If you were to ask the average citizen to describe Microsoft they would probably tell you that they are a mega corporation whose main product is Windows. Depending on their age they may also describe the company as one that has a monopoly on many software genres and is anti-competitive.
During the '90s and even in to the early 2000s Microsoft dominated the home computer landscape. The typical user wrote their documents in Microsoft Office, on top of a Windows XP platform while browsing in IE 6. They were so dominant, in fact, that they were ruled as being anti-competitive in Europe in 2004.
In 2000, Microsoft had a market share of about 87% and today this figure remains unchanged. They grew leaps and bounds in the '90s over their competitors who were falling behind, IBM, Apple and other variations of Linux and UNIX made up a small percentage. Today, though, they have stagnated to the same level as 2000 of about 87.75%. While the number is impressive, it is one of the few areas that Microsoft has remained competitive other than its Office product division.
Microsoft's first major public form of competition was the browser war against Netscape. Netscape was offering up a competing product to Microsoft's Internet Explorer: both products were designed for browsing the Internet. Microsoft eventually dominated the competition because it was able to offer a free product bundled with its operating system while Netscape tried to get users to pay for its product.
After this, Microsoft gained the reputation of being the industry juggernaut and rightfully so; they deserved that title. They controlled the majority of the market with regards to the home PC operating system, web browser, and office products.
But, as time has moved on, is Microsoft still the de facto player it built itself up to be? Microsoft seems to have lost some of its stature of producing the de facto products or always being the market leader in whatever products they sold.
When Firefox launched September of 2002 it was a little known browser taking on the giant Internet Explorer 6. By May 1st of 2004 it had barely 1% of the market share while IE had 95%. It was a true story of David vs. Goliath.
What happened in the following years is nothing short of spectacular for the underdog browser. Mozilla (the company behind Firefox) never gave up on their product. After many years of being defeated ruthlessly by Microsoft they went on a campaign to take back the market. Mozilla received a dedicated following and actively pursued IE. By March of 2009 they had clawed their way up to a very respectable 18% of the market. The reason? Microsoft fell asleep between the development of IE 6 and IE 7; they had presumed that IE 6 was all that the consumer ever needed. They believed this so much in fact that they stopped working on the standalone browser.
In the void left by Microsoft's slovenly development of IE, Firefox took up the competition and forced the company back into the browser wars. Today Microsoft is fighting against Firefox, Safari, Chrome and Opera to keep their market share. But it seems Microsoft may have more to learn as its newest browser IE 8 fails to include support for web standards such as HTML 5.
Did Microsoft become lazy? In a sense, yes they did. When they slacked off in the browser area Firefox came in and re-lit their fire. But this was not limited to just the browser market. Microsoft's slack attitude actually held back adoption of web standards and the progression of the web. That's to say, their behavior had a wider impact than just setting them behind the competition, because of just how huge their market share was. Even today web developers still have to decide if they want to code support for IE 6; major websites like Digg and YouTube have publicly said they will no longer support IE 6.
Windows Vista is a black mark on the company's face that they wish to get removed. After years of delays and unfilled promises they released an operating system that felt as if it was undercooked and only slightly satisfied the consumers' needs. Apple, seeing this, embarked on an advertising campaign that will go down as one of the most recognizable in the history of TV advertisements. The famous Mac vs. PC advertisements hit hard against Microsoft as Apple took Vista's shortcoming and moved in much like Firefox did with IE.
In December of 2008 Apple posted its biggest gains in two years, taking 8.9% of the market share, growing 0.66% in a two year period. Microsoft in that same month dropped below 90%, dropping 0.84, its largest drop in two years. While Microsoft still has a commanding lead, Apple has found ways to dig into Microsoft's dominant market and is slowly eroding its market share and reputation with its successful advertisements.
While the browser wars and the OS wars have seemed to have only given Microsoft a slight setback there are a few other areas where they have failed to live up to their stigma of dominating any market in which they sell software.
Windows Mobile has been a disaster for Microsoft. While promising to deliver the home OS experience on a cell phone it has done nothing but tarnish the company's reputation. Most recently Steve Balmer, Microsoft CEO, admitted that they "screwed up". For the entire year of 2008 Microsoft's Windows Mobile was sold on a little more 16 million devices, while Symbian sold 72.9 Million units and RIM sold 23 million units. Microsoft was able to move a decent amount of handsets but they are far from the leader of the market. They were also beaten in market growth with Apple leading at 245%, RIM at 96.7% and Palm grew at 42.2%; Microsoft only grew 12% and was beaten by the category "Other OSs". Microsoft has a long way to go in the Mobile market as Apple has proved to be a fierce competitor in growth and customer satisfaction; JD Power and Associates ranked Apple users as the most satisfied among mobile operating systems.
Most notably the largest shortcoming that Microsoft has failed to capitalize on is online search. When Google arrived with its "do no evil" tag line it was a direct attack at Microsoft. Microsoft was not only found sleeping but it was also playing catch-up to Google, something it was not used to doing. Google has dominated the search market and Microsoft has found itself running in circles trying to catch-up to a market it once controlled.
When Google launched its email service offering virtually unlimited storage Microsoft was dead in the water. Their offer, Hotmail, only offered a paltry 5MB and lost customers to Gmail in a record fashion. Microsoft tried to reinvent itself with its Live branding and search but ultimately came up short in yet another area; although its newest search engine, Bing, has been making strides in helping Microsoft gain some credibility in the online search market.
As the home PC is moving closer to "cloud computing",this is having all your information stored on a remote server, Google is again a step ahead of Microsoft. Google launched "Google Docs", these are programs that work in the cloud and compete directly against Microsoft Office, and the big difference is that Google Docs is free. While not as robust as the offline version of Office, it does offer a way to side step purchasing the Office package and using an online free variant. Microsoft felt so threatened by this that they have gone and started testing their own online version of Office as well.
Microsoft has also found out that just because they put their name on a product that it does not means guaranteed success. The Zune, for example, launched and instantly become the laughing stock of the industry. It did very little to even nudge away any of Apple's market share. Microsoft latest earning reports for Q2 show that there was a 42% drop on the non-gaming side of Microsoft's Entertainment and Devices unit, which includes the Zune. A second effort is underway though by Microsoft with the Zune HD.
Is Microsoft today the same Microsoft of the '90s? While they did fall asleep and release a line of lackluster products that ultimately hurt their image, they still continue to hold strong in the operating system market share and their office product suite. But the question is, is the damage done, have consumers gotten the message that there is an alternative out there to Microsoft? The answer is yes; the competitors in the field took advantage of Microsoft's laziness and have made a mark for their names. Will Microsoft rebound with the launch of Bing and Windows 7? It's likely to a degree but with Google launching a new OS soon, Apple spearheading advertisements, and software moving to the cloud, the biggest question is if and how Microsoft will adapt.
Special thanks to Rob for his contributions
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