My last post about Microsoft talked about how they typically operate. Because they are a monopoly, it typically does not matter what they do or don't do. They typically win anyway. The deck is stacked so much in their favor it is easy for them to win as long as they spend enough money. Money is not their problem.
They do have a real problem now that money cannot solve. Their introduction of Live.com and officelive.com is an effort to catch up with Google and Yahoo. They are way behind these two powerful companies.
Years ago when Netscape was way ahead with browsers, MS had a big problem. Netscapes browser was becoming the Operating System. MS could not allow Netscape to flank their monopoly. MS decided to focus on killing Netscape and did so within a few short years. They proved the strength of their monopoly and their willingness to use anti-trust tactics to do it. No question MS violated anti-trust laws and they have had to settle multiple criminal lawsuits. Not a problem though since they had plenty of money to do that.
They have two big problems now though.
First, Google and Yahoo have real businesses generating tremendous profits of their own. Netscape had almost no revenues and thus were relatively easy to kill.
Second and more troublesome; if MS wins, they lose. In order for MS to win, they have to cannibalize their monopoly in Operating Systems and Office Applications. These monopolies are massive and generate virtually all of MS's Billion$. There is no way for MS to develop online versions of Excel, Word, Outlook and Powerpoint and even remotely receive the same kind of revenues. The more they succeed with web versions of these apps, the less revenue they will receive from the Desktop versions. Plus, the more the browser becomes the operating system, the more Windows becomes obsolete!
If they don't do it to themselves however, others will do it to them. In fact, they already are. MS is getting attacked where they are the strongest and they have no good way to respond. They are caught between the proverbial rock and a hard place.
Here is an offering coming to market that is reproducing an online version of the entire MS Office suite. Still early, but they have the money to get this done and get it done well. Imagine being able to do everything you can do in Office wherever you have a browser made by anyone? The browser is free.
Here is a company focusing on reproducing MS Word in an online version. Looks pretty good!
Finally, here is a version of Excel. Looks really far along.
Even if Microsoft saved themselves a lot of time by buying these companies, it would only accelerate their problem. How are they going to offer free or very cheap versions of their cash cow products without their revenues imploding? No way they can make up the difference by offering advertising, etc.
In addition, Google and Yahoo will likely beat them to the punch by either buying these companies or developing the online version themselves. In the future we will not buy any software. It will all be free or very near free!
Trust me, MS is really in trouble here. Probably a great stock short but not for the faint hearted. It will take years to play out, but MS may well have finally met their match. It's called the Web!
If I were MS, I would break the company into many smaller companies and take them all public. They have at least 12-15 companies within MS that could successfully compete in the marketplace. As a massive company they have become terribly slow moving. They have but one mission; protect their monopolies. Separate companies are no longer burdened by the need to protect Mama MS.
Will they do this? Not for a long time. Gates and Balmer love running a monopoly. (Who wouldn't?) It is hard to give up that power. That is exactly what they need to do though.