With some $20 billion in cash, Microsoft is in a pretty good position to weather most storms.
Although its results are tied to PC sales, the company is not as dependent on the PC market as Intel or other hardware manufacturers. And the PC sector is definitely in a slump. Because of a maturing market and a downturn in the economy, the U.S. PC industry saw shipments decline 3.5 percent for the first quarter of 2001, according to results just released by Gartner's Dataquest unit.
However, Microsoft's deep pockets and involvement in businesses other than those focused on desktop products should enable it to withstand the current PC market sluggishness.
Every component of Microsoft's overall strategy is at a unique point. With its operating system and Office applications businesses, Microsoft faces two challenges. First, the market is already largely saturated with those Microsoft products. Second, many customers have postponed their upgrades to await indications that the economy has improved. In general, Microsoft will have to balance persistence and patience.
The company's .Net strategy is just getting off the ground and will not have a huge effect on profits within the next six months. Microsoft must get better at clarifying the .Net initiative, which it has promoted inconsistently. For example, the .Net label is applied to products bearing little resemblance to the .Net concept, while other products seem to shy away from using the name. As a result, potential customers may be confused and a bit intimidated by a perceived complexity. Gartner believes that Microsoft should better explain .Net in more sharply focused marketing messages.
See news story:
Microsoft steers clear of PC slowdown
Microsoft does a lot of things right. By focusing on its core competencies, such as its relationship with developers, Microsoft will continue to build its new role as industry visionary stemming from its .Net vision.
(For related commentary on Microsoft's operating systems, see TechRepublic.com--free registration required.)
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