The never-ending dilemma of Microsoft

Consider the real problem of Microsoft.

The company is cash rich, with upward of $60 billion dollars in the bank. Its founders and major shareholders are as rich as Croesus. It has 90 percent of the desktop OS and office productivity software market. Its name is known all over the world as a beacon of U.S. corporate excellence. So, what’s the problem, and why the panic?

Google, perceived as Microsoft’s most dangerous competitor, has one-eighth of its income and a fraction of its workforce (upward of 4000). Should Bill Gates be fearful?

The dilemma arises because Microsoft is having to defend its enormous revenues at a time when, as Mary Poppins might have said, “Quick, children, the wind is changing”. Robert X. Cringely, no Poppins he, has pointed out that Redmond can never sustain its current revenue base from online advertising, as Google does. The pot is simply not big enough.

Yet Google has cachet and cutting-edge cred, as Microsoft once did. It bristles with innovation, and unerringly delivers crowd-pleasing freebies to an eager planet. Its name is a byword for 21st-century style around the globe. Its compact size means it doesn’t have vast territories to defend as Microsoft does. Google is firmly established in the comfort zone where it can make mistakes and still puff out the scent of roses.

As Gates and Ballmer survey the scene from their Seattle bunker, they must know that sizeable chunks of their empire is going to have to be ceded to the invading Visigoths. Cash is not the same as cachet. Defending the status quo is never as personally satisfying as leading the game. Being under siege is scarier than laying siege to the enemy.

That is the eternal dilemma of Microsoft.