Linked by Howard Fosdick on Mon 13th Dec 2010 23:11 UTC
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Member since:
2009-08-22
What's important is to ditch the previous paradigm's way of analysing the success or failure of any technology strategy or product. Even if Microsoft were to take, for example, half the mobile phone market the emergence of the mobile computing market will still be a disaster for them as a company. Why?
During the epoch of Microsoft's desktop monopoly the company could (and for the time being continues to) make very high profits on its core software products such as Windows and Office. These products could be sold with a high mark up because precisely because of Microsoft's monopoly, there were no effective competitors, and the revenue and profits from just these core desktop software monopolies still remain the overwhelming pillars of Microsoft's business.
In the new mobile markets the business model is entirely different. For a start it is highly unlikely that any one company's software will become a monopoly standard for the mobile world so the mark up on software (which is after all Microsoft's core business) will remain far below the rates historically enjoyed by Microsoft in the desktop segment. In fact the situation is worse for Microsoft in the world of mobile software and OS's because it's key competitor (i.e. the other major player with a major offering for OEMs) is offering its products for free.
Secondly it appears that in the new world of mobile devices that the makers of hardware (actually integrated hardware and software i.e. Apple) are the ones making almost all the profits. And Microsoft has no history at all of making even remotely substantial profits from hardware.
So as the technological and economic weight of the desktop fades so will the margins for Microsoft's core business and at the same time even if Microsoft were to achieve substantial market share in mobile OSs and software it will not generate the profits to replace those lost in the desktop market.