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During a cold December in Paris at a conference called Le Web, I was struck by an insight. It was a combination of what I had been feeling for a while and what a brilliant analyst was saying — and that is, Microsoft is on the comeback trail. It really is.
In recent times, Microsoft has struggled to exude that “cool factor” of companies like Apple, a coolness that is reflected in the companies’ respective share prices too. It’s a zeitgeist also brilliantly reflected in these “I’m a Mac, and I’m a PC ads“.
Microsoft’s boss Steve Ballmer is uncool embodied in human form. His awkward stage presence and impassioned, sweaty speeches are in stark contrast to the calm and restrained polo-necked arrogance of Apple’s former leader, the late Steve Jobs.
iPhone and Mac users don’t have time for Microsoft. They become impatient when there’s talk of the Redmond-based company and a look of distaste appears on their faces when you whip out a PC. Microsoft has had a virtual monopoly on computing operating systems for years. And that monopoly has meant buggy operating systems, giving Microsoft a reputation it’s still trying to recover from.
The copycat and blue screen of death
Since the 90s, Microsoft’s reputation as an early innovator became gradually eroded, with the company becoming known more for its buggy software releases and for being a voracious “copier” rather than innovator.
Until Windows 7 arrived, the company gained a reputation for subjecting consumers to sub-standard operating systems. (Whether or not this was the fault of the device manufacturers or not was irrelevant — Microsoft had a responsibility to make sure its products worked on a variety of devices).
Microsoft also became known as a copycat. Bing is laughably close to Google in functionality and appearance. There are also Bing Maps and Bing News, much like Google News and Google Maps. Zune is also remarkably similar to Apples’ iTunes-iPod model. Microsoft’s staunch critics say that the very first Windows design was a blatant copy of Apple’s Mac OS.
In the business world it’s clever to copy because you don’t spend money on research and making mistakes, but it is not something that will win you accolades and respect.
Microsoft’s ‘iPhone moment’
But times appear to be changing. When Windows 7 was released a few years ago, it was lauded. The release was finally a Microsoft OS that was stable and looked good. Windows 8, available as a developer preview, is also looking beautiful — and pretty innovative. But most importantly, Microsoft has truly brought out a truly amazing mobile phone operating system in its Windows Phone. Could this be Microsoft’s “iPhone moment” — the device that propels it, and its share price, to stardom?
Like it or not the iPhone changed everything. It has had such an impact that it caused panic at Nokia at the highest level. The phone has inspired envy and respect amongst rivals. When faced with the need to innovate, manufacturers suddenly go brain dead and manage to only bring out poor copies.
Windows Phone: Something special is about to happen
But Windows Phone is different. It feels original and truly innovative. In fact there’s been the odd quip that Apple in fact “copied” Windows Phone features in its latest iOS releases. Windows Phone is silky, smooth and beautiful. It is packed with amazing innovations like People Hub, Live Tiles, with applications like Facebook and Twitter baked into the OS. It may seem obvious now, but a mobile experience with heavy-duty apps works best when part of the core OS experience. It has been an instant hit.
Then there is the business part. Microsoft is (and has always been) better at business than Apple. How else could Microsoft still maintain market dominance for so long, when it clearly had an inferior products to those of Apple year after year, after year? I’ve written about why this is in “Apple’s folly: Why the iPhone is in trouble“. Microsoft may not have been the innovator Apple was, but it was better at forming business partnerships.
So when Microsoft gets its products right, and combines this with an exceptional business prowess, you know something special is about to happen. On a business level, Microsoft has now paired a brilliant mobile operating system, with the world’s largest mobile manufacturer. Suddenly the Nokia deal seems like a genius move. It sees two giant companies, who have faced stiff competition from Apple, coming together in a powerful alliance.
And it’s why I run a mile from expensive Apple shares and I’m rather interested in the cheaper-looking Microsoft shares.
‘Web-huggers’ under pressure
Even the brilliant head of research company Forrester, George Colony, reckons Microsoft will make a comeback.
He foresees a future where the web will be under pressure and the “web-huggers” — companies like Google and Facebook — will no longer be dominant. He sees a big push back to an “app-internet” scenario, where applications combine with internet power rather than pure cloud businesses. iPhone apps, in many ways, are the realisation of this.
“If you think back in the history of the technology industry, every ten years there is a major tech company that we think is dead that makes a comeback. In 1980 that was Intel, in 1990 that was IBM, in 2000 it was Apple.”
Colony says that Microsoft, with its strong software roots, is the company best positioned to make a comeback, but it would also need a “generational change in leadership” for this to happen.
Microsoft is well positioned because it is a seasoned software, hardware and internet player, so can take advantage of all these ecosystems — and harness both the power of the device and the network.
Its shares are looking like a bit of a steal at the moment.
DISCLOSURE: The author is an iPhone user, and loves it.