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Thursday, January 6, 2011

The King is Dead, Long Live the King

Much has been written recently about the continued success of powerful technology companies such as Google, Facebook and Apple. These companies are reshaping the entire landscape of computing and telecommunications; how we talk to one another, how we gather information, how we entertain ourselves, and are leading the way toward a new way of human connection and interaction. As these companies ascend in prominence, many pundits have been simultaneously predicting the demise, and possible death, to the once all-powerful tech giant Microsoft. The PC is being replaced by tablets, smartphones and tablet/smartphone hybrids. As that happens, these pundits predict, the billion plus users of the Windows OS will stop buying from Microsoft and will begin using operating systems developed by Google, Apple, RIM, Nokia and others. This past summer, in an attempt to fight back, Microsoft decided to enter the smartphone business with Kin, which turned out to be one of the most disastrous new product introductions in the history of the technology industry. Microsoft pulled the plug on the ill-fated product less than a month after it was introduced. Again, the pundits had a field day with this news, using it as further evidence of Microsoft's decline. So it might be easy to dismiss the lumbering giant as a dinosaur headed for extinction. But not so fast. At this year's CES, video game consoles, along with smartphones and tablets, are center stage. And no company's video game console is selling more units in the US than Microsoft's Xbox, which moved 1.37 million units in November alone. The new Kinect accessory for the Xbox sold more than 8 million units in its first 60 days on the market. On the smartphone front Microsoft launched its Windows Phone 7, or WP7, in October and according to the company it has sold more than 1.5 million units in the first six weeks. In addition, the WP7 had more than 5000 apps available in the marketplace and reached that number 3 times faster than Google did with its Android OS. The analyst firm IDC says, "it is precisely the broad launch and sure-footed execution that allows us to predict long-term success for WP7 at this early stage." So obviously Microsoft learned a thing or two from its misstep with Kin. Microsoft's search engine, Bing, is now the power behind Yahoo Search and achieved its highest levels of success to date late in 2010, and the company expects Bing growth to continue. And with what might be Microsoft's biggest bet of all, cloud computing, the company seems to be fairing quite well as evidenced by its recent wins of federal, state, and local government contracts. Sure, Microsoft isn't perfect, and it is no longer the industry behemoth it was a decade ago, but it is still a force with which to be reckoned. It is a company with more than a $200 billion market cap and more than $35 billion in cash on hand. And with all of the momentum of the company's smartphones, game consoles and cloud computing, I think it would be unwise to count Microsoft out of the game quite yet.

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