Microsoft Corporation Seems Teetering On The Brink Of Irrelevance

The first act of the great tech revolution was the PC boom, when computers run with Windows and mice seemed to take over the world. For a time, Microsoft (NASDAQ: MSFT.US) rode the wave of this boom, growing into the most valuable company in the world.

The second act of the tech boom was the explosion in touchscreen devices such as smartphones and tablets, tightly entwined with fast internet and mobile networks. This is where we are at now — a world dominated by Apple and Google. Suddenly, Microsoft seems teetering on the brink of irrelevance.

The great tech convergence

What will be the third act? I think the worlds of PCs and touchscreen devices will converge — I call this the great tech convergence. Already computers now have touch screens and are becoming more like tablets.

Eventually, the worlds of PCs, tablets and smartphones will merge. And there will be an almighty battle for the unifying technology.

When Bill Gates left the helm of Microsoft, this company bestrode the world of technology. When, this year, Steve Ballmer stepped down as chief executive, people were not talking about the dominance of Microsoft, but of its precipitous decline.

When Kodak so dominated the world of film, it completely missed the digital camera revolution. In the same way, Microsoft was so completely immersed in the world of PCs, Windows and mice, it was totally outflanked by Apple’s, and Steve Job’s, touchscreen revolution.

This year, Kodak went into Chapter 11 bankruptcy. Can Microsoft avoid a similar drift into irrelevance?

The vision thing

The third act will be Microsoft’s chance to be relevant again. But the battle between the four titans of tech — Microsoft, Apple, Google and Samsung — won’t take any prisoners. For Microsoft to really have a chance, it needs a Steve Jobs rather than a Steve Ballmer to run it. Ballmer’s real failing was not to realise that, at the end of the day, it really is a vision thing.

Let’s fast forward to 2020. We will be living in a world of smartphones, smart-watches, smart-glasses, and smart-computers, all interconnected by fibre optic broadband, Wi-Fi and 4G networks. These devices will be controlled by touch, gesture and voice.

We will switch seamlessly from device to device, app to app, and control mode to control mode, drawing from the data cloud as we proceed. Thoughts will be turned to actions faster than ever before. Tech in the future will be a transformed, and fascinating, place.

Who will gain control of this tech world? I find it difficult to see beyond Apple, Google and Samsung. Already Google’s Chrome is more popular than Internet Explorer. Apple and Android devices are selling faster than PCs. I expect Google Docs to eventually overtake Microsoft Office.

I see Microsoft as a potential recovery opportunity, but its chief executive faces a hard task turning this company around.

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> Prabhat owns shares in none of the companies mentioned in this article. The Motley Fool owns shares in Apple and Google.