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1/10/2012
11:37 AM
Paul McDougall
Paul McDougall
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Ballmer's CES Keynote: Nothing To Seacrest Here

Microsoft's last appearance at Vegas tech fest underwhelms, even as consumer misses become a clear and present threat to its enterprise business.

Now we really know why Microsoft is ditching CES--it hasn't got much to say to consumers that it hasn't already said. CEO Steve Ballmer took the stage Monday to deliver his last keynote at the Las Vegas tech fest, and proved as much.

Ballmer's final address made it painfully obvious why Microsoft needed to step out of the spotlight--the company is falling farther behind rivals in key consumer markets and its recent string of underwhelming appearances at the show have only served to highlight the fact.

Aside from a hosting gig by American Idol's Ryan Seacrest that was in equal parts unexpected, incongruous, and awkward, Ballmer's swansong merely echoed his keynotes from the past couple of years. And I mean that literally--here's what he "announced" concerning Windows 8 tablets: "We kicked that off last year at CES and we're even more excited this year." Stop the presses.

Paging Paula? Idol's Ryan Seacrest with Ballmer at CES
Paging Paula? Idol's Ryan Seacrest with Ballmer at CES

This was the essence of Ballmer's keynote: There will be tablets at some undefined point in the future, there are some cool new Windows Phones coming, such as the LTE-capable Lumia 900, and Xbox now has voice-enabled search (which we already knew). Oh, and "nothing is more important at Microsoft than Windows."

The latter statement likely had Jim Cramer reaching for his "SELL SELL SELL" button. Microsoft is clinging to PCs like (in President Obama's view) a redneck hooked on guns and religion. Meanwhile, Apple is on the verge of launching iPad 3, Android owns 52.5% of the mobile operating system market compared to 1.5% for Windows Phone, and consumers want to purchase a new Windows machine about as much as they still want books made from dead trees or music that comes in a jewel case.

[ Microsoft had highs and lows in 2011. See Microsoft's Dumbest And Smartest Moves Of 2011. ]

Yet Ballmer is unmoved. "Nothing is better than good competition. It's a great thing, and I'm glad we've got Windows," he said, as Seacrest pondered his career arc. None of this might be a problem for a company that makes billions of dollars in profits from the enterprise IT market, except for a pesky pachyderm in the room named CoIT. The consumerization of IT means an increasing number of companies are allowing employees to use their own client and mobile devices for work. As things currently stand, it's a trend that favors Apple and Google, and could flatten Microsoft.

New data from Forrester shows that businesses and even government agencies are starting to embrace tablets and Macs at the expense of Windows PCs. The market watcher sees Windows' share of the worldwide business client market falling from 96% in 2008 to 70% in 2013, while the combined share for Macs and iPads increases from 2.7% to 30%. Imagine what each point swing is costing Microsoft.

And the implications run deeper. For more and more users, mobile devices are the gateway to cloud services such as search and e-commerce. If you're not a player in mobile, it will become increasingly difficult to be big in the cloud, which Microsoft has targeted as a strategic priority.

Bottom line: Microsoft's whiffs in the consumer market are becoming a serious problem for the company, whether Redmond admits it or not. Pulling out of CES might be the right move for now--why continue to highlight your weaknesses in front of a global audience? But longer term, Microsoft needs to redouble its consumer efforts, and return to the show with some blockbusters. Otherwise it could be in for a long period of post-CoITal depression.

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JC4905
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JC4905,
User Rank: Apprentice
1/11/2012 | 5:49:48 PM
re: Ballmer's CES Keynote: Nothing To Seacrest Here
Research In Motion is already getting killed by the bring-your-own-device movement. Companies' IT department is losing its influence in resisting the BYOD trend, especially when corporate executives consider ditching their RIM device (a BlackBerry) for an iPhone.
gwilson153
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gwilson153,
User Rank: Apprentice
1/10/2012 | 10:10:54 PM
re: Ballmer's CES Keynote: Nothing To Seacrest Here
Your points are valid. MS's failure to succeed with phones and tablets will harm them longer-term inside corporations when PCs give way to light-weight clients that use non-MS browsers.

MS has had a great run. They aren't going to die, they still have some great products, but they aren't going to own the whole stack any longer and they will need to learn how to play in that arena.

Frankly, their biggest challenge is protecting the Windows and MS-Office license revenue/profit, which has been a growing problem that is only going to get bigger. As that problem gets bigger, MS will have to get smaller to survive.
msbpodcast
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msbpodcast,
User Rank: Apprentice
1/10/2012 | 6:38:21 PM
re: Ballmer's CES Keynote: Nothing To Seacrest Here
Microsoft was NEVER a consumer products company.

It rose to be a darling of the corporate accountants in the '70s by creating a multi-source alternative to the IBM juggernaut in the computer ecosystem, (Incidentally, that's why Apple was never considered as a serious provider of computing products after the arrival the the PC ecosystem, it was juts ONE company and the accountants hated that.)

Microsoft was never considered as anything other than a software product, which it is, and it was something which was a vendor problem and not even carried on the books as a line item for years until long after their vendors' introduction onto corporate desktops.

Microsoft rode to its position by being someone else's desktop problem, and that's where it will stay until things INSIDE OF MICROSOFT change. The problem is that the accountants still hold sway over Microsoft's market and the accountants response is to cut costs at all cost, which forces their vendors to cut costs at all cost, so there's no money left for R&D, unlike Apple which enjoys huge markups but produces what consumers want,

Now that were heading into a post PC world, one where individuals purchase their own media consumption platforms, the accountants no longer hold any sway and Apple, having rid itself of the image of being a mere PC maker, is free to make products that IT wants to.
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