Michael Gartenberg of Jupiter has started a series taking a look at “some of the reasons for Microsofts success in the marketplace and how those areas of success might lead to positive growth in other places.” The first post looks at positive feedback loops:
In information technology success begets more success and Microsoft has shown the ability to use positive feedback loops to its benefit far more than any other company. The result is that Microsoft benefits from the image of being the safe choice in so many market sectors and that leads to further growth which has helped it in two critical markets.
Client operating systems is the classic example of this. User adoption of Windows has led to a nearly total support of hardware OEMs for Windows. Nearly all new PCs today ship with a pre-installed version of the operating system ( or enhanced new client versions like Tablet PC and Media Center). Support by users and OEMs has lead to greater independent software vendor support for Windows. Nearly all software for PC desktops is made available exclusively or first for Windows. The availability of this software further increases the rate of user adoption and OEM support, which in turn solidifies Windows position with ISVs.
Similarly, with Microsoft Office, users have adopted the software and trained their personnel in using it. Millions of files have been created using the Office file formats. The existence of the files and trained users create more demand for Office software. Of course, the demand for Office software leads to more trained users and more Office files.
Many organizations feel they need to use Windows and Office due to market momentum making it very hard for anything new to break into this market.
Theres nothing on the horizon that is likely to change this scenario, which is the reason that the Office and Windows Client groups account for the most positive revenue streams of Microsofts seven business units. Its also likely that the tighter integration between the Office, Windows and the different Windows server products will help boost the overall growth of the Windows Server family over the next several years. Integration will also be a key defense against Linux, creating a non-substitutable infrastructure that will ultimately be difficult for IT departments to migrate away from.
One way to take on Microsoft is to begin with today’s non-users – in the world’s emerging markets. Here, the first battle to fight is on the server – which is Linux’s strength. By going beyond what a basic Linux server offers and integrating business applications like accounting and CRM, it is possible to create a package which goes well beyond Microsoft’s own server product. Then, one should use that server base as the way to target the desktops.