Imran's personal blog

July 24, 2012

Microsoft’s return to glory

Filed under: Uncategorized — ipeerbhai @ 10:44 pm

Hi All,

Google released news recently — their CPC ( cost per click ) valuation is down 16%.  They blame mobile for this loss in advertising value.  And now, we have a market situation where Microsoft is poised to rise.

Why?  Google is busy gunning for Apple.  They need to control mobile, as their existent threat at the moment is not the PC — it’s Apple.  Apple is eating a lot of Google’s lunch — and Google can’t accept that.  So, they’re going to focus on Apple as the guys to beat, if they want to keep their yummy Ad money.

Apple, by contrast, has already gone nuclear on Google.  The patents wars are just a skirmish — Apple wants Google dead.  Google backstabbed them ( and Google really was Evil.  They put a person on Apple’s board, signed a no-compete clause, gathered information on how Apple designed the iPhone, then broke the clause.  This pissed Steve Jobs off — Google practiced industrial espionage ( aka did evil ), and wholesale ripped off Apple’s product ).  So, Apple’s been gunning for Google ever since.  They’re out for revenge against a company that is now very evil, but has a great search engine.

Which is why Microsoft will rise.  It’s biggest two competitors — Apple and Google — are busy fighting each other.  They used to be united to take MS down.  As long as they were, they could make headway against MS and the mighty desktop monopoly.  At the same time, MS has decided to make mobile and search the top two businesses — even willing to throw billions of dollars per quarter in losses at them, even willing to destroy brand value in the Windows operating system — to attack both Apple and Google in one shot.

And they might just do it.  Apple and Google aren’t looking, and MS is actually innovating again.  Bing is still crap — but if MS keeps throwing 2 billion dollars a quarter at Bing — at some point, it won’t be crap.  Windows phone is crap — but if they can get strong play on the tablet space with Windows RT — they may be able to credibly re-enter the phone space in 3 years.  And that’s the gamble that MS is playing — Windows 8 gets people used to the Metro interface.  3 years later, people start switching to Windows phone 8 ( or 9 ), familiar with the interface from Windows 8.  And once on the tablet and phone — other browsers  ( like chrome ) are locked out of the RT space( MS certification requirements — they own the store for all RT devices! ) — and with browser lock-out comes search lock-down.  Sure, IE on RT can use Google — but all those accidental searches now done as part of domain typing — they all go to Bing, increasing Bing’s relevance and ad prices — while eroding Google’s CPC further.

This is a brilliant, if risky, strategy.  If Apple and Google notice, they may fight back.  Google with Chromebooks pre-loaded with offline versions of Docs — this will fight the RT tablet, and Apple with a price cut on OSX machines( especially the Air ) — which harms MS OS business.  If Apple and Google coordinated this, they could possibly stop Windows 8 from gaining any market share ( upgrades only! ), and over the next 7 years, begin to erode MS’s market.

But I don’t think Google and Apple will notice.  This strategy doesn’t look like a winner on its face — and they’ll discount MS as they want to fight each other.  MS can now begin a comeback.

It’ll be an interesting 3 years — that’s for sure!


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