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How Microsoft Lost Its Dominance

Posted By Barry Ritholtz On September 8, 2013 @ 9:30 am In Apprenticed Investor,Corporate Management,Technology | Comments Disabled

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My Sunday Washington Post Business Section column is out. This morning, we look at how Microsoft’s slow decline in What’s behind Microsoft’s fall from dominance? [2].

The short version is this: Once Gates & Co lost its Monopoly, they were unable to generate much in the way of successful new businesses line. Their decline was inevitable unless they could become, well, a different company. That was highly unlikely.

Here’s an excerpt from the column:

“The decade since Steve Ballmer took over as chief executive at Microsoft from his Harvard pal Bill Gates has not been kind to Microsoft: The company saw its stock price plummet, it made ill-advised acquisitions, demonstrated poor capital management and suffered a significant loss of market share. The once-dominant software giant lost its way.

The firm, considered the mac daddy of technology at one time, missed every major tech innovation of the new millennium. The Zune, its foray into portable music players, was an embarrassment. It let Apple gain a toehold on the consumer desktop, which Steve Jobs then leveraged to show consumers a superior alternative to kludgy Windows software. Microsoft was late to Web search and failed to monetize online properties. A belated attempt to jump into advertising by acquiring aQuantive for $6.2 billion led to its first-ever quarterly loss, in 2012.

It wasn’t just the existing software. Microsoft failed to recognize the impact of nearly every worthwhile development. It missed the rise of touch-screen technology and the mass appeal of social-networking sites (i.e., Facebook and Twitter). Perplexed by tablets, it lost more than $1 billion in that venture. Late to user-generated content and blogging, it built MSN Spaces — a Windows-only ghetto that failed to catch on or turn a profit. It blew its early lead in smartphones by failing to understand their significance. And it certainly never threw the same weight behind them as it did its mainstay PC business. Indeed, it is hard to think of new technology since 2000 that Microsoft had a significant role in developing, marketing or monetizing — other than the Kinect device for the Xbox 360.”>

There’s lots more details at WP [2].

I like the graphic they put together from some data we assembled:
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click for ginormous version of print edition

data graphics [3]

Source:  Washington Post

UPDATE: We discovered an error in the spreadsheet from which this chart comes from — Microsoft  market cap is down 34% ($399B to $261B ) not up +58%. Its my error; I’ll get that fixed ASAP

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Source:
What’s behind Microsoft’s fall from dominance? [2]
Barry Ritholtz
Washington Post, September 8 2013

http://www.washingtonpost.com/business/whats-behind-microsofts-fall-from-dominance/2013/09/05/b0e5e91e-157b-11e3-804b-d3a1a3a18f2c_story.html


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[1] Image: http://www.washingtonpost.com/barry-ritholtz/2011/03/31/AFWBwIBC_viewAll.html

[2] What’s behind Microsoft’s fall from dominance?: http://www.washingtonpost.com/business/whats-behind-microsofts-fall-from-dominance/2013/09/05/b0e5e91e-157b-11e3-804b-d3a1a3a18f2c_story.html

[3] Image: http://www.ritholtz.com/blog/wp-content/uploads/2013/09/data-graphics.png

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