Zune Guy ("Microsoft Zune") was so disappointed with Microsoft that he's elected to have his ink removed in place of something more in line with his shifted priorities. In addition to the reconstructive work he's going to have, ZG claims that Microsoft actually lied to him about his free trip to the Redmond campus, which (as you might imagine) further tarnishes his image of the company. Unfortunately, according to reps from Microsoft we spoke with, the trip was never confirmed -- only discussed -- and ultimately canceled due to the very reasonable fear that it might lead a lot of "hyper-engaged users" to expect a trip of their own (though they did hook our man up with a free Zune and some related swag).


For those who have not kept track of the lifetime (or deathwatch) of the Zune, here are some articles of interest:



Losing Cuba



Losing business at an enterprise level is far from the same thing as losing an entire nation. Cuba's plan seems to be on track.

At a technology conference in February last year, the Cuban government declared its intention to rid itself of Microsoft software in favor of open-source alternatives. According to an Associated Press report, Communications Minister Ramiro Valdes, who opened the conference, suggested that Microsoft was cooperating with U.S. military and intelligence authorities, and he proclaimed that IT is a battlefield on which Cuba is fighting imperialism.


More on Free software and Cuba:



In summary, things are changing fast. One just needs to look closely.

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