Microsoft Could Lose More Than Consumer Market To Tablets

  • Posted: 07 April 2011 09:01 PM

    Microsoft Could Lose More Than Consumer Market To Tablets

    By Paul McDougall InformationWeek
    April 07, 2011 16:40 PM

    The iPad and other tablets are taking a big bite out of consumer sales of Windows PCs, but Microsoft’s dominance of enterprise computing is safe from slates, right? Wrong.

    New research shows that, contrary to what many pundits first believed, tablets are making significant inroads in the business market as companies look to give employees more technology choice and flexibility. That Microsoft won’t have a true slate OS for at least a year could create even more space for Apple, Google, Research In Motion, and others to get their tablets on workers’ desks.

    In a report issued this week, tech advisory firm Gartner said it thinks tablets are headed to the enterprise in a big way.

    Willis sees a trend, one that should favor Apple and Google, that puts the lie to the myth that Microsoft doesn’t need hits in the consumer market to protect its enterprise franchises.

    And it’s not just the corporate market Microsoft stands to lose. Government agencies have also caught tablet fever and are now rolling out slate-compatible apps and content for employees and clients. For example, the U.S. Agency for International Development earlier this year ported presentations for the U.S. embassy in Brazil to the iPad.

    And USAID chief Rajiv Shah isn’t lugging around a laptop to most meetings, either. “The administrator and his staff are pretty much just using the iPad for all briefing binders and all materials,” said Alen Kirkorian, a USAID principal information technology security specialist, on the agency’s official blog.

    Here’s what USAID CIO Jerry Horton had to say about Apple’s newest mobile devices: “The nice thing about the iPad and iPhone is that the development environment is fairly simple. It doesn’t require a lot of resources to develop an application.” And the iPad isn’t supposed to be a threat to Microsoft in the enterprise? Whole teams of in-house developers have gone missing for months trying to roll out a single Windows app.

    Even if enterprises replace just one of four Windows PCs with a non-Windows tablet, that would still mean a 25% cut in Microsoft’s enterprise Windows sales, not to mention related maintenance and upgrade fees. And that would be on top of significant downward pressure in the consumer sector, where tablets, mostly the iPad, are absolutely killing PC sales.

    Deutsche Bank analyst Chris Whitmore this week cut his estimate for worldwide PC market growth in 2011 by more than half?to 4% from 9%—after concluding that tablets are “usurping” the PC. “Apple remains the primary beneficiary of this technology transition which is increasingly coming at the expense of PC vendors,” said Whitmore in a research note.

    1) The Microsoft Tablet is late, late, late.

    2) Based on what Microsoft has been saying, it doesn’t matter anyway. If the upcoming Microsoft tablet is truly an attempt the put a desktop operating system on a tablet then the Microsoft Tablet is D.O.A. no matter when it ships.

    3) Over 90% of Microsoft’s revenues come from two products: Windows and Office.

    4) It is Dogma that no matter how badly Microsoft is screwing up in mobile that their revenues from both Windows and Office are untouchable.

    5) Apple sold 15 million tablets in the last 9 months of 2010. It is well within reason to believe that Apple will sell another 30 to 40 million tablets in 2011. One hundred million tablets from all manufacturers in 2012 is not only possible, it’s moving into the realm of probable.

    6) Despite the fact that there are over 350 million PCs running Microsoft office, many of those PCs are old or performing minimal functions. These devices could easily be supplanted with a $500 tablet.

    7) The reason people think that Windows and Office are sacrosanct is because Windows and Office are both universally accepted standards. Every other computer or computer software package must be compatible with those standards if they want to survive, let alone thrive. However, IF the focus of computing shifts from desktop/notebooks to tablets, then IT departments will reverse that trend and start to look for notebook/desktop devices that are compatible with Tablets. If that day comes, MICROSOFT WILL HAVE NOTHING. They have no phone presence, they no tablet presence and if the Robe of “compatibility” is taken away, everyone will suddenly realize that the emperor is naked.

    Am I going too far? Am I speculating beyond what is reasonable? Maybe. But ask yourself a couple of questions. If people could ditch Microsoft products would they? In a heartbeat. Microsoft makes miserable products that make people miserable. They have virtually no customer loyalty. If people think they can escape from the Microsoft trap they will jump to an alternative product just as fast as they can.

