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Microsofts $30 billion 'struggle

10 February 2006  

Little to cheer outside core market yet sales keep soaring.

Antipathy towards Microsoft, the US software giant, is common throughout the European business and technology press. And so it was entirely in keeping that UK mobile phone maker Sendo's extraordinary eleventh-hour decision to drop Microsoft's Smartphone operating system (OS), in favour of a rival Symbian-based platform, was greeted with something approaching glee.

"After you shake your hands with Microsoft, count your fingers," warned one report. "Microsoft is largely friendless and getting lonelier by the day," beamed another. That kind of media coverage risks drowning out the wider significance of the Sendo fiasco: In the wide-ranging wireless data market, where does Microsoft go from here?

It clearly does not look good. The news came just days before the Microsoft-based product was due to be shipped, and not long after chairman Bill Gates had admitted that Microsoft is lagging behind Symbian. To make matters worse, Microsoft has a €16 million stake in Sendo.

All the leading handset manufacturers have now eschewed Microsoft's technology. Network operators are less wary - but there has been a trickle of reports suggesting that European carriers are worried about Microsoft's Net web services technology and the possibility of losing customers to Microsoft. If this trickle becomes a torrent, then Microsoft's mobile strategy will be in even greater trouble.

Set alongside Redmond's investments in cable networks, interactive television and the games market, a pattern seems to have emerged: outside of its core market of PC and Intel-based server software, Microsoft's ventures have mostly failed. Even in handheld computers, it has yet to establish the firm grip it expected.

Its problems should be put in perspective, however. In October 2002, Microsoft reported first-quarter sales up 26% to $7.5 billion. As long as there are desktop computers and servers, it seems, Microsoft will continue to fare well enough.


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