The next 12 months are crucial for Microsoft

A few years ago, antitrust regulators were thinking of forcing Microsoft to divide itself into three different groups.

The idea was that if there were two or three different companies, there would be less opportunity for Microsoft to take decisions which broke antitrust laws. While it might not have solved that problem, Microsoft would have been well advised to do that anyway.

Over the last decade, Microsoft has been its own worst enemy. Its sheer size, and dependence on a near monopoly of its Windows operating system, have made it as mobile as an elephant in a very small room.

Good ideas which should have seen it being a significant player have been killed off because of internal feuding and bureaucracy. For example, Microsoft could have had a rather nice tablet in the market place to rival Steve Jobs’ first effort. But the project was effectively killed off because the Windows 8 team wanted to have its product in the shops to fight it.

With hindsight this piece of internal politics effectively allowed Apple to enter the market without a rival and effectively make it its own.

Now Microsoft is in the position of having to make a comeback before it is too late. Its entry into the mobile market now has the elements of being a “last roll of the dice.” It has invested a fortune into buying off Nokia to make sure that its Windows vision has a stable sales base. It has also signed up some big names to support the use of the operating system in tablets.

Early reviews of Windows 8 show that Apple would have a lot to be scared of, but the question is, will Microsoft stuff it up again?

At the moment, Redmond is a little like the Old Republic of the Roman Empire. What was once an efficient city state has found itself the ruler of the world with self interested executives having too much power and carving up small fiefdoms. Apple on the other hand is a little like the Augustus caesership that replaced it. It has a small number of people who make decisions, or are even able to hold an opinion on the companies direction. Indeed it also has similarities to early Microsoft under its founder, Sir William Gates III.

Steve Ballmer might appear to be a Microsoft autocrat but at times he appears unable to focus his company to a particular vision.

What is surprising, is that under normal circumstances there would have been a corporate coup against the emperor, but the suits seem to be too busy fighting each other to bring one about. Indeed, some within Microsoft suggest that keeping his suits fighting each other is part of Ballmer’s cunning plan to keep his job and company together.

What is certain, though, is that things cannot remain like this. The next year will see Microsoft either do well in the mobile industry, or crash and burn completely and utterly. Both scenarios will involve change.

The mobile industry is not one which Microsoft is used to. It requires changes both to hardware and software much faster than Redmond is used to. It also involves partnerships with lots of little companies rather than a big alliance with a single hardware maker, such as Intel.

There were signs that Microsoft is trying to copy Apple’s closed shop model. Early versions of its operating system required strict specs down to the number of buttons each device used. This would be a classic mistake.

Microsoft needs to tackle Apple in the same way that it dealt with it in the past. Instead of copying the company and becoming all “control freak” it needs to become ubiquitous and open, just like it did with the PC in the 1980s.

Later moves suggest that Microsoft slowly twigged to this fact and did something unexpected and started to adapt its operating system to ARM chips. This will help mobile phone suppliers offer a the new operating system on as many machines as possible.

Such moves should kill off moves by some companies to start sticking Apple gear onto the network. Microsoft can say, with some certainty, that it is more secure and better suited to a network than anything Apple can come up with. This is why Dell actually believes it can overtake Apple as the number one tablet maker, because of its connections with corporations.

If things crash and burn, then we could see an uprising and Microsoft forced to break itself up. Its operating system will become less relevant as portables become more powerful. While it is unlikely that a consumer outfit like Apple could take its place, a more aggressive business pitch by Google certainly could steal Microsoft’s thunder.

Then there is the curse of the operating system to consider. Microsoft always has bad luck with every alternate operating system. Windows 7 was great on the PC in the same way that Vista wasn’t. Windows 8 is going to be as significant a change to the operating system as Vista was to Windows XP. This means that the potential for disaster is huge.

Microsoft has a year before anyone can be certain of its fate but what ever happens Ballmer needs to rationalise his company a lot more if it is going to survive.