    Which is the more vital, the more viable developer community - desktop/notebook or mobile? The App Store is literally approving over one thousand Apps a week. Exciting Apps. Groundbreaking Apps. New Apps. When was the last time you got excited about - or even heard of - a new notebook/desktop Application? The action is in mobile. The development community is in mobile. And Microsoft is nowhere to be found.

         
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    Posted: 08 April 2011 01:03 AM #1

    Piling on…

    The design of iOS itself takes away money from utilities developers.  No virus software.  No system maintenance software such as the “Norton Utilities genre”.

    The focus of iOS apps must be on apps that focus on the consumer, not on the CPU or rootkit or registry or disk optimization.

         
  • Posted: 08 April 2011 01:18 AM #2

    FalKirk - 08 April 2011 12:01 AM

    Microsoft Could Lose More Than Consumer Market To Tablets

    By Paul McDougall InformationWeek
    April 07, 2011 16:40 PM

    The iPad and other tablets are taking a big bite out of consumer sales of Windows PCs, but Microsoft’s dominance of enterprise computing is safe from slates, right? Wrong.

    New research shows that, contrary to what many pundits first believed, tablets are making significant inroads in the business market as companies look to give employees more technology choice and flexibility. That Microsoft won’t have a true slate OS for at least a year could create even more space for Apple, Google, Research In Motion, and others to get their tablets on workers’ desks.

    In a report issued this week, tech advisory firm Gartner said it thinks tablets are headed to the enterprise in a big way.

    Willis sees a trend, one that should favor Apple and Google, that puts the lie to the myth that Microsoft doesn’t need hits in the consumer market to protect its enterprise franchises.

    And it’s not just the corporate market Microsoft stands to lose. Government agencies have also caught tablet fever and are now rolling out slate-compatible apps and content for employees and clients. For example, the U.S. Agency for International Development earlier this year ported presentations for the U.S. embassy in Brazil to the iPad.

    And USAID chief Rajiv Shah isn’t lugging around a laptop to most meetings, either. “The administrator and his staff are pretty much just using the iPad for all briefing binders and all materials,” said Alen Kirkorian, a USAID principal information technology security specialist, on the agency’s official blog.

    Here’s what USAID CIO Jerry Horton had to say about Apple’s newest mobile devices: “The nice thing about the iPad and iPhone is that the development environment is fairly simple. It doesn’t require a lot of resources to develop an application.” And the iPad isn’t supposed to be a threat to Microsoft in the enterprise? Whole teams of in-house developers have gone missing for months trying to roll out a single Windows app.

    Even if enterprises replace just one of four Windows PCs with a non-Windows tablet, that would still mean a 25% cut in Microsoft’s enterprise Windows sales, not to mention related maintenance and upgrade fees. And that would be on top of significant downward pressure in the consumer sector, where tablets, mostly the iPad, are absolutely killing PC sales.

    Deutsche Bank analyst Chris Whitmore this week cut his estimate for worldwide PC market growth in 2011 by more than half?to 4% from 9%—after concluding that tablets are “usurping” the PC. “Apple remains the primary beneficiary of this technology transition which is increasingly coming at the expense of PC vendors,” said Whitmore in a research note.

    1) The Microsoft Tablet is late, late, late.

    2) Based on what Microsoft has been saying, it doesn’t matter anyway. If the upcoming Microsoft tablet is truly an attempt the put a desktop operating system on a tablet then the Microsoft Tablet is D.O.A. no matter when it ships.

    3) Over 90% of Microsoft’s revenues come from two products: Windows and Office.

    4) It is Dogma that no matter how badly Microsoft is screwing up in mobile that their revenues from both Windows and Office are untouchable.

    5) Apple sold 15 million tablets in the last 9 months of 2010. It is well within reason to believe that Apple will sell another 30 to 40 million tablets in 2011. One hundred million tablets from all manufacturers in 2012 is not only possible, it’s moving into the realm of probable.

    6) Despite the fact that there are over 350 million PCs running Microsoft office, many of those PCs are old or performing minimal functions. These devices could easily be supplanted with a $500 tablet.

    7) The reason people think that Windows and Office are sacrosanct is because Windows and Office are both universally accepted standards. Every other computer or computer software package must be compatible with those standards if they want to survive, let alone thrive. However, IF the focus of computing shifts from desktop/notebooks to tablets, then IT departments will reverse that trend and start to look for notebook/desktop devices that are compatible with Tablets. If that day comes, MICROSOFT WILL HAVE NOTHING. They have no phone presence, they no tablet presence and if the Robe of “compatibility” is taken away, everyone will suddenly realize that the emperor is naked.

