Is Microsoft really doomed as one analyst predicts? Don't bet on it

Is Microsoft really doomed as one analyst predicts? Don't bet on it

Summary: Some analysts are ready to throw in the towel on Microsoft. It's laughable but that's what happens when you hand the unwise their own piece of virtual chalk. They make silly predictions.


I've seen some goofy headlines in my time and admittedly have even written a few myself.

But the headline I read this morning is the best of the worst I've ever seen: "Steve Ballmer's Nightmare is Coming True." I don't know who Jay Yarow is nor have I ever stumbled onto Business Insider before but I do know that Jay Yarow is way off base on this one. Steve Ballmer and Microsoft are doing fine. It's funny that Yahoo Finance picked up the story--not funny, Ha Ha, funny strange. The analysis is terribly flawed and I'm going to show how flawed it is by refuting Yarow's points and hopefully school him in how the tech business and technology analysis really works. Get your pen and paper ready, Jay, it's time to get the real scoop on Microsoft.

Note: Jay's new article and this response are both based on Matt Rosoff's original article. Jay's commentary outlines his responses to those original predictions. My responses are reactions to his analysis and Matt's original assertions.

Point #1: The iPad eats the consumer PC market. Wrong. You state that, "In the third quarter of 2012, PC sales were down 8 percent on a year-over-year basis worldwide. In the U.S., sales were down 14 percent. A big chunk of the decline can be attributed to the rise of the iPad. Apple sold 14 million iPads last quarter, which is more than the top PC maker, Lenovo, which shipped 13.7 million PCs. Throw in Apple's 4.9 million Macs, and it's the top computer maker by a mile."

Seriously, you need to acquire a clue. The PC market has been declining for years and it has nothing to do with the iPad that is less than three years old. People have been buying fewer PCs for the past ten years. Lots of information about that everywhere you look. Nice try but people are hanging onto their current computers longer and simply purchasing upgrades, such as more RAM and larger hard drives. There's no mystery here. Consumers have clung to Windows XP because it worked. Vista sucked and Windows 7 scared a lot of people off in the very beginning. People are tired of the constant upgrade cycle with each new operating system. I believe Microsoft has solved this issue with Windows 8.

Sure, Apple has made sales but there's no way an iPad can replace a PC for any real productivity. They're nice to have for checking email, gaming and reading but you're not seriously going to work on one for a long period of time. What do you use to write your articles, Jay?

Point #2: Employees gradually switch away from using Windows PCs for work. Wrong. I don't know what planet you're from but in companies of any size, the PC or laptop is still what everyone uses. If you think that it's otherwise, please show me where companies are really abandoning PCs or laptops for tablets.

Tablets are not yet a replacement for laptops or PCs. They soon will be when the Microsoft Surface tablet graduates from an RT operating system to a full-blown Windows 8 or Windows 9 platform. Don't kid yourself. Microsoft isn't going anywhere where businesses are concerned.

Point #3: Windows 8 fails to stop the iPad. Wrong. They serve different markets. Sure, there's some overlap but generally speaking, they serve different markets. The Surface will be more of a business computer than the iPad, which is, I'm sorry to say, little more than an email/game system/music and video player. This is coming from someone who has an iPad and an iPhone. I like my iPad but when I need to do serious work, I reach for a full-sized laptop computer. Windows 8 is not out to stop the iPad. The statement is really a non sequitur. Windows 8 is a desktop operating system. The iPad is a gadget with a light operating system. There's a difference. I hope I don't have to explain it.

Additionally, my son, who is in college wants a Microsoft Surface for Christmas. He says that in his circles, the Surface is the tablet to get--not the iPad.

Point #4: Loyal developers start to leave the Microsoft platform. Wrong. You do leave this one open ended with, "We're not sure if this happening or not. So far, the early signs are actually positive for Microsoft. It has over 20,000 apps in its Windows app store. Windows 8 is only a month old. At the same time, Microsoft doesn't have a Facebook app for the Surface, and one of the biggest complaints from reviewers was the lack of good apps for Windows 8."

Here's a good question. Why would you really need a Facebook App when you have a capable web browser to connect to There are thousands of good Apps for Windows 8 and more coming every day. It's funny that someone would make a statement like, "...and one of the biggest complaints from reviewers was the lack of good apps for Windows 8." As you said, it's been out since October 26. Let's not jump the gun quite yet on stating that there are no good Apps.

