Microsoft’s interest in buying Yahoo! has all the major internet players scrambling for position, and observers trying to figure out who is winning and losing and why.
But, to my mind, Michael Arrington over at TechCrunch mails a point that others aren’t talking about:
Gartner analysts Michael Silver and Neil MacDonald told a conference audience yesterday that Microsoft’s Windows product is collapsing and must make radical changes to its operating system or risk becoming a has-been. [...] For most early adopters (and all Mac users), the browser is increasingly the only operating system that matters anyway. Windows isn’t really that relevant any more just because of the increasing utility of online applications like Google Docs, which competes with Microsoft Office. Vista could be perfect and it still wouldn’t matter. The fact that it is flawed only makes the situation worse.Microsoft makes a ton of revenue on sales of software that sit on the computer. $15 billion a year for Windows alone, and another $16 billion for Office and Exchange Server in 2007. That’s 60% of Microsoft’s total revenue, and profits from those groups float the rest of the company. Microsoft isn’t a viable company without their consumer and business desktop software profits.
The real question isn’t “What can Microsoft do to fix their Windows product?” but rather “Even If Windows and Office were perfect, would it be enough to keep Microsoft relevant in the medium term?” I think the answer to that latter question might be “nope.” And that, of course, is why they want Yahoo so badly. Online advertising revenue is their only real hope of long term survival.
In a nutshell, Microsoft needs to solidify a lucrative internet presence, or it could be facing rough seas ahead.
And, for those who aren’t entirely convinced of the value of online alternatives to spreadsheets and word processing programs, there are some great alternatives out there.
After installing Microsft XP Pro on my laptop, rather than slow it down with Microsoft or Adobe bloatware, installed a good amount of open source ware to replace Microsoft Office and Adobe standards such as Reader, including Open Office and Fox It. And, they work great.
So, sink or swim for everyone, even the big fish. There are no guarantees.
