Window of opportunity: is the end in sight for Microsoft?

Over-expansion, arrogance, or a straightforward failure to spot the Next Big Thing? Any one of these could pose the biggest threat to Microsoft over the next few years. Tony Hallett rounds-up the opinions of the experts who have visited Silicon.com's studios recently

Last Friday, Silicon.com published a compilation video examining the threats Microsoft could face in the near future. While analysts often speak about the rise of Linux, there are several other areas where the software behemoth might come unstuck. Richard Sykes, outsourcing expert and ex-CIO of chemicals giant ICI, said that Microsoft may struggle to get to grips with the "move to services rather than software" - something which companies peddling applications hosted and maintained remotely might also bring up. However, Microsoft itself is beginning to use the word 'solutions' more and more frequently, and has entered into alliances with EDS, KPMG and others. Lotus is one of Microsoft's main productivity and groupware rivals. Jim Burnham, worldwide general manager for SmartSuite, believes the firm's future problems are right under its nose. "Microsoft's biggest threat in the future is going to be from its own customer base," he said. "I think their customers are getting a little tired of some of their business practices, some of their licensing practices, from their continued high prices, and from their continued arrogance to what their customers really want." The growing demand for non-PC computing platforms also crops up a lot when this subject is broached. However, Microsoft is aware of this trend as well. Meredith Fischer, VP marketing, Pitney Bowes, said: "Their biggest threat could also be their biggest opportunity... Information appliances could break the Microsoft stranglehold of power on the desktop." But she added: "If they handle it right, they could have a lot of bright applications and content behind these bits and pieces." Microsoft itself is reported to be keeping a close eye on Symbian and the wireless device market. But the biggest threat may not come from a technology. Clive Longbottom, strategy analyst, Strategy Partners, said: "Their biggest threat is Bill Gates. They've got themselves into a very bad position with the DoJ [US Department of Justice, currently investigating Microsoft], and instead of getting themselves out of it two years ago, they were arrogant, and now it looks like they'll get broken down. Gates is obviously business savvy, but he should have been more politically savvy." He added: "Microsoft has mentioned Linux to the DoJ to show there's competition, but no-one owns Linux, and it won't destroy them. It's a red herring, not a Red Hat." As the company's market capitalisation sets new records, with stories about Bill Gates' personal fortune and ambitions apparently knowing no end, many think the company could 'do an IBM'. David Birss, MD, Xstreamis, said: "Their biggest threat is going to come from a further fragmentation of the industry. I was one of the guys in the 70s and 80s who believed IBM could never be beaten. But IBM was beaten - not by a head-to-head competitor, but by a function of a fragmentation of the industry they thought they could challenge. Digital [Equipment Corporation] is another example." He thinks they will then be too big to catch up, or won't spot the change at all. Nigel Palmer, managing director, Gestetner, added that managing a large workforce won't make corporate flexibility any easier. But it's difficult to ignore the rise of Linux for long. Mike Thompson, research manager at the Butler Group, doesn't believe that size will be a major stumbling block for Microsoft, for example. He pointed out that many companies have more employees and business processes - but does stress the potential danger of the upstart operating system, Linux. He said: "Linux may not be the threat, but the thing about it is that it's perceived that way, and the idea of a unified Unix is threatening - that kind of simplicity has been a big selling point for Microsoft." Further comments about Microsoft's future can now be seen in a compilation video archived in Silicon.com's Group/Middleware Channel - http://www.silicon.com/a31963