It would be unwise to look at the operating system market without looking at what is going on in other areas such as mobile and cloud computing. Consumers are increasingly using mobile phones to do computing and surf internet. In addition, with the momentum behind cloud computing and web apps, Microsoft can’t enjoy the user lock in it has enjoyed for years. Microsoft is indeed under threat from several directions.

Mobile

As mobile usage ramps up, Microsoft can’t sit on the laurels of its success in the desktop. Microsoft’s Windows Phone 7 has been delayed several times, and several mobile phone manufacturers such as Motorola and HTC have substantially and rightfully favored Android over Windows Mobile to compete more effectively against Apple’s iPhone, as iPhone attempts to become the biggest player in the mobile! The numbers tell that it’s Android’s and iPhone’s market to lose, and Microsoft is too late to the party. In fact in part 2 of this series, I gave Microsoft a pretty low score.

However, a number of things have changed since then. On the one hand Android and iPhone have made further inroads, but on the other hand Microsoft’s announcement of Windows Phone 7 looks promising. The biggest problem might be that it is already too late, and there is yet no confirmed date of Windows Phone 7 launch. It is unclear how Kins (recently launched mobile phones targeted toward teens) will do — and whether they will serve to further confuse Windows Mobile/Phone developers.

But I still think that Microsoft can come back strong if the Windows Phone launch lives up to expectations, and isn’t delayed further. There are several reasons to think that Windows Phone will be a compelling device. Microsoft has taken several pages from Apple’s playbook — including stronger control over hardware. Also, its integration with XBox Live can give it a huge advantage and make it an instant hit amongst XBox Live users.

Nevertheless, it is increasingly clear that Microsoft’s dominance in the operating systems is threatened by its slow pace in the mobile OS market. In fact, Windows Phone 7 might be Microsoft’s last chance of maintaining relevancy in the mobile OS market (and thus, to some extent, in the OS market in general).

Cloud Computing

As the industry moves to the cloud, Google and Amazon have established as early market leaders (albeit in very different ways). Steve Ballmer has wisely “betted” his company on the cloud, but Microsoft has a long way to go to become a credible competitor in the cloud. Windows Azure and Office 2010 and steps in the right direction. So is its strategy behind Microsoft Live and Kin Studio. Granted that Kin’s success (if it was even meant to begin with) is in doubt, its Studio is a glimpse of what Windows 7 might do to sync pictures, documents, music, contacts, calendar, emails, and more with the “cloud”. It’s already ahead of Apple’s Mobile Me, which comes with a hefty subscription fee and doesn’t sync music with the cloud yet (sadly Apple shut down the Lala, a recent acquisition that allowed users to play music from the cloud). And it has powerful weapons as Office Live and XBox Live that establish a strong advantage over Google (Google has been hiring game developers recently). Its biggest weakness might be its image. Most users do not think of Microsoft as a viable leader in web apps for apparent reasons: It is late in the game and Google has already established itself as messiah of web apps. Moreover the industry is rightfully way of Microsoft’s potential strategy to gain enough share in cloud computing to force other people to use its standards.

Final Thoughts

Despite Mac’s and Linux’s recent success, Microsoft is still doing pretty well in terms of the market share. According to Wikipedia, Microsoft still commands more than 80% of the market share — a huge lead by any means! Windows 7 has been one of the fastest selling operating systems, and its launch might have saved Microsoft from losing its share in the OS market, at least in the short term. Moreover, cheaper netbooks with Windows 7 have been selling pretty well. Overall, this has helped Microsoft maintain a solid lead in the OS market. It might be late in the game, but not too late.

Score: 4/5 Scoring Explained:

1 -> in deep trouble
2 -> in bad shape, but there are chances of recovering
3 -> can’t say
4 -> in good shape, need to execute well
5 -> in great shape

Part 1: Productivity Suite
Part 2: Mobile
Part 3: Search
Part 4: Entertainment