March 7, 2005 (Computerworld) --
Microsoft's glory days are, if not behind it, at least numbered, according to most of the Computerworld panelists. And that probably goes for the other goliaths of IT as well. But even though our seers predict a less-prominent position for the industry big guys, don't expect more agile players to whittle them down to size very quickly, say our panelists. "Microsoft has already defied the odds once by staying a dominant player as the computer industry made a major technological transition in the late 1990s from the PC era to the Internet era," says Thomas Malone, a professor at MIT's Sloan School of Management. "It's not impossible for Microsoft to do this again, with whatever the next major technology turns out to be, but I'd have to say the odds are against it." But panelists don't agree on just what Microsoft's biggest challenge is. For IT consultant Paul A. Strassmann, the company's business model just isn't suited to the 21st century. "Microsoft enjoys astronomic profit margins selling software wherein the customer ends up spending a large multiple of the purchase price and incurs all of the risks," he says. "Google, because of their architecture, can introduce innovations much faster than Microsoft, which is now hobbled with a huge accumulation of hard-to-upgrade code." IT futurist Thornton May agrees, saying the Microsoft economic model is outdated. "Microsoft is running out of rich, dumb customers," he says. "If you are technologically smart, you can replicate 80% of the functionality of Microsoft Office essentially for free." The company has two monkeys on its back, says Don Tapscott, an author and president of New Paradigm Learning Corp. The first is the high expectations of shareholders. "A company of Microsoft's size has to continue to dominate new multibillion-dollar markets just to meet these expectations, so just finding new areas for growth will be a major challenge," he says. "The second challenge comes from networked/pervasive computing. The desktop and operating system are no longer the center of the electronic universe." And David Moschella, research director for CSC, sees Microsoft enemies everywhere. "The combination of open-source software, ASP services such as Google, an increasingly hardware- and operating-system-neutral Internet and the emerging global economy all work against Microsoft's once overwhelming dominance," he says. "Linux has effectively ended the threat of a server monopoly, and Microsoft's share in new consumer device- and Internet-based services markets is not strong. And emerging economies such as China and India are not inclined to make themselves part of the Microsoft empire." Microsoft's strength has been a good thing until now because it established de facto standards, just like the IBM PC before it, says Michael
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