COMMENT: As Gates bows out what's next for Microsoft?

As Bill Gates steps down from Microsoft today to spend time playing computer games and giving away his money to good causes, what will be next for Microsoft?

Will the corporation that created the computer age that we live in today survive long enough to see the retirement of its next new big cheese, Steve Ballmer?

Microsoft is one of those amazing companies that has so many fingers in so many pies it's actually surprising that it has coped under the siege of competition as well as it has done.

The core to the computer for the past 33 years, Microsoft is so much more than an OS - and all of its other divisions are big players in the respective markets they are in.

You have the Office arm, the music arm, the browser arm, the internet arm, the Instant Messaging arm, the Hotmail arm, the gaming arm, the research arm, the digital photo arm, the hardware arm, the mobile phone OS arm, the server arm and a stack load more arms in places you can't even imagine.

There is no other company I can think of that is so diverse and so it's no wonder that it's under siege. The company might have endless pots of cash thanks to the success of Windows, but imagine if your company was under threat from the likes of Google, Mozilla, Apple, Sony, Oracle, Adobe, AOL, Logitech, Yahoo, Nokia, Linux, Nintendo and even governments from around the world.

But does a Microsoft without Bill Gates stand a chance? There is no doubt about it Gates was heavily involved in every aspect of the company from programming to taking the company forward.

He created it, he coded the first OS, before moving on to demand more from his employees even as he stepped back ready for his retirement day.

Steve Ballmer, on the other hand, is a marketer with no real programming experience (certainly not in the same league as Gates), but has the knowledge to move the company to where it has got today. He is passionate (some say at times overly so) and perhaps a bit like the current Labour government in the UK, in a situation where the future looks tougher than the past.

In the next few years Microsoft will have to up the ante to really compete on so many fronts and commentators, including myself, wonder whether the company can continue in its current guise and still come out top.

There is the internet front where Microsoft will have to change its focus from desktop to cloud computing if it wants to stand a chance of competing in the new Web 2.0 internet age.

Gates might have famously said that the Internet should be the core element to all areas of the business moving forward way back in the 90s, but a decade on and Microsoft as a company is still lagging behind companies like Google.

The failed Yahoo challenge that has carried on for the last 6 months won't have helped - both from a "what's next" to the lost ground focusing on something that hasn't come off.

If trying to continue its quest to conquer the Internet isn't enough of a challenge for any company, Microsoft has to fight off a challenge from Linux and Apple on its traditional core business - the operating system.

The rise of the mobile phone and the netbook has left Microsoft having to move away from its plans to ditch Windows XP (which it's now going to support it until 2014) as well as open up a world of alternatives to consumers.

The demand for the Asus Eee laptop range has shown that people aren't that fussed about having Microsoft Windows on their computer and with the poor performance of Vista and a slow take-up from Microsoft's usual business crowd means Microsoft could be on shaky ground on what has traditionally been its solid performer.

The move to a different operating system also starts to let the idea in - thanks to free applications like Google Docs, Adobe Buzzword and Open Office - that the majority of us don't need to pay for software that allows us to write or do spreadsheets anymore, nor our browser or our email client, and if that idea is allowed to grow then the rot will surely set in.

Microsoft's business model has always been about people buying software and the licence to go with it for their computer. But with computer manufacturers like Acer saying that they are looking to support a free OS - Linux - heavily in the future, Microsoft will have to combat that somehow.

How do you then compete with a company that is giving its product away for free, because it has the ability to so effectively monetise the traffic that is generated by serving adverts via the software you use, rather than requiring an upfront payment?

Nobody currently has the scalability of Google. Like the Third Reich before the Second World War, Google has managed to build up such an arsenal of servers (it was tanks and weapons for Hitler) that it currently runs millions of servers so the system stays up without you noticing any issues, and although Microsoft is the one to challenge, it's still a hard ask.

And all this before you even start to talk about mobile phone operating systems and the challenges the company faces - again against Google and Apple as well as Nokia with Symbian.

The announcement that Nokia has now bought out the other owners of the Symbian platform and plans to give the software away for free so other companies and developers can program for it, will only offer more headaches to a Microsoft without Gates.

Windows Mobile might still dominate on the smartphone front, but it might find, thanks to Android and Symbian and Apple with the iPhone and its App Store that its grip is slowly loosening as time goes on.

On the games front Microsoft has managed to hold its own against the might of the PlayStation, piping it to the punch with video downloads, while offering a more advanced and more complete online gaming service: 12 million subscribers can't be wrong.

However while the battle was and is being fought with Sony, Nintendo has shocked both companies by providing a low cost gaming solution that has captured the imagination of the non-gaming public, bringing in both families and an older generation, one that Microsoft would have no doubt liked to have cornered.

The result is that while the Xbox 360 currently performs better than the PS3, both lag behind in popularity behind the Nintendo Wii.

Keeping with entertainment, what about the Zune, that medicore MP3 player that comes in fetching brown? Another Apple iPod challenger, Microsoft will have to work out whether this is something that will really be able to go the distance or merely bite the bullet. The fact that it hasn't launched it in other markets suggests that the company doesn't have high hopes for the music player.

One area that the company does seem to be challenging the competition in is the mice and keyboard market, coming up with viable products to match the likes of Logitech. Still its attempts at webcams has shown that money alone can't guarantee success.

So a sinking ship? Far from it, you don't become the richest man in the world by being stupid and Gates has always said that the company, unlike the UK government it seems, plans for the bad times as well as the good.

Ballmer will have taken over a ship not sinking, but one that is about to enter troubled waters. Like a battle that is fought on many fronts, he will have a challenge for sure.

Has Gates done a Tony Blair and jumped out just at the right time before everything starts to crumble around him? We will have to wait and see, but one thing is for sure, Microsoft won't be the same without him.


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