Besides, if you see Windows 8 as a business operating system, as well as a consumer operating system, Apps are more "consumery." Businesses want full applications with lots of functionality. If you're looking for 'one hit wonders,' you don't have to go far in either App store. Windows 8 uses both full applications and Apps. Ah, the best of both worlds.

Point #5: Windows Phone gets no traction despite the Nokia deal and RIM's collapse. The new Windows phones are very new--newer than Windows 8 itself. Frankly, I think Microsoft offers a phone because it's an industry trend. I don't think Microsoft is really going to bank their existence on a phone. They sell a lot of them to be sure but it isn't the main thrust of their business. So, in a word, I'm sure they don't really care that much. Besides that, phone customers are the least loyal of any I've seen. In the past few years, I've had a Blackberry, a two Windows phones, an iPhone and an Android phone.

People's minds change with the wind on phones. Today, it's the iPhone, tomorrow it's the Windows phone and two days from now, it's the Android.

Point #6: Office loses relevance. Wrong. That's never going to happen. Microsoft Office is THE corporate choice for office suites. Apple users have enjoyed Microsoft Office for going on 30 years. It's here to stay. The author admits that this hasn't happened and it won't. Office is the standard by which we all live. I've said many times that if Microsoft ever stops making Excel, the entire world will cease to do business. People use Excel for everything. Most of the time, they use it in ways that it was never designed to be used. It's crazy what people use Excel for. Big companies and small companies alike use Office for everything. Microsoft could survive another 50 years just on Office alone.

Point #7: Microsoft's other business applications start to erode. Wrong. You seem to forget that Microsoft's business is software. They know software better than any other company on the face of the earth. Microsoft is software. Operating systems, games, office suites, support software, enterprise applications, virtualization and just about everything that we use is Microsoft.

Even as much as I, myself, claimed for years that open source operating systems and open source software would be the downfall of Microsoft, they're not worried. They've lost a small amount of revenue from Apple and open source software but it's likely that those people wouldn't have bought into Microsoft's software anyway. There are always the renegades who want to buck the mainstream, accepted way of doing things and go off on their tangents. I tend to be one of them. However, when it comes to productivity, I use Microsoft. This article is being typed into the Chrome browser (See? I told you I was a renegade.) on Windows 7.

Point #8: The platform business collapses. Wrong. Businesses will never stop buying Microsoft products. To say that they will is just silly. Sorry, this one is just too far-fetched to really even justify it with a comment at all.

Point #9: The Xbox was never going to make up the slack, and Microsoft can no longer afford to keep investing in it. Wrong. Yeah, another bad prediction. There's one thing that you can say for sure about Microsoft, "They learn from their mistakes." For whatever problems and issues they had originally with the Xbox platform, they have been resolved. The Xbox is now the most sought after game console. Who doesn't want to play Halo?

I'd love to have one but unfortunately we chose the Wii instead because of some early issues with the Xbox concerning security and hardware.

The Xbox platform is an awesome gaming platform. I love it. My nephew had one and he used to allow me to play Halo on it. Unfortunately too, the controller was awkward for me and he didn't let me change the settings nor get used to it, so it was a fail for me. Still fun, though.

Point 10: Microsoft suffers a huge quarterly loss. Ballmer retires to play golf. Wrong. Sure, Microsoft had to write down $6 billion because of aQuantive but hey, you win some, you lose some and some get rained out. That's the nature of doing business. Microsoft's stock price has remained relatively unchanged for the past ten years with the exception of a high of $37-ish in November 2007 to a low of $15-ish in March 2009. Today, it's hovering above $26 per share. It's no Apple but it's keeping pace with Oracle and no one's predicting Oracle's untimely demise.

I think predictions such as Rosoff's are gambles at best. Yarow's commentary is more balanced but still a bit anti-Microsoft. Actually, I should have given Rosoff the hard time, since Yarow was only providing an updated commentary to Rosoff's position. Still, neither article gives any real insight to Microsoft's strength but both writers probably got enough hits to earn some extra Christmas money.

