Is Microsoft now officially irrelevant?

stock market dive.jpgIt seems that now more than ever, when the markets speak, the world listens. And what the markets said yesterday is that Apple is now the biggest IT company in the world.

Apple’s market valuation of $221.4bn passed Microsoft’s $218.3bn on the New York stock market yesterday marking a depressing new low for Microsoft and firmly drawing the battle line between Google and Apple – Microsoft is set to be nothing but a footnote in the IT world.

The decline of Microsoft is all the more amazing when you consider that at the beginning of 2000, the company was worth $556bn compared to Apple’s paltry $15.6bn. Then, Steve Balmer took over Microsoft while Apple co-founder Steve Jobs returned like a prodigal son to Apple which almost went bankrupt in 1997 and started the long road to Apple’s recovery. As a result, much of the blame for Microsoft’s decline has been laid at the feet of Balmer who has been helpless in the face of Job’s ingenuity and innovation.

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To add insult to injury for Balmer, even more spectacular has been the rise of Google which was nothing but a loss-making search engine back in 2000. It’s now worth $115.bn making it bigger than Hewlett Packard and only a shade smaller than Cisco and IBM. Google is very much in the ascendancy and it’s surely only a matter of time before it leapfrogs Microsoft on the stock market over the next few years.

But even though Google may still lag a few places behind Microsoft financially, it’s already miles ahead in the software world. While Apple has destroyed Microsoft in the hardware stakes with iPods, iPads and the increasing popularity of Macs, Google has destroyed it in the online advertising business courtesy of Google AdSense which has outstripped Microsoft’s loss making Live services. Even in the mobile industry, Microsoft Windows Mobile can’t compete with either Google’s free Android operating system or the iPhone.

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Microsoft’s saving grace remains Windows and Office, the two most widely used computer applications in the world. Courtesy of these two products alone, Microsoft still makes more profit that Apple or Google even if its market valuation is plunging. However, the writing is on the wall for these two flagships too. As in the mobile world, why should consumers and manufacturers pay for a license to use Windows when operating systems such as Google Chromium and Google Docs offer a competent free alternative?

Microsoft’s failure to innovate and embrace open source or free software has been its ultimate downfall. In an increasingly competitive and desperate economic climate, both consumers and businesses will ultimately end-up ditching expensive options such as Windows and Office thus finally consigning the company to the history books.

[Header image from Hooray for Change]

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