Microsoft at a crossroads

More recently, it became known that for the first time since 1986, Microsoft received a quarterly loss. And this is largely due to the decline in revenue in the priority direction for itself – Windows & Windows Live. There is an opinion that the company plans to improve the situation on the OS front, relying on its future tablet. 

According to Microsoft’s annual report, almost a third of the company’s revenue comes from the sale of licenses for Windows for PC. But it was the Windows & Windows Live indicators that fell by 13% in the fourth fiscal quarter of 2012 alone. Anyway, Microsoft Windows remains the main PC platform, which is unlikely to be threatened in the near future. So it is likely that the loss of this division is largely due to the unjustified Windows Phone 7. 

One of the company’s representatives unofficially commented on this situation to Vedomosti as follows: “the distribution of these (WP7-based) devices complicates the process of finding developers for our platforms.” In other words, everything depends on the fact that it is difficult and long to port applications to the platform, due to the need to rewrite applications for C#. Given the relatively modest audience of WP7, the cost of developing or porting a project may simply not pay off. Of course, with the release of WP8, it will become easier for developers, the question is whether this will turn the situation around.  

It is possible that the release of a new version of the platform will entail an increase in the popularity of the platform, an increase in interest in it from vendors and users, which means an increase in profits. The release of the Surface tablet in this scenario is nothing more than a populist move designed to demonstrate the potential of the platform. At least, this is the opinion of both Acer management and mobile market analyst Eldar Murtazin. 

Today, the already mentioned Vedomosti also shared their scenario. According to their reviewer, the Surface tablet will compete with tablets from other manufacturers and, thus, may lead to a loss of loyalty among vendors. Moreover, according to the founder of the Russian IT group “Lanit” George Gens, the company has no other option. 

It is quite possible that what is meant here is that in order to succeed in this market, it is necessary to follow in the footsteps of Apple. But such a strategy will lead to the loss of Microsoft’s positions already occupied in the mobile market. The company will have to start all over again, and this will mean new losses. 

Fierce competition with “friendly” devices, the risk of losing loyalty from partners, even a potential conflict with them is the loss of everything that Microsoft has been building intensively over the past two years. No matter how ambiguous Windows Phone 7 is, a certain community has already developed around it and the devices on it, developed by Samsung and HTC, among others. Moreover, the tablet version of Windows 8 is already perceived as the successor of WP7. And aggressive competition with partners will hit the products already sold on its basis.

So, most likely, the Surface for Microsoft is no more than the Nexus smartphone line for Google – a demonstration of strength, but not its source.    

On the other hand, Microsoft has a very successful experience in the field of creating and promoting an original product – the Xbox 360. But whether the company is ready to use this experience in the mobile market is a big question.