Seriously guys (Rosoff and Yarow), Microsoft isn't going anywhere except to the bank with their big deposits. They serve the corporate world, which isn't fickle. Businesses want reliability. Businesses want stability. Businesses want a company behind the products they use. Yes, Apple is a big company but they're more consumer-oriented and consumers are fickle. Trust me, if Apple doesn't continue to deliver, it could only take one Vista for their gaggle of loyal fans to turn and run elsewhere.

What do you think of predictions of doom and gloom for Microsoft? Talk back and let me know.

Topics: Microsoft, Android, Apple, Windows


Kenneth 'Ken' Hess is a full-time Windows and Linux system administrator with 20 years of experience with Mac, Linux, UNIX, and Windows systems in large multi-data center environments.

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  • Thank you!!

    I read theoriginal article and thought to myself WOW, I could not even comment about what they wrote. Your article is more realistic than theirs. They made alot fo assumptions with little facts.
    • Microsoft really is doomed. It lost its future.

      The death of a thousand cuts will befall Microsoft.

      We're talking about the future. The Post PC era. Obviously the author doesn't agree that the Post PC era is coming, but he will be proven wrong on every point within 12 months.

      Microsoft still holds its PC era monopoly, but in Post PC devices (phones, tablets) every single one has failed. Every one. Anyone buying a Windows Phone or Surface should realise that these are doomed devices.

      The author claims business will move to Surface Pro. If that was going to happen, Microsoft's previous x86 tablets would have been a success. But they failed. It's now apparent that Surface with Windows RT has failed. Surface Pro is next to fail, as its PC era processor (Intel x86) burns hot and gives half the battery life of its competitors. With the failure of Windows Phone and Surface RT, it's clear that nobody wants the Microsoft's Metro Interface.
      • Wrong

        Another one drinking to kool-aid saying the PC is dead and there is now a "post-PC era". What a load of BS. Gert a clue, Zchro
      • poor comment

        Dude your knowledge about IT and business its shocking. However not even that can stop you of writing such a rubbish comment(s). You are entitled to your opinion.
        Sorry dude but that is true about you.
      • Same thing every year

        Death of the pc, death of pc gaming, death of apple, and it's the year of linux.
        new gawker
      • They were a success, to those using them

        and could afford them. The price of the hardware (with lots of improvements too) now is in line with more people buying tablets. Apple had good timing to get the iPhone in and the iPad was a great continuation of that. At this point though, people are getting all kinds of tablets. I know of more people with Android tablets than anything else (lots of Kindle Fires, Nexus, other random models). And same with phones.
        Now that hardware costs continue to fall and for more powerful, smaller hardware, the PC is going mobile itself, rather than mobile taking over on its own. So PC operating systems will be more important than the old mobile OSes.
      • Wow...

        Your comment was such a waste of time to read...
        Simon Tupper
      • The Post PC Era is imaginary... or at best, subjective.

        If you have forsaken a PC for another device then you have migrated to the Post PC Era. Good for you! But the majority of content that you consume, the products that you buy, the places of business you frequent in the flesh or online, are produced by, managed by, moved by, developed by PCs, and that will be the case for many years to come. If nothing more than the tactile relationship of the keyboard and the easy - on - the - eyes large monitor is taken into account, the PC rules the day, the week, the year, the decade... and on. Other devices are not powerful enough, large enough, reliable enough, to do the daily grunt work of even a modestly - priced PC. Bragging about being able to see a hi-rez movie on a screen that is smaller than a piece of printer paper is really pretty dumb when you get down to it. Sure "It's Portable!!!" you may shout, but that is an admission that it is really a portable tool which is fine for the limited capabilities which are inherent in the design. It ain't no PC, buddy. Hi Rez video on one of your two 22" screens, multiple browsers, Excel, Outlook, a chat stream and webex session can be done on a business PC with a video card upgrade and 8 gig of RAM.

        Post PC Era? Sheesh. That's a ways off, Hoss.
      • In the real world.

        By which I mean the business world, Microsoft is still king. While iPads may make their way into the boardrooms for note-taking. They won't replace the PC at the desk. Nor will many companies want to abandon the software they use in their business for something that won't do what they want it to do. (For example, a company's quality control software is not likely to be found as an app.) Will the Surface Pro enter into the mix? Possibly but probably not on the large scale. They will be the tools of management and higher level supervisors and not the workers on the floor who will remain tied to the PC.

