Is Microsoft the next GM?

GM's bankruptcy marks the end of an era. Is Microsoft repeating the automaker's mistakes?

It's always shocking when a stalwart of any industry topples. It makes people pause and lay blame in a variety of directions. Some may be slightly confused that GM is not going out of business, as the taxpayers are going to now have a 60 percent stake in the company. However, many different brands we have known for years (Saturn, Pontiac, Saab, and others) will be cut loose. There are three primary reasons why GM tanked: First, GM seemed to focus a lot of attention on high-margin gas guzzlers (case in point, the Hummer). Next, GM hit some competition from Toyota and Ford (both of which seemed to be better prepared for the economic crisis). Add to that the obvious, a financial recession, and we have a bankruptcy.

Now where does Microsoft stand in comparison? Some might say Microsoft has faced a few serious bumps over the last 10 years but came out fine. Going back to Windows Me (possibly the worst of the Windows releases), it was able to rebound with Windows XP. But the Vista debacle that began in 2006 has brought along an avalanche of critique. Although I've never personally agreed with the technical complaints, the fact that there are six or more variations of the software, combined with price tags that have just gone overboard, makes the anger directed at Vista understandable. When you look at the many upgrades and varieties of Vista and now Windows 7, the slew of new System Center products, and the Xbox division (which may continue to do well with the new body controller idea), you have to ask if Microsoft is overbloating its product line. Is it stretching out in too many directions, instead of improving the core products and lowering the cost to consumers?

[ InfoWorld explores five scenarios for Microsoft's future. Which do you believe is likeliest? ]

Some may say, "Well, Microsoft has a ton of money, so there is nothing to worry about." But Microsoft has already begun trimming the fat. Microsoft said in January that it would cut up to 5,000 positions over the next 18 months, starting with an initial 1,400-person wave. And many analysts expect that number to grow.