KELLNER: Competitors soften Microsoft's roar

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By Mark A. Kellner

The impressive news last week that Microsoft Corp. posted its "first ever" decline in year-over-year quarterly sales and that revenues fell 6 percent, has set many tongues wagging in the tech world.

"Microsoft's model is not working anymore," thundered trade journal InformationWeek. "Netbooks hammer Windows revenues for second straight quarter," declared Greg Keizer of ComputerWorld, another respected trade weekly.

The netbook phenomenon is interesting: The tiny portable computers, with screens as small as 8 inches, run either a low-cost version of Microsoft's Windows XP operating system (lower in licensing price than any of the Windows Vista configurations) or some flavor of the open-source Linux operating system, which is either free or much, much cheaper than even Windows XP. Either way, a lower-cost or no-cost operating system on a netbook siphons money from Microsoft's revenue stream.

Other consequences flow from that. If you have a tiny portable with, say, limited RAM and a smallish hard disc drive of 120 gigabytes or so, you're not as likely to fill it up with some of the "bloatware" typically found on notebook and desktop PCs, some of which may bear the Microsoft name. Instead of the Office 2007 "suite," you might go for Microsoft Works, which includes an older version of Microsoft Word, a simpler spreadsheet, and so on. Or, you'll jump to OpenOffice.org's office suite, which is free. There's no tech support number to call, but you can find answers online.

Another scenario involves using Web-based tools such as Google's Documents suite to create word processing and spreadsheet files, or Adobe's Buzzword, or ThinkFree Office, all online tools, of which there are a growing number. Do your computing "in the cloud," and you're not buying Microsoft's software, either.

While such scenarios may not be attractive in many large enterprise settings, consumers are finding them more and more attractive, it seems; otherwise why would there be a drop in Microsoft's sales and revenues?

The more important question is what can Microsoft do to change things? I'm no insider, but I have a couple of decades' experience with the company and its products. Some educated guesses and ideas follow.

First, the company needs to get Windows 7 out there as soon as possible. This has been discussed here twice in the past month; suffice it to say there's a lot of enthusiasm for a Windows operating system that isn't prone to crashing.

Second, move Office online, and soon. There have been some elementary moves toward this: Microsoft Exchange users can access a version of the Outlook e-mail client online via a Web browser, and what used to be Microsoft Publisher is essentially an online service.

What I'd like to see, however — and what I might pay for — is a feature-rich, full-spectrum office suite online, and, while we're at it, let's make it browser independent, please. Example: if you use Microsoft's Internet Explorer to access Outlook/Exchange via the Web, you get more-or-less the "complete" desktop Outlook experience. Use Mozilla's Firefox or Apple's Safari, and you get a "light" version.

Microsoft does this, I'm guessing, to drive users toward Internet Explorer. Fair enough, but as we've seen with Vista vs. netbooks, it's a losing strategy. Better still to engineer a robust Web-based experience and charge a little more than to cut corners and upset your customer base.

By contrast, Kerio Mail Server, which runs on Windows, Mac and Linux servers, offers what seems to be a rather consistent user experience across platforms: It looks, and acts, the same in any Web browser, on Mac or Windows.

The final thing Microsoft should do is buy something, and quick: Outbid Oracle for Sun Microsystems and Microsoft would get an entree into open-source markets; buy Adobe and, after dodging antitrust concerns, they could beef up Office into an unstoppable force.

I'm not a Microsoft insider, but I'm guessing there's hard work going on at the company's Redmond, Wash., headquarters seeking ways to avoid oblivion. It's been a great ride for Microsoft, and I don't think they want to stop just yet.

• E-mail mkellner@washingtontimes.com.