    Am I going too far? Am I speculating beyond what is reasonable? Maybe. But ask yourself a couple of questions. If people could ditch Microsoft products would they? In a heartbeat. Microsoft makes miserable products that make people miserable. They have virtually no customer loyalty. If people think they can escape from the Microsoft trap they will jump to an alternative product just as fast as they can.

    Which is the more vital, the more viable developer community - desktop/notebook or mobile? The App Store is literally approving over one thousand Apps a week. Exciting Apps. Groundbreaking Apps. New Apps. When was the last time you got excited about - or even heard of - a new notebook/desktop Application? The action is in mobile. The development community is in mobile. And Microsoft is nowhere to be found.

    But..but.. but. MS make good mice. See how many mice models they have out in the market and at fairly high prices too. None compare to Magic mouse or Magic Trackpad though. grin

         
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    Posted: 08 April 2011 01:32 AM #3

    Excellent topic.  Was talking about this with a VA IT person. A place where Apple computers are banned and Dell and HP are kings There is this misconception that changing to an iOS system will require new people and more people to manage.  This thinking is based on how Windows environment works. 

    However we know that the truth is different for iOS.  The problem is that no matter how economical and easy to use the iOS is, it still requires a significant change for most companies.  That change takes time and more money.  Therefore I think Apple has a 3-5 window( no pun indented ) to make the case and help make that transition smooth and doable while MS thinks that the iPad is a fad.

         
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    Posted: 08 April 2011 01:56 AM #4

    Twenty years ago I was introduced to the Wacom tablet and pen. Never used a mouse again because it was too slow. In other words, productivity.

    The decluttering of the interface (as compared to a windows computer) and direct control as distinct advantages for the iPad and I would say, the first meaningful productivity gain in years.

    Demonstrable productivity increase will drive enterprise demand. I don’t see any other tablets offering the productivity gains of iOS and iPad.

         
  • Posted: 08 April 2011 02:05 AM #5

    Excel is a great product, but if Microsoft screws with the interface again (like the dreaded ribbon), they’ll kill it before its time.  Word’s feature bloat makes it vulnerable to a scaled-down version of something else, but I’m not sure Pages is powerful enough to replace it in the Enterprise.

         
  • Posted: 08 April 2011 02:43 AM #6

    Mercel - 08 April 2011 05:05 AM

    Excel is a great product, but if Microsoft screws with the interface again (like the dreaded ribbon), they’ll kill it before its time.  Word’s feature bloat makes it vulnerable to a scaled-down version of something else, but I’m not sure Pages is powerful enough to replace it in the Enterprise.

    Excel is a great product. For the sake of argument, I’ll stipulate that Word is too. What I’m arguing is that as of today, Windows, Excel, Word and the entire suite of Microsoft Office products are the de facto standard in computing. You cannot hope to make a successful business program unless you make it run in Windows. You cannot have a successful program that manipulates text unless it is compatible with Word. And so on and so forth.

    However, in the mobile world there are NO programs compatible with Windows. There are NO programs compatible with Word.

    What most people think is that it is only a matter of time until programs that run on phones and tablets will become completely compatible with programs that run on Windows and are compatible with Microsoft Office. But this is an impossibility. Even Microsoft’s own Windows Phone 7 runs an Operating System that is alien to Windows and even Windows Phone 7 does not run software that is truly compatible with Excel, Word, etc.

    A phone and a tablet require a touch interface. And A touch interface is fundamentally different from a mouse driven interface. Even though the foundation for iOS and for OS X are the same, they can never completely merge because they are irreconcilably different. If iOS programs are always going to be estranged from OS X programs, then how much more true is it going to be that iOS programs are divorced from Office programs?

    And once the lock-in of standardization falls, once the illusion that all software runs though Microsoft is stripped away, once Microsoft’s OS and Office software suite are forced to compete on equal terms with all comers, that is when Microsoft’s share of the the desktop/notebook market will begin fall and to fall hard.

         
  • Posted: 08 April 2011 02:56 AM #7

    Interesting discussion.  Back in the 80’s I was telling my brother he should move his finance guys to Excel and was told they’d never give up Lotus.  (Random thought that jumped into my head)  Anyway, I never thought it was Excel or Word (maybe Outlook though) that Corporate America would be reluctant to give up.  I’ve always thought the barrier was the custom software of various departments that they were loathe to walk from such as the accounting stuff.  A lot of them are running Windows servers now.  How does that impact the desktop?  What about all the CRM stuff from JD Edwards and the like?

