Microsoft Just Doesn’t Get Consumers

I’ve said it beforeinsistently and repeatedly, in fact — and I will say it again here and now: Microsoft doesn’t understand consumers.

Even as it rejigs pricing of the Xbox 360 and prepares the Zune HD for launch in September, I see no evidence that Microsoft can be anything more than awkward second (or third or fourth) banana in the consumer markets in which it competes.

That’s not necessarily because Apple has done everything right in the portable media player space with the iPod and iPod Touch, or because Nintendo outfoxed Microsoft and Sony in the game-console space by stressing an intuitive game interface over graphics-processing brawn. Both those factors are relevant, of course, but Microsoft’s biggest problem is, well, Microsoft.

Put simply, the company doesn’t have the chops to dominate consumer markets. It can superficially compete, it can play a minor or secondary role in those markets, but is that the sort of aspiration that befits a software colossus?

Well, I think not. Microsoft still has plenty it could do to gain more traction in enterprise and SMB markets, especially in emerging global economies. That’s a focus that should be garnering more time and resources at Microsoft’s Redmond headquarters. There’s a lot of business still to be had in leveraging its redoubtable enterprise assets — the Windows and Office franchises — and surrounding them with Exchange servers, front- and back-office applications, new communications capabilities (such as unified communications), web-based applications, and enterprise mobility. Microsoft can actually win those battles.

In the consumer market? It’s an afterthought or an also-ran, looking distracted, out of touch, sadly eccentric.

Now we have the news that Chris Stephenson, the general manager of marketing for the Zune, is abandoning ship immediately before the launch of the touch-screen Zune HD on September 15.

What are we to make of that? By all appearances,Stepeheson is departing of his own volition. Even if that were not true, the development would not reflect well on Microsoft or on the Zune’s woeful market performance as media player.

Earlier this year, Microsoft reported that Zune sales plunged 54 percent from $185 million in the last quarter of 2007 to $85 million during the same quarter a year later. Those numbers speak volumes — and fail to speak of volumes.

Is there any reason to think Zune can pull out of a death spiral? Sure, the situation might get a little better, sales might spike a bit when the Zune HD reaches market, but — honestly — is this where Microsoft thinks it can get the best return on its strategic investments?

Close the retail stores, Microsoft. You’re not Apple. Play to your strengths, not your weaknesses.

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