The Decline and Fall of Microsoft? Part 3.

For various reasons, I find myself flying much more frequently now than I ever have. Being a frequent flyer, I’m occasionally upgraded to first class where I get to sit with…other frequent flyers. These fellow FF’ers are often fellow businesspeople, too. Although I mostly like to keep quiet and read some airport fiction, I sometimes end up striking a conversation with a neighbor.

On a flight not too long ago, I sat next to a man who had started a business that makes high-tech coatings for glass. These are not the sticky films they sell on late night TV; they’re chemically deposited coatings used by premium glass manufacturers. I wasn’t surprised that the company is starting to focus on “green” coatings that reduce energy use or actually generate electricity while remaining transparent. What surprised me, however, was the reason the executive had decided to focus on green products. It wasn’t because the economic math was starting to make sense. Quite the opposite, the company had decided to develop green products because “it (was) no longer a purely economic argument”. He explained that “cultural elements had taken hold” that convinced them the trend would be long lasting. He was convinced that the world’s interest in reducing energy use and carbon emissions had reached a level of acceptance that it would be, for all intents and purposes, “permanent.” At first, this sounded completely backward to me. I could imagine them ignoring purely cultural trends if the economic terms were not favorable but I could not imagine them doing the opposite — ignoring economic conditions because the cultural trends were lacking.

I’ve discussed this anecdote with several people and the more I think and talk about it, the more I accept the argument. Cultural movements can be much more effective and long-lasting than economic parameters. Although it can be argued that we’ve yet to achieve the goals of the civil rights or the equal rights movements – it can not be argued that each of these hasn’t permanently affected the way that we consider race and gender. Campaigns against littering and smoking have also seen great success once they’ve achieved at setting the “norm.” If you see someone throw out empty food wrappers from his/her car you probably have a strong visceral reaction (“what a pig!”). My smoker friends tell me they definitely feel similar contempt rays emanating from non-smokers.

I believe we are beginning to see cultural trends that bode badly for Microsoft. Microsoft is simply not cool anymore. (Arguably, Microsoft was never “cool” but is now, perhaps, explicitly “uncool”).

There’s some clear evidence of this. Consider how Microsoft and Apple have fared on the Forbes “Most Admired Companies” list during the last few years:

Apple Microsoft
2006 11 10
2007 7 12
2008 1 16

In 2008, both Target and P&G were listed higher on the Forbes “most admired companies” list. Now, I’m not sure I agree 100% with Forbes’ methodology but any methodology that ends up with a low-cost retailer and a toothpaste company ahead of Microsoft tells me that Microsoft is, indeed, losing its mojo.

Another clear evidence point can be seen by visiting your neighborhood Starbucks and counting Mac vs. Windows laptops. While the numbers are higher in Bellevue and Redmond, they’re dismal in San Franciso, Boston and New York. My own family, Windows users for many years, are checking out the “cute” Mac laptops and Mac Minis. My son, perhaps the most loyal to Microsoft (he’s a gamer), has been Beta testing the one-laptop-per-child OS in his high-school and is asking about how one installs Linux.

I won’t go into why Apple is succeeding where Microsoft is not. Anyone who has looked at iPods and Zunes or iPhones and Windows Mobile phones knows the answer to this question.

Beyond Apple’s success is Microsoft’s failure. Windows Vista is not cool. Sure, it has pretty graphics, but we were already seeing those graphics on the Mac and I can also see them on my $400 Ubuntu Eee PC machine that doesn’t require 2Gb of memory to run well. Microsoft Office 2007 is also not cool. Sure it has a couple of neat features here and there but why does it force me to re-learn a UI that I’ve known for years? Why does it default to the new file format? Why is it so incredibly slow on my cool Mac laptop?

MSN is the new AOL. The only people I know who have their home page on MSN are those who haven’t figured out how to change it to Google. Microsoft buying Yahoo search is tantamount to Ford buying Yugo for its engineering prowess.

There are still a few cool things at Microsoft. The XBox 360 is cool. Sure, the PS3 folk scoff, but XBox live rocks and there’s still very few games that take advantage of the PS3. If you want a great multi-player gaming experience there’s no better alternative.

There’s stuff at Microsoft Research that’s incredibly cool. Check out “Group Shot” or  “Photo Synth”.

As a whole, however, the public perception of Microsoft has changed. There was a time when everyone was using Windows XP and Microsoft Office at work and could not imagine anything that worked better. Macs were around but occasionally blew up with “sad Mac error #6” or whatever. Those days are gone. There are kids in college now who’ve remember only Windows computers. For them, Microsoft represents “their father’s operating system.”  Apple is the cool “new” company. Google is the best place to work.

Macs may be more expensive than PCs. There are strong economic arguments for buying Microsoft products. Personally, though, I’d keep my eye on the cultural arguments for not buying them.