After the latest financial results were announced by Microsoft (including the first year over year revenue decline in its history), I heard an increase in the comments from press and some analysts along the lines of ‘Microsoft has hit its peak’.
Don’t underestimate Microsoft.
Microsoft is at its best when it is threatened. Time and time again, Microsoft has rallied its immense resources to successfully counter some emerging challenge to its business. The Internet and Web was a classic example. Reforming and revamping the Internet Explorer team and launching IE7 is another. Search appears to be turning a corner with Bing, and the recent relationship announced with Yahoo should strengthen this. Looking forward, the battleground for the Cloud is wide open and Microsoft will be a player with its differentiated message of hybrid on-premises and Cloud-based platforms enabling customers to choose how, when and where they move some infrastructure and applications to the Cloud.
Does Microsoft have challenges? Absolutely. Its cash cows are suffering. Upgrades and purchases of Office has slowed because of economic conditions worldwide. Windows Vista was a disaster and the declining sales of PCs directly correlates to declines in Windows revenue. Even growth areas like Netbooks are a mixed blessing as Windows is included with the vast majority of these units, but at a lower average selling price to Microsoft. Also, licensing and pricing remain a significant pain point for its enterprise customers.
At the same time, there are bright spots of substantial new growth such as SharePoint, Office Communications Server, CRM, and System Center. Windows Server is performing better than the overall market for servers.
I am the primary analyst on Microsoft at Gartner. A team of 35 analysts has just completed a comprehensive research set of six research notes comprising about 45 pages that overviews and rates Microsoft and each of its enterprise offerings. For clients, I’ve linked to the research here:
First the overall Vendor Rating:
And the five drill-down focus research notes:
Each rating has a team of analysts and multiple research notes behind it. If you are looking for a big picture overview of Microsoft across all of its areas, I encourage you to review this research and talk to the analysts that are responsible for the ratings and research in each of the drill down areas to better understand how Microsoft’s solutions and initiatives will affect your organization.