MENU

Microsoft’s window of opportunity is here

The tech world has been buzzing since Microsoft (NASDAQ: MSFT) CEO Steve Ballmer announced he’s leaving the company within 12 months. Ballmer’s retirement has come at a pivotal time in Microsoft’s history — and there’s plenty of time for the next leader to get things right.

Source: Microsoft.

The state of the Windows maker

Whomever Microsoft’s new CEO will be, he or she will need to fuse the company’s strong software past with its hopeful devices-and-services future. The restructuring Ballmer announced last month should be a good start to moving the company in the right direction — and a new CEO calling the shots should only enhance that.

Under Ballmer, Microsoft more than tripled its annual revenue, grew its search market share to 30%, purchased Skype, and made the only corporate investment in Facebook. But it also saw its stock price drop by 35% since Ballmer took the helm 13 years ago. On top of that, the company lost its mobile footing to Apple  (NASDAQ: AAPL )  and Google (NASDAQ: GOOG) , botched aspects of its core product (Windows 8), and experienced what can essentially be described as an embarrassing launch of its own tablets.

Apple easily surpassed Microsoft’s smartphone ambitions when it introduced the iPhone back in 2007. At the time, Ballmer infamously said, “There’s no chance that the iPhone is going to get any significant market share.” It’s no secret the iPhone did gain a significant slice of the market, and iOS still holds the No. 2 spot for worldwide smartphone operating system market share. Meanwhile, Microsoft’s Windows Phone OS trails Apple’s iOS with just 3.7% of smartphone market share.

As the CEO, Microsoft’s consumer-side failures rest solely on Ballmer. The Microsoft of today is clearly not the Microsoft of old — and he is partly responsible for that.

Microsoft 2.0

But even in its muddled state Microsoft still retains resources, talent, and drive that could make the company a technological beacon once again — if it can find the right person to lead it.

Ballmer said in his resignation announcement, “There is never a perfect time for this type of transition, but now is the right time.” I wholeheartedly agree. The company is third in mobile OS market share — leaps and bounds behind Apple and Google — and it may have struck out with Windows RT and its almost US$900 million “inventory adjustment,” but Microsoft isn’t a BlackBerry, and there is still time for new endeavors.

As ReadWrite recently pointed out, Microsoft can still tackle wearable computing, the Internet of Things, or in-car technology integration.

But what Microsoft’s new leader will need to bring is the creativity and perspective that turns the company’s products and services ideas into consumer demand. For too long Microsoft was the obvious choice for users. But that ship has sailed.

When portable music players took off, Apple left Microsoft in the dust. When smartphones emerged, Microsoft got the software wrong for too long while Apple and Google marched in. Google smartly decided to give away its mobile operating system, leading to near worldwide smartphone OS domination of 79.3% market share by Android. Android also boasts a worldwide tablet OS market share of 67%, compared to Windows’ 4.5%. Google made itself irreplaceable to consumers by offering a laundry list of free services — and a free mobile OS — that rivals anything other tech companies have created. Microsoft would be wise to take a few chapters out of Google’s playbook as it tries to figure out what to do with its services.

On top of Apple and Google outpacing Microsoft, PC sales are on the decline as tablets take over — and unfortunately, Microsoft tablets aren’t the ones consumers want. They are arguably more interested in buying tech than they ever have been, but they’re not buying Microsoft.

A new leader can change this.

To be fair, Microsoft does very well with its enterprise business. BGR mentioned last month that company is expected to make US$1.5 billion from its Office 365 subscriptions this year and 88% of its Office revenue comes from business. But as important and the company’s enterprise side is, Microsoft cannot ignore the fact that it is a consumer business as well.

It’s future will be built on how consumers view and respond to its products. Consumers have an array of tablets, operating systems, mobile devices, programs, apps, and services at their fingertips everyday, and new ones emerge faster than anyone can keep up. This is the tech world the new Microsoft needs to embrace. The company is no longer the only software king, as small companies with useful apps own that title. It’s not a device stalwart either; Apple and Samsung have earned that position. It’s not a mobile giant — Google is the reigning champion.

But what Microsoft can do now is find a leader that will make consumers stand in line for its devices and swoon over its software. And no, it’s not an impossible task. Apple, Samsung and Google are doing it. Consumers are fickle and their preferences change. It’s up to Microsoft’s new leader to be able to anticipate that. The only other option is for Microsoft to continue marching to the same beat, haphazardly introducing new tech that stirs little desire in consumers’ heart. It’s the old tune of irrelevance — and it’s a dangerous one for any tech company to listen to.

The Australian Financial Review says “good quality Australian shares that have a long history of paying dividends are a real alternative to a term deposit.” Get 3 Stocks for the Great Dividend Boom in our special FREE report. Click here now to find out the names, stock symbols, and full research for our three favourite income ideas, all completely free!

More reading

A version of this article, written by Chris Neiger, originally appeared on fool.com.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.