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Microsoft getting squeezed between Chromebook and iPad


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by Ron Miller
Ness Blogger 

Back in the 80s when I was working for a small management consulting firm in Boston, the operations manager went shopping for these new-fangled devices called PCs. She ended up buying IBM-brand PCs and I remember her saying, "Nobody ever got fired for buying IBM."

Many people in IT today probably feel the same way about Microsoft, but is it still true or is Microsoft on a slippery slope toward irrelevancy caught in the middle of a changing computing landscape?

There are two key trends squeezing Microsoft as it gets attacked relentlessly on two fronts. The first is the iPad and the second is the Chromebook -- and by extension the broader trends of mobile and cloud computing.

Microsoft is not stupid. It has recognized these assailants and they have taken action to fend them off. On the user level, they developed a broad cloud computing plan that includes Office 365 and Sky Drive. On the enterprise side, they are making a push to the cloud with hosted versions of SharePoint and Exchange, and the Azure development platform among other steps.

Windows 8 is an attempt to capture a single screen view of the world with Windows 8 on the desktop, Windows 8 Phone and Windows RT and Windows 8 on tablets. They have developed their own tablets and made investments in Nokia and Dell to keep the PC and phone ecosystem oriented toward their products.

Make no mistake, Microsoft remains a formidable company with deep pockets and lots of smart people. It still maintains a powerful presence in the enterprise, but if you look at any company starting out today, how many are going to go with the Windows/Office model which has been the revenue bedrock of the company for so long? Not very many. That means as these newer businesses grow and develop, they are not going to be Microsoft shops as in the past.  

It's like a company with an old demographic. The market is still strong, but the youngsters aren't buying into the vision.

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And of course we have begun to witness the shift away from PCs. So far, the numbers have not been very kind to Windows 8 on the desktop or any device for that matter. comScore announced its latest figures and Microsoft phones are still langusihing at a dismal 2.9 percent of US market share, continuing a downward trend. Meanwhile, although Microsoft has not announced Surface RT sales, reports have them sitting at around the same 3 percent. The Surface Pro came out this week to mixed reviews. By contrast, Apple announced it sold 22.9 million iPads and 47 million iPhones last quarter. 

Samsung ChromeBookThen there is the Chromebook, the cheap cloud-based notebooks running Google's Chrome OS. As Steven J. Vaughan-Nichols wrote on ZDNet, Chromebook is coming on much stronger and much more quickly than expected. As he reported, Acer, which just started manufacturing Chromebooks at the end of last year, now reports that these machines will account for between 5 and 10 percent of its US shipments this year. 

Other PC manufacturers are noticing too. Recently Lenovo announced a new Chromebook offering and just this week HP jumped on board, albeit with what sounds like a very poor implementation. The key here though is that these traditional PC/Windows manufacturing companies are looking elsewhere and selling alternatives and that has to be cutting further into the Windows market.

I'm not suggesting, by the way, that Microsoft is going anywhere any time soon. I expect it will be around for years to come, but it is clear that Microsoft's key markets are being squeezed by devices that aren't running Windows -- and if you're placing your bets on Microsoft, you might want to at least think about that choice moving forward, and recognize that there are alternatives now.

Photo Credit I'm a PC: bytesrc on Flickr. Used under Creative Commons SA license.

Photo Credit iPad: Sean MacEntee on Flickr. Used under Creative Commons SA license.

Photo Credit Chromebook: Google

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