Mike Langberg writes on Microsoft’s evolution:
Silicon Valley still sees Microsoft as the Tyrannosaurus rex of technology, so powerful it can break any competitor in half with a snap of its mighty jaws.
Does this leave valley companies as slow-moving dinosaurs doomed to serve as snacks for T. rex? No.
Many of Microsoft’s competitors are behaving more like tiny, scurrying mammals who will evolve and one day take control of the earth when T. rex has crumbled to dust.
There’s a growing pile of compelling evidence that Microsoft is so big it can’t effectively enter new markets.
Overall, Microsoft still reaps huge profits. But it’s all from two aging monopolies: the Windows computer operating system and the Microsoft Office suite of productivity software.
In the nine months ended March 31, the three Microsoft divisions responsible for Windows and Office contributed 83 percent of the company’s $27.5 billion in sales and 112 percent of operating profit.
The other four divisions lost $1.2 billion. They represent all of Microsoft’s efforts to move beyond the twin monopolies — such as the Xbox video game system, the MSN online service, software for advanced mobile phones, the PocketPC personal digital assistant and the bCentral service for small business.
Microsoft’s bottom line, in other words, would look better right now if the company did nothing but Windows and Office.
MSN didn’t obliterate America Online. Microsoft Money didn’t crush Intuit’s Quicken, and Microsoft TaxSaver disappeared after making not even a dent against Intuit’s TurboTax. A digital video recorder called UltimateTV, a challenge to San Jose-based TiVo, died after six months. An almost forgotten product named PhotoDraw never came close to threatening the powerhouse Photoshop from Adobe Systems of San Jose.
Indeed, I can’t cite a single example where Microsoft has managed to create an overwhelmingly dominant position for itself beyond products directly linked to Windows and Office.
Not that Microsoft is a toothless tiger. You can never ignore a company with $56 billion of cash in the bank. What’s more, the antitrust cases brought against Microsoft and the threat of further litigation could be keeping the company from using its vast resources in ways that could instantly destroy competitors. And some of the Microsoft efforts that look like also-rans today could eventually become big winners.
But I’m no longer losing sleep at the thought Microsoft will stomp Silicon Valley. If anything, Microsoft should fear us.