There is something wrong in Redmond. And it is not exemplified by what is happening as much as it is by what is not happening. On the one hand this is not something new. After all, Microsoft has typically played catch up (very successfully) in various markets. But some of the current missteps are surprising given that, in many ways, Microsoft really does seem to "get it". That irony makes it all the more interesting.
The current era of personal computing is seeing some of the grandiose promises of the pre-crash internet become a reality. High speed internet access has finally become enough of a commodity that compelling use cases like internet delivered video, VOIP and network storage are no longer just vapor. Complementing this trend is the growing availability of wireless networking options (both WiFi and cellular) which open the possibility of access to these services beyond a tethered connection. And like a reliable old friend, Moores Law has ensured that computing horsepower both at the desktop, and on the go, has kept pace.
Building on this compelling infrastructure, Web 2.0 is delivering on software as a service (in some notable cases without needing a runtime) and the ASP model in a way that has captured real consumer attention. Whether this growth is commercially sustainable is debatable, but they’ve clearly caught people’s interest. Services like Google Maps, Skype, YouTube and MySpace have proven, just as Amazon and EBay did for eCommerce, that "Internet Culture" is a real phenomenon.
The driving force behind the adoption of this cool new stuff is an emerging generation of users that have grown up with computers and have an unprecedented level of saavy. Not so much the "power users", or "tech geeks" of old (like myself and my contemporaries), these are kids for whom the computer is just second nature. They may not get into the deep workings of what makes it tick, but they know their way around as easily as if it were a car or a toaster. These users are ready for an enhanced experience. Things like desktop search, widgets/gadgets, and advanced UIs resonate with them and they use them. They’ve got the equipment and infrastructure there just waiting to be put to use.
In each of these areas, one would assume that Microsoft is uniquely positioned to truly execute well. They have 96% of the user desktop, 60% of the server desktop, have taken the lead in next generation development platforms with .NET and own a massive online presence with MSN. They’ve worked on technology like search and speech for years and have made acquisitions in many of these spaces. And yet, they have seen themselves beaten to the punch, and frankly embarassed, time and again by Google, Yahoo, Apple and a host of up-starts.
Probably the most glaring examples of this are the total inertia that appears to have set in at MSN, and the fiasco of Vista. MSN has again lost market share while Yahoo actually gained a bit on Google, and they have failed to match the interesting and continual wave of services coming from their competitors. They got a nice desktop search product out, but with little fanfaire since Google and Apple had already stolen the thunder. The Live initiative is compelling, but it seems to lack cohesive vision and is not moving quickly. They have strong core technology in the RTC space, but again, there is no cohesive vision.
On the Vista front, Microsoft is in real danger of losing relevance. Apple made a very strong showing with OSX that has continued to improve and has already delivered many of Vistas cooler features. Even Novell Linux has managed to get to market with a very compelling next generation UI. Features like gadgets and desktop search are already being made available for Windows XP by Yahoo and Google. Media Player 11, .NET 3.0 and IE 7 are all needed and welcome upgrades, but they will be retrofitted to Windows XP and are certainly not platform prime movers.
Vista has a nice core platform story in that it improves upon the venerable NT kernel and subsystems in areas of security, performance and usability, and there is a nice enterprise story in terms of manageability, but the lateness of the entry and the fact that nearly all of the "cool bits" have been coopted by Apple, Google and Yahoo is damaging. If someone has their XP box running well (having learned the ins and outs of keeping a PC secure in the internet age), and has installed Google Desktop and some of the visual enhancements to bring XP nearly to Vista level, the only real thing from Microsoft that could compel them to move would be DirectX 10. That may just be a strong enough incentive for the gaming crowd, but Microsoft is betting an awful lot on plumbing changes and a gaming API!
It will be interesting to see where all of this goes over the next 12 months or so.