Whither Microsoft?
Max is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Back in tech's olden days, people used to pay a lot of attention to “first-mover” or “second-mover” advantages. The idea was (specifically with new technologies) you could be first to market with a new product and, if you were successful marketing it, you could dominate that space early. Failure to dominate would give your competitor a second-mover advantage. That competitor could come in with a similar product and capitalize on the failure of the first mover to market the product effectively -- and free-ride on efforts of the first mover.
This first/second-mover distinction still holds to some degree. But things have gotten a little more complicated as technology products (especially mobile devices) reproduce faster than tsetse flies. Interestingly, the distinction was at the height of its usage when governments were hauling Microsoft (NASDAQ: MSFT) into courts for being a monopolist. Needless to say, the landscape has changed.
Today, the idea of a Microsoft monopoly is almost the punchline of a joke. Not because Microsoft isn’t a solid company, but rather because other companies have become powerful competitors. Times change. Apple (NASDAQ: AAPL) and Google (NASDAQ: GOOG) are considered scarier than Microsoft these days in a lot of areas. Oracle (NASDAQ: ORCL) is still a tough rival in the business sector. The marketplace is dynamic -- especially in the tech space, which leaves anti-trust regulators flat-footed.
So what’s up with Microsoft these days? Where are they still dominant? And what does the future hold?
- Operating Systems - According to Stat Owl, Microsoft still controls 84.21 percent of the market for operating systems, with Apple holding fast to its 14.48 percent. This snapshot looks pretty stable when compared to years prior.
- Web Servers - For years, Microsoft made strong inroads in the market for web servers. And for about five years, it looked as if they might wrest even more market share from open source Apache, nearing 40 percent of the market in 2007-08. Apache has returned to dominance and Microsoft now settles for about 13.81 percent of the web server market.
- Mobile Operating Systems -- Windows trails Apple, Android (Google) and Blackberry for share of the market for mobile OSes. Android currently dominates with 61 percent of the market according to analysts IDC. Microsoft currently controls only 5.2 percent of this market. But the same IDC analysts predict Microsoft will overtake both Blackberry and Apple by 2016.
- Tablets -- Apple and Android still dominate the tablet market, but given the release of Windows 8, it appears Microsoft will make significant gains in this space -- especially as businesses are signaling greater interest in tablets for the rank and file, according to eWeek.com.
- Games -- Microsoft’s most impressive entry into any market is, in my opinion, their foray into games. Ten years ago, gaming consoles were dominated by Sony and Nintendo. Today, Microsoft commands an impressive 34.5 percent of that space -- up from last year despite an overall decline in console purchases. Expect Microsoft to stay very strong in this space. Their graphics are great and XBox products continue to rock.
- Enterprise Software - Microsoft just acquired Yammer to build out its Sharepoint enterprise platform with a social component UI. Some analysts call this a “bolt on,” but businesses that have been using Sharepoint for years will likely celebrate a social component.
My punchline would be that Microsoft remains a competitor in so many different areas, it is still a safe, steady investment overall. As more of these technologies converge and diverge, Microsoft is going to be able to leverage assets across categories to positive effect. And for the foreseeable future, their guarded watch-n-wait strategy will work well. Just as the Japanese did in the 1980s with electronics and cars, they can “embrace and extend” as second- third- and even fourth movers come on the scene.
Secret announcement?
And now Mashable reports Microsoft has a big surprise in store. Is it trumped up hype or the real deal category killer for the former enemy of the U.S. Justice Department? We should know this week. Stay tuned.
Max Borders is author of the forthcoming Superwealth.
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