Bill Gates retired from Microsoft a decade ago, yet his ghost still loomed large, in the form of a persistent effort to continually extend the reach of Microsoft into every nook and cranny possible. And that ghost inhabited a company increasingly focused inward on its own view of what users should want and do. Like Windows Vista and Windows 7 before it, Windows UT (Unlimited Technology) captured a smaller share of upgrades than its predecessor. Ditto with Office UT. Even though Microsoft paid attention to hardware resource requirements in UT and didn't wield the new software as a way to force users to buy new hardware as its last several versions had done, feature fatigue had set in. For most people, Office 2000 and Windows XP did the job they needed, and learning a new UI every few years was simply not in the cards for a user base that had long thought of technology not as a shiny toy to play with but instead as a tool that needed to get the job done and stay out of the way.
But the long reach of Windows and Office meant that they stayed front and center at work and home, even if users tended to stick with older versions of the software, fracturing the market along version lines and causing great grief for consultants, help desks, and app developers.
Although Macintosh market share now reached 20 percent, it remained a Microsoft-oriented technology world. And even though Internet-based apps such as Salesforce.com, Intuit QuickBooks.com, and ADP Payroll.com were now the mainstays of small and medium businesses, Office and SharePoint remained the primary front ends for users' work, especially collaborative efforts.
Why? There just weren't many viable alternatives, and those that did exist tended not to team up to offer a complete alternative. For example, Mac users might rely on cloud-delivered apps such a Salesforce.com, but no one had a viable alternative to Office, by 2013 available to Mac users only as the Windows version running in a virtual machine. And many Web sites based on .Net didn't work well with non-Microsoft browsers, just as many Java-based sites wouldn't play nice with Internet Explorer. Although the European Union and several Asian governments banned the use of IE in 2013 and discouraged government agencies' use of Windows and Office, desktop Linux never became usable enough to be a serious option, and office suites for Mac never worked well with the Microsoft version, making it hard to enforce the ban.
Various technologies meant to sideline the OS in favor of the browser -- AJAX, ARAX, application streaming, and Adobe AIR -- gained traction, but as supplements to the core OS, rather than as replacements. Part of that was due to the platform favoritism that had become the norm in Windows, Mac OS, and others.
But the OS alternatives also faced a series of service outages in 2012 and 2013 experienced by Amazon.com, Google, IBM, and Salesforce.com, as well as several spectacular data breaches at Amazon.com and Salesforce.com in 2014 that compromised millions of people's data and wiped out the business records of nearly 14,000 companies. Cloud-based provisioning didn't look that reliable or secure any longer, after a fling in 2010-2012. SAP and Oracle regained many enterprise customers after the scare, and Microsoft consolidated its hold in the midmarket for its Dynamics business apps.
High bandwidth charges also hampered the growth of cloud-based delivery, as AT&T-Comcast and Verizon-Roadrunner -- which served 80 percent of U.S. households by 2012 -- made by-the-byte pricing the norm, ostensibly to get the capital needed to enhance the wired and wireless networks to support video on demand, Internet radio, app streaming, cloud computing, and other bandwidth-intensive uses. In Europe and Asia, regional governments essentially returned telecom services to highly regulated, per-use utilities in the wake of the 4G bubble and its subsequent collapse. The result: The drop in use of Internet services created a freefall in the Internet economy that came just as businesses were recovering from the global no-growth era of 2009-2010.
In this environment of a few dominant players at each chokepoint, all fixed on their own machinations to make customers dependent on them. Microsoft was not alone in pursuing a path of "fully integrated stacks" that complicated hopes of heterogeneity; the two remaining major U.S. carriers, along with Google, Hewlett-Packard, IBM, Oracle, and SAP, had similar strategies. Sometimes they acted as an informal cartel with each other and key players such as Adobe, Apple, Intel, and Sun Microsystems, but just as often, they came across as independently lumbering giants whose uncoordinated steps kept IT ever fearful of being stepped on accidentally.
Ironically, this very strategy perpetuated Microsoft's slow decline. Customers were loath to invest further, given the high prices that customer lock-in afforded providers such as Microsoft. That continued to drive a slowdown in Microsoft sales, as customers that could escape did and the rest stayed pat as long as possible.
See what other futures may be in store for Microsoft:
Overview of Microsoft's post-Gates challenge
1. The "Borvell" scenario
2. The "slow decline" scenario
3. The "streaming" scenario
4. The "Oort services" scenario
5. The "Gates was right" scenario