The looming irrelevance of Microsoft

Feb 01, 08:00 PM

In the decades of its existence, Microsoft has always appeared to have a clear goal: Appeal to as many as people as possible. In fact, founders Bill Gates and Paul Allen used to say their aim was to have a PC on every desk — and it's a desire they ostensibly achieved. PCs may now be overshadowed by smartphones in importance, but it was the Windows computer that first propagated the ubiquity of digital technology that is so commonplace today.

Now that we are well into the 21st century, however, it seems Microsoft no longer sees itself as a company meant to appeal to everyone. The company is undoubtedly doing well, seeing its stock price triple over the past few years and general sentiment around its business improve. Yet this success has come at a loss of focus on the end user. As one product after another gets discontinued, or canceled before it even launches, the tech world faces a new phase — one in which Microsoft abandons the consumer market almost entirely.

It may seem like a strange proposition. After all, Microsoft has only recently made the leap into being a consumer hardware company with its now well-received Surface lineup. Though the first couple of hybrid tablet-laptops were lackluster, in the past few years, the Surface Pro and newer entries, like the Surface Studio desktop computer and the Surface Laptop, have been both well-reviewed and lucrative, drawing in a billion dollars in revenue in more than one quarter.

But the signs of Microsoft's exit from the consumer business are growing. During this past holiday season and the Consumer Electronics Show, Amazon and Google heavily pushed their smart speakers, while Microsoft's own Cortana assistant was almost nowhere to be seen. It was found only on an obscure speaker from Harmon Kardon, even as companies like HP, Lenovo, and ASUS were including Amazon's Alexa on their PCs and downplaying the native Windows 10 assistant. In one of the most quickly growing sectors in tech, Microsoft is sitting on its hands.

There is also the litany of canceled or overlooked products. Whether the smartwatch or Surface Mini tablet that never made it to market, or the existing products like Groove Music or the Band fitness tracker that were put out to pasture, the company keeps pulling back from various important areas like wearables or media.

Certainly, companies trim product lineups all the time. It can even be a sign of focus and strength. But the most obvious sign of Microsoft's abandonment of consumers is the complete and total lack of a mobile solution. After a series of cumulative mistakes resulted in the utter failure of Windows Phone, Microsoft's position as a consumer company has eroded drastically. Without the base of a smartphone ecosystem, any other of the growing areas — the smart home, smart speakers, wearables, or the Internet of Things — lacks a key element to hold it all together. While it's true Microsoft still offers software like its popular Outlook email client, Microsoft Office, or OneDrive, for many users, it's simply easier to migrate to Google or Apple's products and the pride of place they hold on their respective creators' platforms.

It's thus hard to envision how Microsoft remains as influential or as important to consumers as it once was. With the center of gravity in consumer tech having shifted to mobile, voice, and wearables, Microsoft faces an enormous, essentially impossible task in trying to regain a foothold.

This shows in its bottom line, too. Increasingly, more and more of Microsoft's revenue is coming from its Azure cloud platform, its broader "Intelligent Cloud" platform, as well as its cash cow Office products, which are increasingly moving to a lucrative subscription model. And while the Surface line is doing comparatively well, it has also been plagued by reliability problems while also being exponentially outsold by Apple's Macbooks and iPads. It may well be next on the chopping block — or at least refocused to become an enterprise-f...