Monday, 26 July 2010

Why does Wall Street hate Microsoft?

Why does Wall Street hate Microsoft? is the question posed on the Microsoft Blog. The answer the author arrives at, extremely quickly, is Windows is just not exciting enough. Hmm okay then. I'm no expert on the stock market or on how investors behave. But I think it's a safe bet they're more interested in the profit margins. Not just from one or two products. But from the whole product line. And there in lies the problem. With the exception of Microsoft Office and Microsoft Windows very few Microsoft product lines ever seem to make any profit at all.

Take Bing for example. It was supposed to be the next best thing since sliced bread. It wasn't. Hardly anybody uses it and Microsoft's on-line efforts are haemorrhaging something on the order of $2,000,000,000 per year. Vista was a disaster and despite the supposedly good figures for Windows 7. The business world is sticking with Windows XP. Which is why Microsoft has extended downgrade rights to 2020. And Windows Surface was also essentially still born.

There was Zune. Which only really sold in the USA and even then wasn't so popular. There's the Xbox. Hugely popular, yes. Shame it's a technical disaster with at least half of all units sold at one point being returned as duds. Which one might think was enough disappointment for one product. But no. Microsoft had plenty more disappointment for Xbox fans. First they decided to lock out third party peripheral devices. Then they decided to cut off early adopters by ending support for their version of the console. There was the sidekick debacle. Then there was the still born Microsoft "Kin Phone". Which nobody wanted. And then of course there is a list longer than your arm of product lines Microsoft has recently discontinued.

All of which is very telling about Microsoft's understanding of todays market. They just don't get it. For some unfathomable reason Microsoft thought teenagers would buy a phone like Kin when they could have an iPhone or the HTC Legend, the Google Nexus One or the Motorola Droid. Even Microsoft's own Windows Phone 7 looks like a better proposition. Then there is the way Microsoft treats it's paying customers. People are tired of the 20 character activation codes. It makes people who have bought and paid for their products feel like criminals. So it's understandable then they might consider switching to Apple or Linux.

And speaking of the competition. When Microsoft's competition does something different, exciting or innovative Microsoft's responses are almost non-existent. Microsoft's answer to the buzz surrounding Compiz on the Linux platform was a new task-bar. Windows that minimise or maximise when you shake them or some such. Compiz in comparison has a multitude of features. Some actually useful in boosting productivity like the Negative, Opacify, Enhanced Desktop Zoom or Add Helper. Basically Microsoft are a company that doesn't have anything new to offer and always seem to be late to the party. And not even fashionably late at that.

It's not that Wall Street hates Microsoft. Wall Street just doesn't see any potential. Investors minds have been made up that Microsoft has run it's course. It's time for a change. For something new. Apple are currently storming a head because Apple has proven it's self to be a company that can diversify to survive and fight it's way clear of bad times. Microsoft innovates by buying up an existing company or product and slapping it's own brand on it. Apple innovates by putting a new spin on existing technologies and products.

Then there is the honesty factor. Investors don't like it when people lie to them. Windows 7 is turning bumper profits. Except virtually nobody in the business sector is interested and the whole of Asia is apparently pirating Windows. So who exactly is buying Windows 7? Are these bumper profits coming from consumers alone? Maybe there's some "Hollywood" accounting going on over at Redmond.

Wall Street doesn't hate Microsoft. It just doesn't care any more.