Very Soft

MG Siegler on Microsoft’s first ever quarterly loss:

I think what we’re seeing in Microsoft’s numbers right now is the full-on shift of the company towards enterprise. To be clear, I think the company will remain alive and probably even thrive in that regard for a long time. I just think the time of their consumer dominance is already over. And within the next decade, it will be completely over.

I think at that point, Microsoft will be an enterprise software and services company with a strange, but successful gaming sub-division that will probably be spun off by then.

He’s right. The thing is, Microsoft has never been a consumer-focused company to begin with. Windows was designed for businesses, not people. Microsoft got in good early in the enterprise market in the 80’s and 90’s and that trickled down to peoples’ home computers. “I have Windows at the office, I might as well get it for home.” That left Apple out in the cold until Steve Jobs came back in 1998.
Computer component miniaturization made huge strides since the first Macintosh went on the market in 1984. So while the first iMac was a smash hit when it debuted, portable computing was Apple’s Trojan horse to reclaim dominance. First the iPod. Then the iPhone. Then the iPad. Windows PC spread from the office to the home. In the past 10 years we’ve seen the opposite: Apple products are going from the home to the office.
And this is why Microsoft is in a jam. They’ve never had to market to people until now. OK, they tried with the Zune, but it was pathetic (they peaked their market share at around 3%). And the XBox division? Chump change to Microsoft’s bottom line. If they had to rely on just Xbox division revenue to keep the company afloat, Microsoft would be about 20 people working out of a Starbucks.
In addition to Window 8 being their first real attempt to sell to people, they’re also introducing a version of Windows that completely deviates from past versions (except when it doesn’t). Microsoft has built Windows on the strength of its legacy support. So they’re selling to people while simultaneously pissing off people at the companies who they rely on to upgrade to new versions of Windows.
What a mess. I can only imagine the stress and chaos and madness going on at that company right now.

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