No More New Things From Microsoft

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By Saul Hansell

Tags: Bill Gates, CES, Microsoft

In an era when the vanguard of technology is creating smart devices for entertainment and communications, Bill Gates, the outgoing chairman of Microsoft, had little that was interesting or innovative to show off in his last annual keynote at CES in Las Vegas on Sunday.

The headline from the speech was a series of partnerships to bring some movies and television programming both to Xbox and to MSN. At best, this is more of the same. Xbox and MSN already offer video content. And the studios in the announcement †Disney, NBC Universal and MGM †already distribute their content digitally on other services. At best, this is a footnote completing a deal that was obvious. Apple, by contrast, regularly announces deals with Hollywood that offer new content and new terms for users (think 99-cent songs, and then music without copy protection.)

Microsoft will also run the NBC 2008 Olympics Web site and use it as a way to show of its Silverlight Web publishing software, a rival to Adobe’s Flash. That means anyone who wants to watch Olympic video online will have to download Microsoft’s new software. That may be a small competitive boost for Microsoft, but doesn’t really offer consumers anything new.

Mr. Gates spoke of the “digital decade,” his much-repeated vision of how computers will change everything. In a world where greeting cards talk to you, and shopping carts have display screens, there isn’t a luddite left who doesn’t understand this. And to the audience of CES, it’s a monumental snore.

Robbie Bach, the president of Microsoft’s entertainment and devices division, did get to boast of the company’s one clear success in electronics: its Xbox game system. The company sold 17.7 million Xbox 360 consoles in 2007, a record, it claims, in dollars spent. As for the Zune, which is trying hard to be the distant No. 2 in music players, Mr. Bach did not release any sales numbers. He said merely that 1.5 million people have registered for the Zune Social Web site.

The two executives did list a range of other initiatives: some new third-party applications for Microsoft’s set-top box software, some features for the Tellme voice recognition telephone service it bought, and a nifty image-recognition software demo.

But somewhere between “everything is digital” and some cool new features, the largest software company seems to be missing the most exciting game in the world.

MSFT is bereft of innovation, incapable of doing anything but that it supports its monopoly fortresses, Windows and Office.

All its othe recent products: Zune, WMobile, Xbox, etc. are market/profit failures. Zune is both; WM is a set of grafted together, kludgy, unuseable junk; Xbox will never earn its cost of capital.

Apart from the fortresses, MSFT is a hollow core.

†Posted by Jeremy W

I old enough to be reminded of the evolution (devolution) of “Big Blue,” which was the hint in a crossword puzzle not so long ago…

†Posted by Mitch Keamy

Of course Microsoft didn’t announce anything new. They’re still reeling from Apple’s iPhone announcement last year.

†Posted by Michael

Microsoft is falling on their face with XBox Live. They have had terrible service problems over the holiday season, and even in normal times this service is slow and unreliable. I can’t fathom why a technology company with Microsoft’s resources and expertise can’t make their online community work smoothly and reliably. This is especially true since we pay $50/year just for the privilege of connecting to XBox Live, on top of the hundreds and hundreds of dollars spent on consoles, games, and accessories. Get your act together, Microsoft…

†Posted by Steve

Good, maybe they will fix some of the bugs in their current products.

†Posted by Tonashideska

when has microsoft ever been innovative.. really? All the ever do is rip off other software and products and try to muscle in on any successful market with inferior products….

†Posted by zippy

It’s not quite clear in your blog, but MS did not sell 17.7 million Xbox360s in 2007. It had shipped 17.7 million of those devices by the end of 2007, after two years of sales. Seems a small thing, but quite a big difference in reality, particularly to investors. MS had sold 10.4 million of the devices at the end of 2006, so that means they sold only 7.3 million total in 2007. In other words, the device sales are NOT accelerating but already declining. They shipped about 1 million consoles in each of the first three quarters of 2007, and then shipped another 4.3 million consoles in the fourth quarter of 2007.

†Posted by KenC

You say: “Robbie Bach, the president of Microsoft’s entertainment and devices division, did get to boast of the company’s **one clear success** in electronics: its Xbox game system.”

If losing money is your definition of a “clear success”, then I’d like to do business with you!

(For the record, the Xbox system has not made a singe cent of profit since Day 1. If I give something away at less than cost, I can have a high market share too. I am surprised that the DoJ hasn’t gone after them on this front).

†Posted by aks

The Little Company that could in the beginning, has lost its charm, creativity & innovation. It’s time for Micro$oft go back to its roots.

Otherwise, its just a shadow of itself without a centre!

†Posted by Apres Ski

When Apple comes out with the next big thing worth imitating, maybe M$ can introduce something “new.”

†Posted by Rick A

2008 will see the Xbox 360 lose significant market share to PS3. They have nothing left in their bag o’ tricks and a vastly inferior software lineup compared to PS3 in 2008. Now with the Bluray momentum behind the PS3 (and vice versa), Xbox can only go down from here on in.

†Posted by The Professor

With all it faults MS is still a good buy…especially now…the stock will split soon.

†Posted by cd

KenC,

Yes, MS IS selling a ton of XBox’s but they lose money on every unit. Until they can market a consumer device for a profit, there is nothing for MSFT stockholders to celebrate.

†Posted by WC

If all other software/hardware manufacturers would follow in lockstep the citizens of the United States would be far less distracted from reality and may be able to focus on much greater issues facing the nation — such as the coming petroleum depletion.

A Geologist

†Posted by tarwater

Microsoft never did innovate anything. Gates was always a good businessman, but the idea that Microsoft is a motor of invention is a marketing myth. They bought DOS. They copied the Mac windowing system. They copied Netscape. They’ve bought most of their innovative technology from companies that they could afford to take over. Generally speaking, Microsoft is a parasite in the software world and I am eager to see a day when its operating system is no longer the hegemon.

†Posted by Andy

To those who say Xbox has not made money, you simply don’t understand the economics. No video game console makes money directly; they make money from games, licensing and peripherals. By that measure, the Xbox division made a boatload of money in 2007. Also, it may not be as well covered by the media as Apple’s iThis-and-iThat products, but Microsoft’s mobile division makes more money than Apple’s mobile products by licensing the Windows Mobile O/S to dozens of companies that run it on millions of devices. Producing products with longevity, which enable others to be innovative, has proven to be the business model that is sustainable. Microsoft enables tens of thousands of partners to be innovative; Apple enables themselves only.

†Posted by Val B

Bill Gates? You mean the guy who thought that internet browsers were stupid? The same guy who said that shopping on the internet would never happen? The same company which pirates creative people’s ideas and then rigidly enforces their own copyright on what they stole from them? The evil empire is still the power on the dark side of the computer innovation force. The only value they find in innovation is their ability to steal it, exploit it and call it their own. Vision, insight and imagination make the minions of the evil empire avert their gaze.

†Posted by Stephen M. Taylor

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