Microsoft has the tools it takes for survival


With all the talk about how the once-great Microsoft is losing talent, shedding massive amounts of consumer weight and facing increasing competition from companies like Google, is Microsoft doomed?

John Dvorak, noted PC World and MarketWatch columnist, thinks so. So do others. Is there reason for alarm? Remember this -- MSFT shares recently hit a five-year low on the heels of the Redmond giant's latest lackluster quarterly results and rumors continue to fly that the next Windows operating system, Windows Vista, will be delayed until the year 2010.

Robert Cringely from PBS writes rather eloquently that Microsoft's business model can't be re-engineered fast enough to meet these challenges and he hints at the software giant taking another corporate direction before it's too late, even though he thinks MSFT will survive no matter what.

Like Cringely, I don't think Microsoft is doomed. Why? Several reasons. First, it has the cash hoard to make acquisitions to catch up with almost any competitor it chooses -- and yes, Google will prove to be the biggest challenge.

In addition to a cash pile, Microsoft also has a raft of corporate applications that the mainstream press conveniently forgets when the juicy headlines of Microsoft versus Google comes up again and again. There is an entire Internet ecosystem being powered by Linux, Sun and Microsoft software that can not be replaced overnight with anything. That is a poker chip Microsoft can play with the acquisition face as it sees fit, although the increasing prevalence of open-source computing (specifically, Linux) is causing sweats with. Also, the challenge it faces in the consumer world is causing one heckuva ruckus right now -- a fact we hear about daily -- and sometimes, hourly. Windows Vista and Microsoft Office (fill in year here) are, and should be, the top dogs in the Redmond labs in terms of getting products shipped

Is Microsoft dead in the water, as Dvorak suggests? Well, I see the reasoning behind his points, but disagree with the end opinion. He makes good points, and hits (a little) on the Xbox 360 issues that caused Microsoft some pain recently, as it under-planned to meet demand and lost sales because of it. Still, it is ahead of the competition in that space. Microsoft may have some large bruises right now, but it's definitely not headed for the corporate graveyard.

[Disclosure: I own MSFT shares as of 5-15-06]

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