Amid record profits Microsoft has serious cause for concern. It is coming off the high of the fastest-selling operating system in its history -- Windows 7. That OS sent its profits soaring and convinced some that Microsoft was no longer on the retreat.
But part of Windows 7's success was due to how poorly received Vista was. With Windows 8 landing reportedly in 2012, the company may have significant difficulties in convincing the average consumer to upgrade to its latest and great OS.
Other than the Windows brand, Xbox and Microsoft Office are the company's other two major successes in the consumer sector. But the Xbox trails Nintendo's “family friendly” Wii and the Office team is getting seriously nervous about growing consumer interest in OpenOffice.Photos Steve Balmer and Bill Gates ..
On the other hand, Bing has failed to gain even 10 percent of the search market in most metrics, despite a massive ad push and a deal with Yahoo. Zune remains a tiny player in the MP3 market, having failed to become a true competitor in terms of sales to Apple's iPod line. And Microsoft's smartphone empire, once a major player, is in rebuilding mode after the disastrous Kin and ill-received Windows Mobile 6.5. It is placing its hopes on Windows Phone 7, but that phone enters a packed market.
Internet Explorer, Microsoft's browser, has long led the market, but has seen a steady decline in recent years, which may allow Firefox and Chrome to eventually reach its formerly insurmountable market share peak. Microsoft's key hope here is a new product, Internet Explorer 9.
So while it seems that CNN Money's recent headline, "Microsoft is a dying consumer brand", is a bit sensational, it is a claim that is grounded in some reality.
One of the key points in the article is that aside from the struggles of many of Microsoft's consumer "expansion" business units, it is also bleeding executive talent, like many other struggling firms (HP, Yahoo, etc.). States the report, "Microsoft's executive suite is in turmoil. CFO Chris Liddel, entertainment unit head Robbie Bach, device design leader J Allard and business division chief Stephen Elop have left within the past year. Ray Ozzie joined the exit parade last week."
The report praises Microsoft's recent efforts, but concludes in cautionary fashion, "Microsoft just has to hope [they're] not too late."
Much like the Romans or Greeks, Microsoft has built a mighty empire, a key part of which are expansions into new arenas -- in Microsoft's case phones, video game consoles, and internet services.
But much like the Roman empire fell, Microsoft appears dangerously close to losing its expansions to hungrier parties. But much like Rome, it will likely hold on to its central holdings (Windows, Internet Explorer, Xbox, and Microsoft Office) for some time, even if its other efforts fall into commercial purgatory.
The talent gap is absolutely a concern for Microsoft. And equally concerning is the fact that the company is being led by Steve Ballmer. Mr. Ballmer, while a brilliant tactician in some regards and a man with obviously enormous love for the company, has failed to execute a strategy to turn around the company's struggling units -- or one that works at least.
To succeed, Microsoft may need to move on without Mr. Ballmer. But who to pick to lead the world's largest software company, perhaps the most powerful technology company in the world? The leading candidates have already left the company. That means that, essentially, there's no easy answer to Microsoft's leadership issues and that the ongoing risk to the company is tremendous.
Is Microsoft's consumer brand "dying"? Not yet, in our minds. But it lacks the hunger that it once did. And it most certainly sorely misses the leadership of its founder and chief visionary -- Bill Gates..