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  • Posted: 08 April 2011 02:59 AM #8

    Another random thought.  Someone is going to have to ride herd on Intuit if they’re interested in the small business market where quickbooks is the de facto standard.

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    Posted: 08 April 2011 04:34 AM #9

    FalKirk - 08 April 2011 05:43 AM

    However, in the mobile world…There are NO programs compatible with Word.

    Documents To Go Premium enables MS Office app use on iPad

    The $16.99 DataViz application makes it easy to view, edit, and create Microsoft Excel, Word, and PowerPoint files right on the iPad. The software works with a variety of Office versions, too, including 2007, 2008, 2010 and 2011.

    http://www.techrepublic.com/blog/mac/documents-to-go-premium-enables-ms-office-app-use-on-ipad/989

         
  • Posted: 08 April 2011 04:37 AM #10

    Windows in the enterprise is so entrenched, MS can print money off this annuity for some time to come.  The IT infrastructure, the business software, Excel and Word, and familiarity of users will give Microsoft more than a few years to adapt to the new paradigm of mobile computing.  Microsoft may still blow it, especially with Ballmer at the helm.

    Funny you mention Word features within enterprise software: Just today I was bemoaning the archaic text features within some business software wherein the vendor has been promising word-like functionality for the last 5 years, so some of the frustration is not all the fault of Microsoft.  Industry-specific software is generally underwhelming stuff. 

    On the other hand, Apple is producing far better, more powerful, software for consumers than developers are selling to enterprise.  I have first hand knowledge of business software where owners are paying $5,000 - $10,000 per month for stuff running on 30 year old code.  I am not kidding here.  Users put up with it for two reasons:  familiarity and lack of better alternatives.

    And I agree that the operating system should be far more transparent than it is. The iPad’s iOS rarely intrudes on the user’s experience and that has great appeal, both to experienced and the inexperienced computer users.

         
  • Posted: 08 April 2011 04:39 AM #11

    Drew Bear - 08 April 2011 07:34 AM
    FalKirk - 08 April 2011 05:43 AM

    However, in the mobile world…There are NO programs compatible with Word.

    Documents To Go Premium enables MS Office app use on iPad

    The $16.99 DataViz application makes it easy to view, edit, and create Microsoft Excel, Word, and PowerPoint files right on the iPad. The software works with a variety of Office versions, too, including 2007, 2008, 2010 and 2011.

    http://www.techrepublic.com/blog/mac/documents-to-go-premium-enables-ms-office-app-use-on-ipad/989

    Documents to Go is not very good, in my experience.  Despite being a heavy Excel and Word user, I’d rather use Pages and Numbers on the iPad.  Actually, I rarely create any spreadsheets on the iPad.

         
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    Posted: 08 April 2011 11:57 AM #12

    MS is promising a Slate product next year. However, MS never gets anything right the first time. It’s been a standing rule to wait for SP-1 before upgrading any MS product. IMO the initial MS Slate device will be terrible. They may get it right by 2014 or so but they will have to pour lots of money into developing and pushing the product without much profit. Then there is turning a market that has already gotten established and trained using iOS/Android slates. It could be another several years (2016/2017?) before they see significant profits from this market if ever.

    We saw this with the X-Box. Sure it’s selling well now but I doubt it will ever recoup the losses from the initial low pricing, RROD, etc mess. MS took a bath on the Danger purchase/Kin fiasco. Zune has been a disaster. The MS stores are losing money. They may eventually sell a lot of phones with WP7 on them but I don’t see them making a lot of money from it. If they raise the price of the OS too far MS/Nokia won’t be able to compete with Android, which is more refined. As pointed out Win/Office is their only cash cow but adding ribbons and other gimmicks is not going to keep other options at bay especially if people are looking at using tablets and other software where MS is not even at the table. As far as Win, sure Win7 is selling but it works well enough and I doubt Win8 will do anywhere near as well. Remember how long XP has hung on.

    The computing world is changing on both the Consumer and Enterprise level and MS is simply not adapting fast enough. There is a deep seated rot in the bowels of MS that is poisoning the whole enterprise. It’ll be a bad decade for Ballmer and co.

