Microsoft: Resurgence of a dinosaur
Microsoft’s shareholders had little to grumble about on Wednesday as they shuffled into its annual meeting, held in the outskirts of Seattle.
The 43-year-old software company, not long ago seen as a dinosaur of the tech industry, has in recent months overtaken its younger peers, Amazon and Google, in value.
This week, it went one better. On Monday, Microsoft leapfrogged its old rival Apple for the first time since 2010, making it the world’s most valuable public company for the first time in 16 years.
Since Monday, the two have repeatedly traded the top spot. The moment caps an extraordinary comeback for a company many were prepared to consign to history.
In early 2009, when its share price was at its lowest point this century, the company was reeling from the disastrous launch of Windows Vista, the failure of The Zune, its supposed iPod-killer, while Internet Explorer’s dominance was being gradually chipped away by a not-for-profit browser called Firefox and the newly released Google Chrome.
While it had spent its time trying to fix its numerous problems, Apple had launched the product that would change the computing world for good. The iPhone, released in 2007, caught Microsoft flat-footed.
Steve Ballmer, Microsoft’s chief executive, laughed it off, but could not have been more wrong, a fact that was made clear when, in 2010, Apple’s value surpassed that of its old rival and it went on to become the world’s most valuable company.
Meanwhile, Microsoft was weighed down by internal bureaucracy and infighting. Little wonder, then, that it missed the three great consumer waves of the 21st century: search engines, social networking and smartphones.
But in 2018, Microsoft’s floundering looks like a blessing in disguise, as the markets it missed out on suddenly look less valuable.
The smartphone market remains highly profitable, but sales are falling, while the digital advertising market that powers Google is showing some signs of running out of puff. And the less said about social networks these days, the better.
By the time Satya Nadella replaced Ballmer in 2014, Microsoft knew it had to try move on.
Under Nadella, its attention is largely focused on getting businesses to adopt its corporate offerings – Office software such as Word, Outlook and Excel – and its computer server business.
But its most notable success has been the cloud computing division Azure, a business that few outside the tech industry have heard of.
Companies using Azure gain access to Microsoft’s data centres, which allow them to run applications and host services without having to buy their own hardware. Azure revenues increased by 76 per cent in Microsoft’s most-recent quarter.
Meanwhile, a series of other bets appear to be paying off. HoloLens, its augmented reality headset just won a US$480 million contract to supply them to the US military.
Other businesses, such as its Surface tablets and Xbox gaming console, have been reinvented, leading to healthy growth.
Microsoft’s time in the wilderness allowed it to reinvent itself. As the rest of the industry struggles with a stock market crash, fears over fake news and the threat of internet regulation, Microsoft’s past failures have paved the way for the company’s renaissance.
– Telegraph Group