Analyst: 'It is game over for Microsoft in consumer'

Summary:What if Chief Software Architect Ray Ozzie and other leaders at Microsoft are wrong and integrating the consumer and business worlds doesn't really matter? One very influential market watcher, Mark Anderson, author of the Strategic News Service newsletter, is betting that instead of a melding, there will be an increasing chasm between the consumer and business market.

Microsoft started out its life as a consumer/developer-focused company. The company subsequently switched strategies and became a largely enterprise-focused vendor. These days, consumer is king for Microsoft -- at least as far as corporate strategy and where its ad dollars go.

But what if Chief Software Architect Ray Ozzie and other leaders at Microsoft are wrong and integrating the consumer and business worlds doesn't really matter? One very influential market watcher, Mark Anderson, author of the Strategic News Service newsletter, is betting that instead of a melding, there will be an increasing chasm between the consumer and business market.

Anderson, whose word carries a lot of weight with corporate execs (including those from Microsoft), venture capitalists and other movers and shakers, held his annual predictions dinner in New York City on December 10. His list of 2010 tech predictions, which included a number of things that won't surprise some tech watchers, Anderson acknowledged, were pretty dire for Microsoft. The ten:

1. 2010 will be The year of Platform Wars: netbooks, cell phones, pads, Cloud standards.  Clouds will tend to support the consumer world (Picnik, Amazon), enterprises will continue to build out their own data centers, and Netbook sector growth rates continue to post very large numbers.

2. 2010 will be The year of Operating System Wars: Windows 7 flavors, Mac OS, Linux flavors, Symbian, Android, Chrome OS, Nokia Maemo 5. The winners, in order in unit sales: W7, Mac OS, Android. W7, ironically, by failure of imagination and by its PC-centric platform, actively clears space for others to take over the OS via mobile platforms.

3. All content goes mobile.  Everything gets tagged, multi-channeled, and the walled gardens open up.  TV and movie content, particularly, break free of old trapped business models.  We are moving toward watching first-run TV and movies on phones, for a price.  Which leads to no. 4.

4. MobileApps and Mobile Content drive MicroPayments, which move from niche to mainstream payment models.  Payment for content will split along age lines, at around 35; above, pay; below, don’t pay.

5. The Phone vs. the PC: A Split Along Two Paths (enterprise vs. consumer).Note: The phone is now the most interesting computer platform, and it is driving innovation: software, business models, distribution. Netbooks are next up as drivers.

6. There will be a Cloud Catastrophe in 2010 that limits Cloud growth by raising security issues and restricting enterprise trust.  CIOs will see the cloud as the doorstep for industrial espionage.

7. A huge chasm opens in computing, between Consumer and Enterprise (government/business.), with Apple, Google and most Asian hardware companies in Consumer, and Dell, IBM, Cisco, and MS on the Enterprise side. HP will straddle both. Before 2010, talk was all about unifying consumer and enterprise. Now, talk will be about their split.

8. Microsoft loses in its Consumer play: except for gaming, it is Game Over for MS in Consumer. This will make Consumer the place to be, where the most robust and exciting change artists will work.

9. News media that survive will move to the subscription model, in whole or in part, along age lines.  (See no. 4)

10. Connecting remote data to people and things in real time will lead to a series of exciting new devices and applications. Possible examples: real time comparison and recipe-driven shopping, facial recognition (in social spaces) linked to bios, self-guided tours by phone, voice-queried information about your personal environment.  Many of these are technically proved out today, but they will start to emerge as an exciting and brand new trend in applications in 2010.

Anderson's contention that Microsoft has no hope of redeeming itself in the mobile market is one a growing number of company watchers share. (I'm no Anderson, but I'm going to predict Microsoft still has something up its sleeve with Windows Mobile 7, due in 2010, that could pull it from the brink. Or at least keep the company's market share from eroding toward zero. If Microsoft could at least make good on its hints to cut the time between delivery of mobile operating systems to phone partners and the delivery of those phones to consumers from six-plus months to a few weeks, that would be a good start...)

But it's Anderson's prediction No. 7 about the growing chasm between consumer and enterprise that could really spell doom for Microsoft, and especially Ozzie, if it comes true. (And if Microsoft doesn't revert to focusing more on enterprises, where it's strong and credible.

Anderson doesn't believe that Ozzie's "beautiful world" of three screens and the cloud will ever come to pass. Part of the problem is Microsoft cannot recover from its mobile failure, Anderson claims. But the whole story of the importance of connecting front-end platforms that can integrate tightly to a strong back-end platform isn't resonating. Instead, customers are more interested in the fully-integrated user interfaces (with apps, marketplaces and the like) with an OK, but not great, back-end integration story. Apple, Android and others are better positioned here and going to win, Anderson told dinner participants last night.

Anderson, who noted that Ozzie is a friend of his, said he wouldn't be surprised for Ozzie leaving Microsoft some time in the relative near-term. Ozzie hasn't found it easy fitting in culturally in Microsoft's dog-eat-dog culture. And if Ozzie's three-screens vision and "consumer experiences first" push don't resonate with users, will he want or need to stay?

I've never been a big believer in the consumerization of IT theory. And I've said a few times I felt Microsoft has been spreading itself too thin and risked alienating its enterprise users with too much attention going to consumer. If Microsoft were two different companies -- a consumer-focused one and an enterprise player -- it might better serve its users and be less scattered in its focus, I think.

Anderson's track record on predictions is pretty darn impressive (95 to 97 percent accurate on his 2009 list, he claimed last night). Do you think he's right about the growing chasm between consumer and enterprise? Is Microsoft's three-screens strategy nothing but a perfect world in a bubble?

Topics: Microsoft, Hardware, Mobility, Operating Systems, Software, Telcos

About

Mary Jo Foley has covered the tech industry for 30 years for a variety of publications, including ZDNet, eWeek and Baseline. She is the author of Microsoft 2.0: How Microsoft plans to stay relevant in the post-Gates era (John Wiley & Sons, 2008). She also is the cohost of the "Windows Weekly" podcast on the TWiT network. Got a tip? Se... Full Bio

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