Welcome to the fading days of the Microsoft empire

The company remains a formidable force and a software juggernaut, but its days of sheer dominance are over

Microsoft's fortunes these days can be compared to the decline of the British Empire. Once upon a time, the British Empire stretched far and wide across the globe, making Great Britain one of the greatest world powers of all time. Then, countries in the empire gained their independence, and Britain's empire slowly but surely faded. These days, Great Britain is an important world power, but it certainly is not the only one or even the dominant one.

This is what is happening with Microsoft, which has just announced another big reorganization, emphasizing cloud and device technologies. Moves by enterprises and individuals to tablets and smartphones -- as well as the rise of Google, with its search engine, apps, and cloud services -- have thrown Microsoft off balance. Previously, in areas like the GUI, Web browser, and server OS, Microsoft could watch what others were doing and then come in afterward and rule the roost. But the pervasiveness of strong tablet and smartphone offerings from rivals, along with a crowded cloud services field, have relegated Microsoft to the status of just another provider in these spaces.

The desktop PC, Microsoft's bread-and-butter technology for decades now, is no longer the only game in town. IDC expects tablet shipments to outpace PCs by 2015. Although Microsoft has some entrants in the tablet market, such as the Surface tablet, Google and Apple are the key providers in tablets as well as in smartphones.

Of course, Microsoft in the 1990s once had Apple down on the mat but let the company get back up, even helping to revive Apple with some financing. Now, Microsoft must contend with the once-faded Apple again. Ironically, its staregy to do so seems to be to become a services-and-devices company just like Apple.

In cloud services, Microsoft has made an admirable go of it with Windows Azure. But the company has to face off against formidable competition there, too, from providers like Google and Amazon.com.

What Microsoft's changing fortunes show is that the marketplace still works. One company can dominate for a long time, but rivals with superior technologies or maybe just superior marketing can arise and succeed. Microsoft will continue being a big player on the desktop and in the enterprise. It is also can be expected to grab a greater share of the handheld device space, too, especially as BlackBerry's attempt to regain its former glory appears to have fizzled.

But these days, the technology buzz has decisively shifted away from Redmond and back to Silicon Valley, where Google and Apple reside.

This story, "Welcome to the fading days of the Microsoft empire," was originally published at InfoWorld.com. Get the first word on what the important tech news really means with the InfoWorld Tech Watch blog. For the latest developments in business technology news, follow InfoWorld.com on Twitter.

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