| Author: |
boz |
| Dated: |
Thursday, October 06 2005 @ 10:15 PM EDT |
| Viewed: |
488 times |
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 My prediction for Microsoft is this: Eventually they will restructure and become more of a software/services company, rather than a "Windows" company.
Certain things have been happening in the market, like with the Firefox browser beginning to chip away at some market share of Internet Explorer, and with Google launching applications like Google Maps, which offer desktop-like application functionality in a web browser.
With highly publicized security issues in Windows, companies, governments, and individuals have begun to look for alternatives. Granted, operating systems like Linux and Mac OS X are not completely bug-free, so Windows security is not the only driving factor here. As networks become larger with more computers online and the need to keep systems communicating smoothly as more services go online, there comes a greater desire to make things standards compliant and open.
This is where the platform shift comes in. If we take the example of IBM in the early 1990's, it was still largely living in the world of the mainframe as companies where switching to client/server architecture. At home, the move was from DOS to a more (arguably) user friendly Windows environment, for which Microsoft not only wrote a ton of software, but managed to get their operating system on as many cheap PCs as possible. As a result, IBM had to restructure its business in 1993 to become a more generalized, services-oriented company that could function in the new marketplace. Today, software and services make up more than half of its yearly revenue.
Today, the platform shift is to open standards, and naturally, to the web. This would make the desktop operating system less of a factor in productivity. This is precisely what Microsoft was trying to prevent during the "browser wars", where it tried to kill off Netscape by bolting Internet Explorer into Windows. However, with broadband gaining usage along with more computing options becoming viable and accessible, combined with increased concerns about security, we get an environment much more conducive to a platform shift.
If you look at Microsoft's balance sheet, it would seem as though the executives are preparing for some big changes. With nearly $40 billion in cash and short term investments as of period ending June 30 2005 (and note the fluctuations), you'd think the dividend yield would be higher. It would seem there should be a reason for hoarding all of this cash over the years. Perhaps part of the funds are allocated for fighting to maintain the dominance of Windows on the desktop through acquisitions, settling lawsuits, developing Windows-based services and other products, such as development tools. The other part of this would be put towards a major restructuring to get out of a mostly Windows-only mode. The main difference between Microsoft and IBM would be this cushion of cash: When Microsft needs to take the hit, it won't be as hard as it was for IBM.
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