Microsoft must fight to remain influential, say analysts

Far from dead -- its lock on the enterprise remains safe -- but must focus on consumers to stay at the table

Stormed by a shift to tablets and smartphones, and threatened, even in its enterprise bastion, by new demands from workers, Microsoft may lose its place at the table reserved for major technology players, an analyst argued today.

But it's not in danger of disappearing, either overnight or as far as forecasts predict.

What is at risk, unless it turns around what by all appearances has been a faltering mobile strategy, is its importance in the industry, one it's dominated for decades, said Carolina Milanesi of marker research firm Gartner.

"To be relevant, to continue to play an active role from a ecosystem standpoint, they need to win the consumer battle," Milanesi said. "To remain relevant, to remain an influencer, consumers need to seek out their products."

Milanesi's argument stemmed from forecasts that Gartner published last week showing traditional PC sales, the platform that Microsoft has long dominated, and will continue to, remaining virtually flat over the next five years.

Through 2017, sales of PCs will climb just 5%, Gartner predicted. Meanwhile, tablet sales should more than quadruple in that same stretch, and before 2017, will outnumber PC sales. At the same time, mobile phone shipments, most of them smartphones, will continue to climb until, in 2017, they will number 2.1 billion, 22% more than currently.

Technology's growth over the next five years, then, will be in tablets and smartphones. PCs, in contrast, will, after a dip this year, first struggle to regain 2012 sales volumes then climb ever so slowly.

Those forecasts fueled blogger, pundit and media interpretations, creating a brouhaha last week as Microsoft naysayers looked at the numbers and said the company was a goner, destined for the history books. Others defended Microsoft, saying the PC was far from dead, still would have a part to play in five years -- and beyond -- and that the Redmond, Wash., company had a long life ahead of it.

Both sides scored points, if sometimes ignoring any nuance, Milanesi seemed to say in an interview this week.

"If," she said, stressing the word, "Microsoft does not make progress in consumer, then it risks losing its relevance."

She based that on the explosion in tablet sales, and a belief that increasingly, most people will be satisfied with what they get from a tablet, and will use it as their primary computing device. In turn, that means PCs will become increasingly less important to consumers, resulting in fewer sales overall and longer intervals between system refreshes.

"It used to be, consumers went to the store every few years, selected a PC, which had Microsoft [Windows] on it," Milanesi said. "But if consumers aren't seeking out [Windows devices], then PCs become something that IT hands them [at work]. Microsoft cannot go about its business by leaving it in the hands of IT. Microsoft has to change. They need to put more focus on consumer than the enterprise."

Market share chart
Microsoft's future as an influential technology company rests on its ability to convince consumers that it can move beyond its comfort zone of the traditional PC and compete in tablets and smartphones. (Data: Gartner.)
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