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Former Apple exec: Has Microsoft gone nuts?

Microsoft Strategy Analysis

Of all of the dramas currently unfolding in the tech world right now, Microsoft’s is undoubtedly among the most intriguing. Years ago, just before Windows Phone was first released, industry watchers warned that unless Microsoft could make serious strides in the smartphone market, it would undoubtedly be doomed. Then the iPad and Android tablets began eating into PC shipments and analysts warned that unless Microsoft launched an immediate and aggressive attack on the tablet market, it would be steamrolled by Apple and Google. Fast forward to today and Microsoft’s global smartphone market share still sits in the low single digits. Microsoft’s new tablet platform, Windows RT, is all but dead. And yet despite all that, Microsoft is still thriving, having racked up a $5.24 billion net profit on more than $18.5 billion in revenue during its most recent quarter. But the Redmond, Washington-based giant is hardly in the clear.

Former Apple executive Michael Mace recently penned a piece on Microsoft’s current debacle. We covered some aspects of it earlier this week, but the broader, simpler theme is one that really is becoming an important question that more and more people are starting to ask:

Has Microsoft gone nuts?

Mace points to three rumors early on in his piece, and he notes that while they are all just rumors, they come from well-sourced reporters with solid track records.

  1. Nokia was working on an Android phone and Microsoft might not make Nokia kill the project after it takes ownership of Nokia’s devices and services business.
  2. Microsoft is toying with the idea of offering its Windows Phone and Windows RT operating systems to partners for free.
  3. The Start button is already back in Windows 8.1, but the full Start menu may return in a coming update. “Metro” apps, meanwhile, might be removed from the current Start screen, instead functioning in more traditional windows on the desktop.

“Those are just rumors, of course, but they’re coming from multiple reporters who have strong ties to Microsoft, which means they’re probably genuine plans or at least serious trial balloons,” Mace wrote. “Taken together, the reports give a picture of a company that’s laudably willing to revisit its assumptions, but that also seems to have lost track of what it’s trying to accomplish.”

There are even a few other gems out there that Mace didn’t cover. Is Microsoft going to give Samsung a $1 billion bribe to keep making Windows Phones (that it doesn’t even bother to promote)? Is Windows Phone 9 going to ditch the “Metro” interface partially or even completely?

So again, has Microsoft gone nuts?

Mace goes on to pick apart these specific reports and to offer some offer some unsolicited advice to his former rival, but the biggest takeaway goes back to his main point. Once Microsoft names its new CEO, his or her first and perhaps most important near-term task will be to prove to customers and investors that Microsoft has direction.

“The challenge for Microsoft’s new CEO is the same one Steve Ballmer has tried and failed to answer for years: Demand for Windows is declining because the platform hasn’t done anything new for a decade, while Microsoft doesn’t control the fast-growing segments in tablets and smartphones,” Mace said. “Microsoft tried to use Windows 8 to take over tablets. That failed. What do you do now?”

There’s nothing wrong with experimenting, of course, but Microsoft appears to be reversing course on some core moves that were supposed to carry the company forward through the “post PC” era. What’s more, these well-sourced reports suggest that some of the big changes Microsoft is considering might simply make matters worse. Would a free Windows Phone OS really be any more appealing to vendors that have already invested several years and tens of millions of dollars in Android (which also, of course, is already free)? Is paying Samsung $1 billion to keep making uninspired Windows Phones a smart long-term play when Samsung is in the process of launching its own Android rival?

Microsoft is not in dire straights. Not even close. But the challenges currently facing the company are real and the recent string of rumors noted above suggests that Microsoft still has no idea how it is going to address them.

Zach Epstein

Zach Epstein has been the Executive Editor at BGR for more than 10 years. He manages BGR’s editorial team and ensures that best practices are adhered to. He also oversees the Ecommerce team and directs the daily flow of all content.

Zach first joined BGR in 2007 as a Staff Writer covering business, technology, and entertainment. His work has been quoted by countless top news organizations, and he was recently named one of the world's top 10 “power mobile influencers” by Forbes. Prior to BGR, Zach worked as an executive in marketing and business development with two private telcos.