        In any case, Microsoft has nothing to fear... yet.

        One thing to keep in mind is the old phrase "You'll never get fired for buying IBM." There was a time when IBM was king of the market. Now? Not so much. They were the monolith but a monolith can be tipped over. However, the iPad isn't going to do it in the business market. It is a consumer device. Apple has never been able to make great strides in the server market and never made a mark in the enterprise. I don't expect that to change.

        There isn't a post-PC era yet (and possibly never will be entirely except in the consumer sphere). Microsoft makes its real money from the business sphere and Apple won't change that.
  • refreshing

    it's nice to see someone actually write a positive microsoft article for a change. There is so much microsoft bashing at present it is getting boring. Time will tell though.
    • I know everything's fine

      How do we explain the contracting revenue (particularly the two monopoly products)? Sure the PC market is stagnant, yet Apple revenue's are soaring.

      Developers still uncertain about the platform direction, keep in the dark the whole Win8 process.

      Plenty of unease with Win8 UI changes (e.g. Start menu and touch), particularly as the enterprise won't touch it.

      Nokia & WP8 are dying, XBox hasn't covered it's prior losses.

      MS share price has benefited from massive buyback programs, but when we say win/lose some (e.g. aQuantive) just where are the wins?

      MS and Ballmer doing a stirling job is a given;-)
      Richard Flude
      • Just like the comic books

        When the villain fails, he normally blames it on his henchmen or meddling outsiders, but never himself.
        John L. Ries
      • Really?

        I'm a developer, and I'm not the least bit confused, I know exactly where the platform is going (I may not like the direction, but I do know where). You obviously haven't been to MSDN lately.
      • are you on drugs ?

        Nokia / WPI are dying ?: have you even used a nokia / windows phone ?

        XBox hasn't covered its losses: do you know it is no. 1 gaming console since atleast two years ? The revenue reached billion last year. With more content added regularly on it, the revenue is bound to increase.

        Developers are uncertain about the platform direction: 20k apps in one month on windows8. Do you even understand what you write ?

        Plenty of unease with Win8 UI changes: Did you try it yourself or just read the news ? I tried it myself and I got everything in two hours (just looked at a couple of youtube videos). Its damn easy to use and in a good way.

        Every company has its peak time, Apple is enjoying its time now. This does not mean Microsoft is losing value, because, as the article says (if you actually read it), iPad is not a replacement to PC. The notion of post-PC era is exaggerated. People need to understand that PC itself has been changing with every release, Win8 being an example of it. In some sense, PC is already a post-PC.

        Go troll somewhere else !
      • Windows 8 is thriving...

        The reason Windows 8 sales aren't keeping pace with Windows 7 (yet) is because there aren't enough touchscreen devices on the market. They're in such high demand, that retailers can't keep them on the shelves. What they're having trouble selling is non-touch hardware with Windows 8 on it... which makes perfect sense.

        Unfortunately, many bloggers & analysts only want to look at half of a fact, but don't investigate what's really going on in the market.
    • That's because

      it's so easy.
  • Hypocrite...

    You are wrong as well. You confused fact and opinion.
    • Yep. Ken's rebuttal #1 is simply WRONG.

      Source: Wikipedia
      YEAR Units
      1996: 70.9
      1998: 80.6
      1999: 92.9
      2000: 113.5
      2001: 134.7
      2002: 128.1
      2003: 168.9
      2004: 189.0
      2005: 218.5
      2006: 239.4
      2007: 271.2
      2008: 302.2
      2009: 305.9
      2010: 351.0
      2011: 352.8

      What I notice a drastic slowdown in growth when smartphones (2009) and the iPad started (2011) became the center of people's tech expenditures. Long term, I expect MS to do OK through this.
      • I don't think the drastic slowdown

        relates directly with smartphones or tablets. There were other times where it was even less than the year before or not nearly as much, and then various times when it was suddenly more than ever before.
      • Your comment is flawed...

        if I follow your logic than in 2002 Microsoft nearly died? come on... so you are telling me that the 50 billion growth in 2010 what poor? You certainly don't know what you are talking about.
        Simon Tupper