"Is the Party Over for Microsoft?" is the headline at Marketwatch.com.  In case you missed it, last week Microsoft reported sales and earnings, and "Microsoft declines on disappointing results" was the most appropriate headline.  Sales dropped 17%.  Let's see, the last  time we heard about a mega-corporation with double-digit revenue declines that would have been – oh yes – GM – and Chrysler.

This blog has been brutally negative on Microsoft for over 3 years.  A quick look at the long-term chart and you'll note that the stock has not come near its 2000 high this decade.  It's been mired in a go-nowhere range, and has recently broken down to prices last seen in the late 1990s.  For investors, Microsoft has been only a disappointment. 

But that's because the company has been equally disappointing for customers.  Microsoft has been very consistent about trying to "milk" it's near-monopoly in desktop operating systems and office software.  Even though the market has moved, Microsoft has done little to move with it.  It's applications are "more of the same."  It's operating systems have become bloated, and new versions have offered practically no advantages to switch.  Meanwhile, customers are learning to enjoy Linux – and Macs again – as well as Unix for servers.  There's literally been nothing for customers, investors — or suppliers to get excited about.  Ask Dell, itself stuck in the doldrums as a Microsoft devotee.

It's not due to a lack of opportunities in the dynamic IT world.  Since 2000 we've seen the emergence of Google, which simply cleaned Microsoft's clock in search and ad placement.  The world of digital music became dominant, but that was claimed by Apple.  Hot websites for information became valuable – but Marketwatch and HuffingtonPost (examples) are laying claim to attracting lots of readers.  Microsoft simply missed these markets.  Always late, and never really in step with shifting market requirements.  The company tried, failed, and just kept "clipping coupons" from its near- monopoly.

It hasn't been hard to see the market shifting.  Customers were put off by Microsoft's disregard for their needs in the 1990s.  They searched for better solutions, and found them.  Microsoft kept being Microsoft, but the world moved.  Now, Microsoft is stuck.  And what are they going to do to get out of their rut? 

When a company is large, has a lot of cash, and has strong market share analysts are reluctant to predict it will do poorly.  But Microsoft has been so Locked-in, for so long, it has been quietly letting all new markets go to new competitors.  There have been NO Disruptions to the Success Formula.  Windows and Office have dominated the investments.  "Taking care of the franchise" has been the mantra.  That meant doing more of the same.  Which got us Vista – an operating system that was over a year late to market, and very easy to ignore.  There hasn't been any White Space to develop new solutions.  And as a result whenever Microsoft has tried to do anything new it has been late, with inferior product, a significant lack of knowledge about what the market really wanted, and out of step with new requirements for performance and price.

Microsoft won't declare bankruptcy in 2009 – or 2010.  But it's acting just like GM.  It's spending all its time trying to Defend & Extend its past.  But in fast changing markets, that's not enough to remain viable.  In markets moving as fast as IT, it's deadly.  Remember DEC?  Wang?  Lanier?  Burroughs?  Univac?  IBM mainframes?  Cray supercomputers?  Microsoft is more like GM than it's like Google.  Thus, it's future isn't hard to predict.  If you're an employee, time to brush up the resume.  If you're an investor, time to look for the exit.

Do'nt miss the new ebook "The Fall of GM:  What Went Wrong and How To Avoid It's Mistakes"