Computing’s Big 3 and the Continuing Dissatisfaction with Microsoft

When proposing that Windows 8 would be a smash hit, the highly negative reaction to Windows 8  I discovered on commentary sites like Reddit  and Digg was a bit surprising. Many of the reactions to Windows 8  were pure scorn. It appears that Microsoft  has a lot of make-up still to do for such sore points as the Vista fiasco, the nagging stream of Windows gotchas, the continual grief that IE has caused for Web users and developers, the “fun” of  constant security updates including Security Bug Tuesdays for Windows administrators, and the many developers who have had to contend not just with a wavering stream of API updates but also  Microsoft invading part and parcel of their product lines. This latter sore point will be worsened  by Microsoft’s invasion of the hardware PC and tablet markets.

But these points of contention will just increase especially with the continuing  invasion of Microsoft into its “partners” hardware, software and service markets. True Microsoft has been in the tablet, gaming  and phone businesses for years – but now with Surface and Phone 8, Redmond is completely covering the client computing marketplace just like Apple. And just as Apple has moved to garner bigger chunks of profitability from its software and exclusive delivery of all iOS apps  and media [for a mere 30% take], Microsoft is using entry into the hardware side of the business and the Windows Store to do the same.

The Emergence of Computing’s Big 3
 

In case you have not noticed, there is a  new Computing Reality – Apple,Google, and Microsoft have become the BIG 3 in Computing. This is how it looks from a financial perspective:

Computing’s Big 3 Companies
Company Annual Revenues Market Value Earnings in the Bank
Apple $109B $622B $28B
Google $38B $220B $43B
Microsoft $74B $256B $63B
IBM $107B $226B $11B
Oracle $37B $156B $31B
Source: Google Finance

So from a financial point of view only IBM has a Market Value close to the Big 3 though it does rank 2nd in revenues.

From the technology perspective Apple, Google, and Microsoft have also become clear leaders in computing. This is because neither IBM nor Oracle  have the golden key in computing – a market leading OS. More than ever before OS leadership leads a company to dominance in both consumer  and enterprise computing markets.  Look what iOS has done for Apple in smartphones, tablets and media devices. Ditto for Google’s Android. And of course Windows on the both the consumer and server side of the market for Microsoft.

But the crucial point is that hardware and apps/programs are dependent on OS software. So with ever changing APIs, extensions and included apps,  OS vendors can control which innovations and vendors succeed in the market. Look no further than Apple’s unjustified assassination of Flash[Adobe could do nothing from a legal angle because more than half of Adobe’s total market share is Apple-based] and Microsoft’s strangulation of Java on Windows.

The next  Computing magic ingredient is a continuing record of innovation with thousands of  world-wide patents  to protect that IP-Intellectual Property. Apple just proved this weekend  in its US jury judgement  against Samsung the billions of dollar  value of patents – and Microsoft has had equal patent duties success against Android phone venders. One of the reasons Google bought Motorola was an entry for producing reference mobile hardware but also for Motorola’s vital communication and mobile patents Now IBM and Oracle have huge patent troves themselves; but they are are lacking in the key fields of mobiles, OS+ user interfaces, and broadband communications. In contrast, Apple, Google and Microsoft also have large patent holdings but they include many in the key OS and client computing sectors that are vital for the next 5-10 years.

The final key ingredient is consumer confidence. Back in the late 1980’s and early 1990’s Microsoft and Windows had carefully garnered the positive perception among consumers  of providing the best  and winning value in computing. Sure, Microsoft stumbled but the third time was always charmed. Currently Apple carries that consumer confidence – Apple’ is worth the premium price because its devices are innovative,  well designed, and just work well. Sure there are  cracks of arrogance such as  Mac usres cant have touchscreens because of “arm fatigue” and  Apple’s massive profits yet we can’t build in the USA. But Apple products don’t get nearly the same scorn in the tech and commentary media seen by Microsoft’s. Redmond will have to address the lingering Vista, ME, IE and Bob doubts that instil the notion that Windows 8’s intuitive touchsreens for everybody, better speed, battery life and lightweight mobility are not worth the Windows 8 learning curve. If Microsoft fails to do this, they could become the Chrysler of Computing’s emerging Big 3.