    [ Edited: 08 April 2011 12:05 PM by geoduck ]

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  • Posted: 08 April 2011 01:15 PM #13

    Going back to Word/Excel replacements on the iPad, I have only tried QuickOffice. And while I can open and edit Word and Excel programs, the experience isn’t great. And often times, taking the file back into native Word ends up with a jumbled mess of formatting issues.

    I think that the strength of the tablet in enterprise will only reach critical mass when internal systems are engineered so that the devices aren’t trying to recreate the “computer creating files” mindset. 

    By example, I could see companies moving to a Googledocs style of infrastructure, where documents are created, stored, and managed in the corporate cloud. In this environment a tablet would shine as a device to access and edit those files; either via a web browser, or a dedicated app.

         
  • Posted: 08 April 2011 01:18 PM #14

    I agree with the underlying trends you are identifying, but I think you’ve overlooked some “inconvenient facts” that make the situation a bit less dire for MS than your post suggests.

    [quote author=“FalKirk”] Based on what Microsoft has been saying, it doesn’t matter anyway. If the upcoming Microsoft tablet is truly an attempt the put a desktop operating system on a tablet then the Microsoft Tablet is D.O.A. no matter when it ships.

    Slates running Windows already exist, and have for a decade.  My local Honda dealership, to name just one business, uses Windows tablets for everything.  They’re no iPads, but for a complex app that has to be seamless between the desktop and tablet, they work okay.  Of course, that’s not to say Apple can’t far surpass that as they continue to develop iOS.

    3) Over 90% of Microsoft’s revenues come from two products: Windows and Office.

    I suspect this nugget of information no longer holds the weight it once did.  What I mean is: (1) it might be outdated—the “not making money” phase of the Xbox is long since over, and (2) even if it were still literally true, the other 10% of infinity dollars in revenue is still a whole lot of money.

    6) Despite the fact that there are over 350 million PCs running Microsoft office, many of those PCs are old or performing minimal functions. These devices could easily be supplanted with a $500 tablet.

    In this instance I not only echo your argument but go further: Most of those PCs (including the thin-client antique I am currently typing this on) could be more than adequately supplanted by simple sub-$100 nettops.  That’s not really Apple’s sandbox, but it still points to an MS vulnerability.

    If that day comes, MICROSOFT WILL HAVE NOTHING. They have no phone presence, they no tablet presence and if the Robe of “compatibility” is taken away, everyone will suddenly realize that the emperor is naked.

    ...and still raking in insane dough from Xbox 360 hardware, software, subscriptions, accessories, licensing, etc.  And that’s with no announcement of any kind on the horizon for a next-gen console from any provider.  They’re all in profit-taking time on the console life-cycle calendar.

    MS’s lack of phone presence is a real deficiency, but Windows tablets do exist and have existed.  They just aren’t freakin’ awesome like the iPad is.  They’re touch-screen handheld PCs, and that’s both good and bad.  To a person who hasn’t really tried a Mac or iPad, they probably seem great.  To those of us who know better, a Windows tablet isn’t something we would want.

    Am I going too far? Am I speculating beyond what is reasonable? Maybe.

    Yes and yes.  But your argument’s inaccuracy is of degree, not of kind.  You’re only wrong for the time being. smile

    If people could ditch Microsoft products would they? In a heartbeat. Microsoft makes miserable products that make people miserable. They have virtually no customer loyalty. If people think they can escape from the Microsoft trap they will jump to an alternative product just as fast as they can.

    You’d think that, right?  I know!  But inertia is a powerful force.  I just had this very argument with my mother-in-law last weekend (she is a CPA and runs a warehousing business).  It was like listening to myself back before I made the switch to Apple.  In her mind, and that of many Windows adherents, Apple makes toys for fun, not tools for productivity.  Most people don’t know or think about the Dieter Rams design philosophies or understand how Mac development sculpts the machines around what its users actually want and enjoy doing.  The concepts just don’t exist in their minds.  A computer is just a terminal for performing tasks.  They revel in the time they get to spend away from it.  WE revel in the time we get to spend ON our Macs, iPads, etc.

    Great post!

         
  • Posted: 08 April 2011 01:34 PM #15

    I have been wondering for a long time as to why MS does not “port” their Surface computer OS to a smaller form factor.

    Is it because it only runs on Intel based machines? Can anyone shed some light on this?

    Sorry if this seems off topic. grin