Why Microsoft is having a hard time

October 22nd 2102- Microsoft launches its new operating system- Windows 8 together with its new tablet "Surface".  The launch was an amazing event. Witnessing Times Square NY colored in blue with Microsoft logos in eye sight for block and blocks. Walking down the streets I thought to myself “I hope they sell enough to cover the costs of this campaign”.

 

The campaign raised several questions such as; where are all the people? Where are the lines? Microsoft doesn’t have a concept store such as Apple does and isn’t known as a tech-savvy innovative company like Google. To concentrate potential customers Microsoft rented areas in Times Square and posted the new tablet and operating system there. This was aggressive marketing. There was a feeling that Microsoft was trying really hard to create buzz around their new products.

Viral spread and buzz are hard to measure. There are no exact terms of declaring how widely spread the word got. Although comparing to past events we know how to put this event alongside the rest. Be sure, this was far from the anticipation of the launch of iPhone 5 or the Samsung Galaxy 3. Microsoft made an attempt to start a ball of snow by starting a discussion about their new products hoping it will pick up. Results were that the tech innovators determined the future of Microsoft products for the rest of us.

I do not want to go into details whether which product is better, I want to focus on why Microsoft is struggling. And they are- October 22^nd thru November 17^th Microsoft saw a decrease in sales of 21% versus the same period last year.

The anticipation built for the new launch didn’t hold up to expectations and thus a big disappointment of early adopters. Possibly this disappointment was what affected Microsoft’s sales.

An interesting point to think about is what Microsoft’s executives had in mind when they launched a new operating system (mobile) when two major players controlled over 80% of the market. Microsoft hasn’t released a successful operating system for mobile since the iPhone and Android became major players. They have been under the radar for too long.

Smartphone OS	2012 Market Share	2016 Market Share	2012 – 2016 CAGR
Android	61.0%	52.9%	9.5%
Windows Phone 7/Windows Mobile	5.2%	19.2%	46.2%
iOS	20.5%	19.0%	10.9%
BlackBerry OS	6.0%	5.9%	12.1%
Others	7.2%	3.0%	-5.4%
Total	100.0%	100.0%	12.7%

Their strategy to gain market share with their new OS has yet to justify itself. As we see RIM and Nokia fading into commercial death there is an opportunity out there but the player has to make a great product, nothing less. Microsoft re branded its logo recently; they made a step towards being seen in a different light by consumers. The efforts although haven’t been as big as Yahoo! bringing in Marisa Myer to ignite innovation into Yahoo!. Speaking of Marisa, recently she has replaced all Yahoo! employees BlackBerry’s with iPhones or Androids. No Windows phone.

Microsoft has been out for too long. They have become a non-relevant brand in the world of smart phones. They will have to make huge efforts in order to make up for the time they lost. They have been making efforts; the results aren’t what they were expecting. Constant communication with your customers and engaging with them is a great way to learn from mistakes and concentrate on the positive features. Microsoft hasn’t been in contact with their customers, hence not sure what they want. Coming out of the grave to introduce a new product to an already divided market is a tough task. It has yet to be determined if Microsoft’s phone will gain market share but as it looks for now, they’re not in good shape.

We can take several lessons from this case:

1.       Never stop communicating with customers. Always learn their responses to your moves to find out what they like most and what they will be willing to pay for.

2.       Learn the market very well before launching a product.

3.       Validate whether there is room for your product.

4.       Build a compelling product for your customers.

5.       Build a short term and long term strategy aligned with company vision.

The bottom line is that planning is crucial when launching a new product. There is a way to reduce un-certainty. It’s validation, studying, learning, research and planning.  These all are time consuming processes but are priceless for a company. Spend the long hours on talking to customers, learning, research etc. Remember, this is the other side of business.