Microsoft will 'die and disappear' in next few years

Ex-British Telecom CTO Peter Cochrane says divergence, not convergence, is the future of IT.

By Minyanville.com Nov 7, 2012 11:14AM
Brand X Pictures JupiterimagesWith the Windows Surface RT selling out of its available stock -- and winning an endorsement from Oprah Winfrey, no less -- it may seem like Microsoft (MSFT) is riding on a high.

Despite the short-term good news, the long-term fate of the company is not so rosy, at least according to futurist Peter Cochrane, ex-chief technology officer of British Telecom (BT). Microsoft will "die and disappear" within the next few years, Cochrane told Computing.(Microsoft owns and publishes Top Stocks, an MSN Money site.)
"There is no convergence in IT -- what we see is divergence ... apps are appearing individually to achieve separate functions," he  said. As such, the "one OS" (operating system) business model, like Microsoft's, cannot survive. By all accounts, Microsoft "owns" the operating system business, with about 85% market share. (The remaining market share is divided between Mac and Linux.)

Far from being an alarmist, Cochrane's bona fides are sterling; after an illustrious career at BT, he was appointed as the UK's first "Professor for the Public Understanding of Science & Technology" in 1998. Cochrane is currently CEO and Chairman of Cochrane Associates and he is an active investor in high-tech start-ups.

The "one OS" model clearly seems to be where Microsoft is putting most of its chips, given the recent debut of Windows 8. In Windows 8, Microsoft has a single OS that looks like it will be able to span multiple hardwares (PC, tablet, phone, TV) and can be accessed in a variety of ways including touch, type, clicks, and gestures (Kinect). 

Windows 8 is not only used in the Surface RT tablet; the Nokia (NOK) smartphone using the application was just launched last week. However, Nokia currently has a very small share of the smartphone market, according to data from the International Data Corporation.

Nokia's Symbian operating system holds a 2.3% share in the market, down from 14.6% a year ago, said IDC regarding third-quarter data in a release dated November 1. Windows has a 2% share, up from 1.2% over the same period. Apple's (AAPL) iOS holds a 14.9% share and Google's (GOOG) Android holds a 75% share. Research In Motion's (RIMM) BlackBerry platform shrank to 4.3% for the third quarter, down from a 9.5% share for the third quarter last year, according to IDC.

IDC said shipments of Android-based smartphones grew 91.5% in the third quarter to a record 136 million units. Google's free mobile OS nearly doubled the third-quarter growth rate for the rest of the industry.

Replacing the operating system-based model, said Cochrane, will be a new app-based model that allows users to interface with any screen in the world through tiny access devices, or even cybernetic implants. Cochrane also predicts divergence in the cloud, with clouds "going live and being populated only for as long as they are required." Current reliance on device-hosted applications is holding back the move to more agile computing, he said.

Microsoft clearly has a legacy operations business to support, now and in the near-term future, since most cloud servers run on Windows. Even so, the migration to cloud computing, an estimated $14 billion industry in its own right according to IDC, could be a turning point for the industry. Sanford Bernstein analyst Toni Sacconaghi said in a research note that the cloud could represent "the tip of the iceberg ... an important deflationary force for traditional packaged applications services."

With about $50 billion in cash or equivalents, Microsoft has the means to reinvent itself and develop applications beyond the stable opensource platform model it has built.

Even if Cochrane's predictions are correct, in the end, Microsoft has the means to transform itself in a similar manner to what Fuji (FUJIY) is trying to do as it migrates away from the dying photography industry. Alternatively, it could truly "die and disappear" like Kodak.

More from Minyanville
3Comments
Nov 7, 2012 11:53AM
avatar

"Far from being an alarmist, Cochrane's bona fides are sterling."  His balls may be sterling but his opinions are donkey dung.

 

Microsoft's OS convergence is based on an object oriented programming (OOP) concept of reusing software objects to provide functionality and scale across heterogeneous hardware devices. It's worked for Unix for the last 40+ years and will certainly work for Windows. Microsoft now has a single OS kernel with a variety of services and three user interfaces; CLI, Desktop and Modern Touch. Microsoft can offer classic PC, touch based mobile and server operating systems effortlessly with the services installed for the required duties of the device and the appropriate user interface.  Peter Cochrane  would be better off to pounder Britain's long term survival and not Microsoft's.

Nov 7, 2012 12:03PM
avatar
I disagree, The article didn't mention the various other successful products developed by MS including gaming systems etc. I would agree that being a viable alternative in the tablet mobile market won't be easy yet the old MS made a career out of new and better products than the competitors. Apple and its proprietary approach might just give the competition an option for competing in the tablet and phone market. Once MS gets really into the tablet market they could be real competition. As for the OS being a standard. This will be defined by whether MS can dominate the apps and functionality market and work with other products and OSs. Their tablet even though I haven't used it seems to offer options for configuration that droid doesn't. Don't count MS out if they are even close to the old MS.  The experts thought XBOX was a waste of time and it turned out to be one of the best selling gaming systems on the market.  Like most systems and apps it will be decided based on a better product that consumers want. 
Nov 7, 2012 1:15PM
avatar

Who brought back the OS dominance were Apple and Google. MS was already way ahead on the path of replacing the OS platform with universal plug-ins (build in Silverlight) running on any Client Machine.

Now we are back on the OS race and total control of the app market through “apps stores” as we abandoned the plug-ins technologies which do not generate money for the big companies. Who you think is currently winning momentum in the race? Apple and Android have discovered how to make even more money combining the OS platform with a market one.

Yes! Microsoft will disappear; but way after Apple and Google do. Who is going to win a different race is the one that figures out the way to make money out of applications with no dependency of the operating system running on any device. For now we will pay money to the OS landlords!

Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

114
114 rated 1
278
278 rated 2
474
474 rated 3
641
641 rated 4
639
639 rated 5
663
663 rated 6
640
640 rated 7
499
499 rated 8
284
284 rated 9
122
122 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
COPCONOCOPHILLIPS9
TAT&T Inc9
VZVERIZON COMMUNICATIONS9
KOGKODIAK OIL & GAS Corp9
CVXCHEVRON CORPORATION8
More

VIDEO ON MSN MONEY

ABOUT

Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.