Can Microsoft Be the Leader Again?

Phillip is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

What's it going to take for Microsoft (NASDAQ: MSFT) to take its former position as the leader of technology breakthroughs? Several areas that the company is currently focused on could turn the company around and send it to the type of profits that Apple (NASDAQ: AAPL) is experiencing. But as Apple has shown, the key ingredient to market dominance is creating a device or software that can change a society.

Microsoft's future

After Windows 8 flopped, Microsoft certainly has its work cut out for it. Users said the system was difficult to navigate, though the system was essentially the same as Windows 7 with a few new features. Nevertheless, Microsoft recently announced its pledge to make the system easier to navigate by having the operating system open in a similar format to popular previous versions. But the failure of Windows 8 is a black mark against the company and shows it isn't able to deliver revolutionary breakthroughs similar to what Apple has done.

For Microsoft to really make moves comparable to Apple, it will have to work better with its customers. The Windows 8 operating system was dubbed user-unfriendly, and now Microsoft is putting restrictions on what gamers can do with the upcoming Xbox One, which on June 10 the firm said would be released in November. Microsoft said gamers can only trade in games at "participating retailers." Furthermore, users can only give a game away to a friend once, and that person must be their friend for at least 30 days prior to receiving the gift. Those actions don't bode well for customer loyalty.

Apple's future

Now appears to be a better time than any to take a bite out of Apple's market share. Despite not releasing anything as revolutionary as previous editions of the iPhone have been, Apple has still maintained a loyal customer base. The iPhone 5 isn't much different from the iPhone 4, but the company hasn't experienced the type of criticism that Microsoft has.

On June 10, Apple announced changes to its iOS software that powers the iPhone and iPad. The new software doesn't represent major changes, just alterations to the iOS usability, including new features like a faux-wood bookshelf and simulated paper. The new software also includes changes to the text messages, email, and calendar. This shows that unlike Microsoft, Apple is obviously trying to be user friendly.

I wouldn't expect another groundbreaking technology to come out of Apple in the years ahead due to the passing of the company's original genius (Steve Jobs), so now would be the time for Microsoft to show that it is the true genius in the industry. But it's not a matter of Microsoft vs. Apple, as IBM (NYSE: IBM), could lead the way once again after being mute for nearly two decades.

IBM's future

While the company has been an afterthought in computer technology advancements since the 1990s, it now appears to be locked into the cloud computing market. After all, there are now more devices that connect to the Internet than there are people on earth. That makes storing and accessing the same information on multiple devices important to many people. IBM looks to be at the forefront -- along with Amazon and Microsoft -- of the cloud computing industry. IBM's executive director Vance McCarthy said the cloud computing industry is set to generate about $20 billion for IBM by 2015 due to the company's focus on the "new wave" of smart clouds. While cloud computing is in its baby stages, it still has a long way to go and IBM is in the thick of it. Microsoft also has a stake in the cloud era, however. The company dedicated nearly all of its $9.6 billion annual budget for research and development on cloud computing. The payoff appears to be the Windows Azure software that is attempting to make storage easier.

IBM announced at the Edge conference on June 10 that it will dedicate $1 billion into flash-based storage. During the conference, the company introduced its IBM FlashSystem family of flash storage devices. The company said it aims to address the IT demand for performance improvements for managing unstructured data. IBM called the new service "smarter computer," and looks serious in dominating the sector.

The crystal ball

While it no one is able to predict the future with a crystal ball, looking at the companies' dedication to research and development could go a long way toward that end. Microsoft has taken some heat for its lack of progress, but that doesn't mean the company isn't trying. It is utilizing some of the best minds in technology to help bring it back to the forefront of the computer industry.

Apple has a history of cranking out revolutionary products... and then creatively destroying them with something better. Read about the future of Apple in the free report, “Apple Will Destroy Its Greatest Product.” Can Apple really disrupt its own iPhones and iPads? Find out by clicking here.


Phillip Woolgar has no position in any stocks mentioned. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple, International Business Machines., and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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