Microsofts current platform, Windows Vista, is struggling. While there is actually some increasing evidence it can provide substantial savings over Windows XP, this information is being overwhelmed by coverage of Vista problems and the effective Apple attack campaign.
Apples Leopard has had similar problems but Apple has marketed through them, creating the perception that the MacOS is fundamentally better and driving growth that Apple hasnt seen in decades.
At the low end of the PC market, Linux-based systems have started to show up. Some from partners like Lenovo are targeted an emerging consumer opportunity, others based on unique distributions like the gOS seem to blend an Apple-like user experience with a Google-based backend to create something really interesting. While not yet fully mature, this offering could with Googles help become a real threat.
The Google Attack
Of the three attacks, the Google attack is the most serious. Linux continues to suffer on the desktop largely due to the lack of a solid economic model; it simply does not generate enough cash to truly compete with Apple or Microsoft except at the very low end. And even there it is iffy.
Apple is hardware bound; there is only so much you can do with a limited line no matter how good. Apple is closer to the PC equivalent of Saab or Volvo in scale then they are to General Motors or Toyota. In addition both competitors really are more designed for the PC market the way it was, not the way it will be, if we think of Cloud Computing as the future.
Google, on the other hand, is a different beast entirely. Younger, designed with the Cloud in mind much as Microsoft was designed for the PC Market in the 90s and very well funded Google represents a real challenge to Microsofts desktop dominance.
Currently rolling to market with their first true developer platforms, and likely to use subsidized smart phones and browser-based solutions to first deny Microsoft revenue and then displace the company, they represent a very real threat.
Windows 7: Microsoft Fights Back
The mistake IBM made and Microsoft may avoid and I use the word may advisedly is that IBM agreed that the market was making a move to client/server and they eliminated by choice their leasing protection.
Microsoft is not eliminating their similar enterprise agreements. While they are investing in the Cloud with their Live offerings they are not supporting the argument that the desktop PC is dead yet.
In addition, they have begun to reinvest in Windows and recently showcased a multi-touch user interface which could help the desktop OS become relevant again, protecting both Apple and Microsoft from the premature shift to Could-based desktop computing, assuming, as is likely, that Apple is doing the same thing.
They have recently brought on board one of the most creative marketing agencies in the world and if (a big word here) this agency is given the knowledge and the latitude they need to become successful it could make a huge difference. But Microsoft is used to being technology- and not market-driven, so making this change at a critical time in Windows 7 development wont come naturally.
Will History Repeat Itself?
While Microsoft is in better shape to fight this fight than IBM was, they are facing several competitors at once and two are well-funded. Google has some control over Web marketing and Apple is a marketing powerhouse second to none in the technology space. (And Microsoft has proven particularly vulnerable to marketing-based attack.)
Finally, the Cloud is coming, and unlike Client/Server, which didnt have much of a foundation, the Internet is here and forms a better foundation than existed for that early challenge. In other words, the transition to Cloud computing could happen vastly faster than anything we have ever seen before.
Still, just remember, people dont like change. If Microsoft can create a compelling new platform they can probably hold most of the market. And the multi-touch capability in Windows 7 is an interesting, and possibly even compelling, start. Its a new Windows team. I wonder if they realize they probably have the future of Microsoft riding on their shoulders.