Can Microsoft re-Surface?

Just a couple weeks ago, something that was believed to be true for a while has surfaced with Google’s chairman Eric Schmidt quite publicly dismissing Microsoft as a well-run, but irrelevant company. In his view, there is a “gang of four” technology platform leaders – Google, Apple, Amazon and Facebook. While I largely agree with Eric Schmidt’s view, I am reluctant to just write Microsoft off. Yes, Apple has its formidable ecosystem, or “walled garden”, Google owns search and Android market, Amazon owns digital market and Facebook owns one’s digital identity. But what about those millions of PCs installed and running Windows at the enterprise level? It’s not necessarily true that corporate America has been migrating to Apple’s ecosystem for its everyday use. Although that day may come where macs are in the office and syncs with iPad seamlessly (which would be cool), for a foreseeable future, Microsoft’s core products are intact. But it is in decline.

This year has been very important for Microsoft. It is releasing Surface, Windows 8 and trying to revive its weak mobile presence with its partnership with Nokia. In my view, MS is betting on two things; that consumers would want to interact with all their devices, include PC to run on a same OS and that Windows 8 will be success. And if either of these go wrong, I think Eric Schmidt will be proven correct. As argued in the last article, I believe that MS is trying to build its own ecosystem with Windows 8 in the center and success or failure and how customers accept Windows 8 will be critical to MS’ future. If things go well, it could be that MS can take some share away from Apple in terms of PC and OS sales growth, mobile and tablets ecosystem and become a legitimate fifth member of the gang. If things turn south, MS will have an unsuccessful OS (without much backup other than putting together another version) on its hands with tablets that don’t sell and very weak mobile presence with small appstore.

Current state of affairs seems to be pointing closer to south. Various reports suggests that Surface pre-orders has sold out (but the actual demand has not been released) and that close to 10,000 apps are ready to go for the Windows 8 phones and tablets with 500 apps being added a day for two days prior to launch (but didn’t reach MS’ goal of 10,000 apps by launch date). Despite MS’ effort, it is still much behind its competition. iPad users have about 700,000 iOS apps in the App store with 250,00 of them written specifically for the iPad and there is currently over 550,000 Android apps available, with more than 20,000 being added daily. So where does this leave MS?  

MS is unlikely to be a completely irrelevant company when it comes to enterprise customers and its continuing dominance in the world of PC. And its current efforts are likely to result in MS remaining a name to be at least concerned with for the other four tech giants. However, without a significant breakthrough and innovation in any particular part of the ecosystem (perhaps X Box has the best chance? Not sure if returning to keyboard style tablet is a ground-breaking innovation that will won over consumers) MS is likely to become a diminished giant whose name was once feared when its dominance manifested in phrases such as “Minding Your Microsoft Manners”. I personally don’t believe that the gang of four are particularly mindful of Microsoft manners in these days.