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Microsoft’s Challenges

November 9th, 2002 · No Comments

Writes the Economist:

To prevent open standards and Linux from dethroning Microsoft in the way that the PC and Microsoft toppled IBM, the firm is trying to develop other strongholds. One attempt is the .NET platform and its related web-based information services, which have failed to take off so far. Another could be anti-piracy technology (which is why Palladium, the firm’s secure-PC initiative, has caused such a stir). A third could be Yukon, a new database technology.

If it is to keep growing fast, a tall order for a firm with yearly revenues of $30 billion, Microsoft must meet a second challenge: expanding beyond its traditional markets. One new area is high-end enterprise software. More importantly, it has also moved into several non-PC markets, including handheld computers, interactive television, games consoles and, most importantly, smart mobile phones. But in each case, so far, it has failed.

The Economist article talks about “the long shadow of Big Blue” and asks if Microsoft might go the way IBM did in the 1980s. IBM has since made a strong comeback – IBM and Microsoft are the technology superpowers now.

Even as Microsoft look at new markets, it needs to remember that its next users will come from the world’s emerging markets. In countries like India, customers cannot afford to pay hundreds of dollars for MS-Office. This is where Microsoft faces the “Innovator’s Dilemma”. Its primary products (Windows and Office) are more than good enough for its existing markets. And it hasn’t yet created products for the next markets, which need something at a tenth of the price.

Tags: Microsoft

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