Microsoft remains the world's biggest software company, but it might not be for long unless it reestablishes itself, and its brands, as the products of choice for tech users in the consumer and enterprise markets. Once the unquestioned king of personal computing, Microsoft has become almost irrelevant in key markets like mobility and search, and even seemingly once unassailable franchises like Windows and Explorer are under threat.
Here are some moves the company must make next year if it hopes to regain some relevance.
1. Launch a tablet.
There may be no more pointed an indicator of what ails Microsoft than its fumbling when it comes to tech's hottest market--tablets. At the Consumer Electronics Show way back in January, 2010, CEO Steve Ballmer showed off a range of prototypes meant to assure the public that Windows would be a player in slates. But those efforts turned out to be so kludgy that even longtime ally HP ditched its plans for a Windows tablet and opted for webOS.
Two years later, Microsoft has yet to launch a legitimate entry. What's worse, there are indications that it could be another two years before a capable Windows tablet hits the mainstream.
By then, rivals like Apple and Google will have third-generation systems into the channel, and even peripheral players like Amazon and Barnes & Noble will have carved out solid niches. Forrester analyst J.P. Gownder believes that if Microsoft can't get a solid contender into the tablet market until 2013, it might be too late. "On tablets, Windows 8 is going to be very late to the party," said Gownder.
Microsoft needs to get a tablet out next year, not in 2013, or the race may be over.
2. Ship Windows 8.
On a similar note, Microsoft needs to get Windows 8 out the door next year. There can't be Windows 8 tablets without Windows 8, and the moribund PC market also could use the new OS in time for the 2012 holiday season. Consumers and even many business pros will only continue to purchase traditional desktops and laptops to the extent that they mirror the experience they have gotten used to on their smartphones and laptops, an experience that is all about touch and apps.
With its Metro interface, borrowed from Windows Phone, Windows 8 presents a more mobile look and feel, whether it's running on x86 or ARM chips. As Windows chief Steven Sinofsky noted at Microsoft's recent BUILD conference, many attendees who were given touch-based systems to play with continued to try to interact with their non-touch PCs by pressing the screen.
"People say touch is only for small devices or lightweight things. I promise you the minute you use a touch device with Windows 8, by the time you go back to your laptop or desktop you're going to be hitting that screen. You'll have fingerprints all over your monitor if it doesn't support touch," Sinofsky said.