Between A Hammer and the Anvil: Microsoft Gets More Aggressive

Any successful company in the tech industry eventually ends up competing against Microsoft in one way or another. But recently we’ve noted a rising tide of competitive action by Microsoft across much of our client base, all at once. In segment after segment — including financial software, antivirus, wireless e-mail, and graphics — Microsoft is making aggressive new pushes to displace the established leaders.
If you’re facing one of these assaults, you may feel like you’re being targeted individually, but the context is that Microsoft is trying to increase its growth by targeting many places at once. We think that now most of the antitrust complaints against Microsoft have been settled, it feels freer to be aggressive. And the company’s delayed delivery of new products has made it especially hungry for quick revenue growth.
The emerging push by Google and other Web companies to drive software services will further complicate the situation. They’re already making Microsoft extremely nervous, which will make it even more aggressive. Meanwhile, that same trend toward online services can threaten other software companies as well.
The net result: in 2006, some tech companies are going to feel caught between a hammer and an anvil. We’ll let you decide whether Microsoft is the hammer or the anvil, but either way it isn’t likely to be pleasant. Tech companies need to be ready to defend their franchises vigorously, so Microsoft goes after easier pickings elsewhere. At the same time, tech companies need to figure out how to restructure their franchises for the world of atomized software sold as services.