Wednesday, August 05, 2009

Microsoft woes

I wonder whether the news that Microsoft, still the world's largest software company, posted profits down 29% in the second quarter may turn out to be a very significant turning point?

Microsoft has in the past been a shining example of the law of increasing returns where everything they produce pushes more developers to develop for their platform and therefore more people buy their software, and so on, and so on.

But now there are credible alternative platforms growing at speed: particularly Google in search, advertising, cloud based productivity apps, and now mobile; and a resurgent Apple in the desktop and especially the mobile space.

It could be that the relentless upgrade cycle which drove the company's profits for so many years is finally faltering, as corporates delayed the upgrade to Vista because of the well-publicised woes of the platform, and enough alternatives have arrived on the scene to at least cause a review of IT strategy.

Of course it is far too early to call the end of Microsoft's growth, but the earnings dip is surely a sign of more trouble to come.