Microsoft in 2010: Four challenges that lie ahead

CIO - When you're a technology mongrel like Microsoft, challenges are constant - and 2009 was chock full of them. It was a tumultuous year that saw the software giant's first widespread layoffs and its worst quarterly revenue earnings ever.

Special report: Looking back at 2009, ahead to 2010

Yet there were some rays of sunlight flickering through the clouds. Windows 7 survived its many pre-launch milestones and launched successfully in October; search engine Bing debuted with aggressive marketing and innovative features; the launch of Windows Azure pulled Microsoft's cloud computing strategy together; Office, Exchange and Sharepoint software continue to own the enterprise; and Microsoft's public presence on television improved with the Laptop Hunters, Windows 7 and Bing ad campaigns.

But still, due to its massive size, Microsoft has been more affected by the global economic downturn than tech companies of smaller stature. So 2010 is likely to be a rebuilding year for Redmond as the economy slowly improves, say industry analysts.

[ For complete coverage on Microsoft's new Windows 7 operating system -- including hands-on reviews, video tutorials and advice on enterprise rollouts -- see CIO.com's Windows 7 Bible. ]

But Microsoft cannot merely wait out the economy. It must stave off competition and improve on many fronts. Here are four challenges for Microsoft in the year ahead.

Don't Fall Further Behind in the Mobile Race

Windows Mobile 6.5 was met with harsh reviews when it launched in early October, widely regarded as a ho-hum refresh on the road to Windows Mobile 7.

The key mobile question for Microsoft is this: How do you win over and keep customers when there are so many established and well-regarded choices?

It doesn't help Microsoft's cause that Windows Mobile runs on generic smartphones that lack brand recognition and loyalty. Microsoft could change the game by branding its own smartphones. RIM, Apple and Palm have proven that buyers want smartphones from one maker with one name. Microsoft's alleged Project Pink is a plan to develop Microsoft-branded phones that will reportedly include Zune services and be built on top of Windows Mobile 7. But waiting for Windows Mobile 7 means it will be a year until consumers and businesses see these "Windows" phones.

The bottom line is that Microsoft has not been able to compete with the iPhone, BlackBerry, Palm or Google Android. Redmond will need to keep WinMo 6.5 from fading into obscurity in 2010 and deliver on the promises of Windows Mobile 7.

"If Microsoft delays much longer on producing a decent mobile platform with software, services and partners," says veteran industry analyst Roger Kay, "then it will be out of the game."