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You are here: Home / Computing / Microsoft Faces Some Rough Waters
As Gates Departs, Microsoft Faces Rough Waters
As Gates Departs, Microsoft Faces Rough Waters
By Richard Koman / CRM Daily Like this on Facebook Tweet this Link thison Linkedin Link this on Google Plus
PUBLISHED:
JUNE
26
2008
So this is really goodbye? Bill Gates' last day at Microsoft is Friday and tech-watchers around the globe are assessing the impact of the man responsible for the dominance of the PC, DOS, Windows and the "Evil Empire."

Such an assessment seems almost impossible. Gates and Microsoft have not only dominated the PC industry, they often dictated the computer and software choices for the home and, more importantly, defined the computing environment for businesses around the world.

Gates' claim to fame may be the storied history of DOS and how he outsmarted IBM, but "it was his creation of the first software development tools for DOS that actually gave the software industry the wings to fly," said Tim Bajarin, principal analyst with Creative Strategies, in an e-mail. "That can't be underestimated, as its impact was enormous. And his decision to do Microsoft Office, Exchange and eventually include the Web browser in the operating system has become the center of most of today's digital business environments."

Evil Empire?

If Microsoft is synonymous with Windows and business computing, it is also tightly tied to another moniker: the Evil Empire. As Microsoft's dominance in the industry grew, it increasingly engaged in anticompetitive behavior, including a successful effort to stomp out once-leading browser manufacturer Netscape. Such monopolistic practices led to intense scrutiny of the company from U.S. and European regulators and Microsoft has substantially changed its practices in the light of government scrutiny.

Microsoft's dominance eventually gave rise to the ultimate unintended consequence -- open-source software. As developers rankled under Microsoft's control of the computing environment, programmers volunteered their time to develop an alternative operating system, Linux, and eventually a whole ecosystem of open-source applications and tools. The open-source challenge was a "very unusual development" virtually unprecedented in business history, said Charles King, principal analyst with Pund-IT, in a telephone interview. It was certainly one Gates didn't see coming.

"I don't believe Gates strove to make Microsoft a monopoly, but his desire to create great software clearly forced the company in this direction," Bajarin said. "But this came about because the industry desperately needed standards early on to rally around, and because Office delivered a solid set of integrated tools, it had a very rapid adoption in business, education and consumer markets. That, along with their OS clout, had a lot to do with their eventual strong market position."

IT Watching Ballmer Carefully

Now, with the world's largest software company under the direction of CEO Steve Ballmer and Chief Software Architect Ray Ozzie, can Microsoft continue its dominance? "I think Bill Gates leaving is on the same level as Steve Jobs leaving," said Mary Jo Foley, author of the book Microsoft 2.0: How Microsoft Plans to Stay Relevant in the Post-Gates Era. "He has been the face of Microsoft."

Many analysts think Microsoft is now ready to move forward without Gates. "Microsoft will continue without him, and I think that's ultimately what he was aiming for," said Michael Gartenberg, an analyst with JupiterResearch. "This is Bill's company. Bill built and redefined an entire industry. He was challenged by a number of competitors throughout the years and successfully fought off all the challengers, even when naysayers predicted Microsoft's loss of relevance."

And yet Gates is leaving when his company faces enormous challenges. Ballmer's failed pursuit of Yahoo underscored to the world just how profoundly Microsoft has been eclipsed by Google in online search and advertising. While Microsoft achieved market-share dominance in Web browsers, it was Google that figured out the online business model.

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