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Nine ways Microsoft is winning, and losing

A recent wave of popular product launches is balanced with some high profile failures

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Microsoft has been riding a tide of good vibes in recent months, thanks to a host of new popular and critically acclaimed products.

Internet Explorer 9 is being hailed for its speed and adherence to HTML 5 standards. Windows Phone 7 may not be popular right now, but many critics like it. Microsoft also has a deal with Nokia to put Windows Phone 7 on the Finnish phone maker's devices, potentially a big win for Windows Phone 7.

Kinect was named the fastest selling consumer electronics device of all time. And within Windows 7's first 18 months, Microsoft sold almost twice as many licences as it did for Windows Vista.

How did Microsoft achieve this feat after stinkers such as Windows Vista, Live Search and IE7? It's easy. Microsoft appears to have one speed, "go." It's a software company addicted to winning, even as it fails. After all, it wouldn't be Microsoft unless it was losing in some way.

Let's take a look.

Winning: Internet Explorer 9

Despite years of declining market share and complaints about the reliability and speed of Internet Explorer, Microsoft has been winning with its latest browser revision, IE9. IE9 is quick, has a small memory footprint, and has embraced HTML standards to a greater degree than previous versions. Microsoft also added interesting touches, such as saving web app launch icons in the taskbar and dynamic jumplists that let you navigate directly to specific pages within a site.

Winning: Windows Phone 7

After watching Apple's iOS and Google's Android battle it out for supremacy in the smartphone market, Microsoft finally decided to enter the fray with Windows Phone 7. The new mobile OS has been praised by critics for its fluid interface, the way it integrates related content such as photos into one place, and its responsiveness and speed.

A recent deal with Nokia should also help the company improve its smartphone fortunes. Gartner recently predicted that by 2015 Windows Phone 7 will be the second-most dominant mobile OS in the world.

Winning: Windows 7, and, Maybe, 8

Microsoft recently said it had sold a total of 350 million licences of Windows 7 since launching the desktop OS in late 2009.

Windows users have shown near universal love for Microsoft's latest OS, a likely relief for the company after the Windows Vista hate fest. And there is even hope that the forthcoming Windows 8 will also be a crowd pleaser, breaking Microsoft's habit of producing one great OS followed by a universally hated one.

Winning: Kinect

Don't call Kinect a fad, because video game fans are eating up Microsoft's motion-based gaming addon for Xbox 360. Microsoft said in late April during its Q3 2011 earnings call that it had sold 2.4 million Kinect devices during the quarter. The company sold 2.7 million Xbox 360 consoles during the same time.

Kinect is also a favourite toy among hackers, who have used the motion-gaming system to control a USB rocket launcher, have a virtual light saber duel and encase themselves in carbonite. Hacking the Kinect is so popular that Microsoft plans to release a software development kit to let developers create Kinect software for Windows 7.

Winning: Bing

Bing, Microsoft's search engine, has been slowly increasing its market share and recently reached a new high of 30 percent of all US searches, according to metrics firm Experian Hitwise. That's a huge jump considering Bing claimed less than 10 percent of all US searches in early 2010.

Of course, a big part of that jump can be attributed to Bing's deal with Yahoo that made Bing the white label search engine for the ailing web portal. Nevertheless, more people are using Microsoft's search product than ever before.

Bing also inspired its rival, Google, to make some changes to its image search interface. The competitive pressure from Microsoft's search engine may also explain why Google got a little snippy at Bing in February when it accused Microsoft of copying Google's search results. Google and Bing haven't been allowed to sit together during the bus ride home ever since.

Losing: Bing

Bing might be more popular than ever; however, as Microsoft is finding out, it costs a lot of money to buy friends. In its latest quarterly earnings report Microsoft said it earned $84 million dollars in online revenue mainly from Bing. But Microsoft's online services expenses grew by nearly $292 million, according to analysis by Business Insider. You don't have to be an economist to see that spending an extra $292 million to make $84 million is not a viable long term business strategy.

Losing: Tablets

Tablets such as the iPad and Motorola Xoom may not be sold as widely as PCs running Windows, but the new devices are certainly growing in popularity with users. Apple has sold 19 million iPads since launching the device in 2010, and most Apple competitors are looking to Android to develop an iPad challenger.

Microsoft, meanwhile, appears unwilling to give up on Windows as a tablet OS. The Windows 7-based HP 500 Slate was panned for trying to put a traditional mouse pointer interface on a touch-based device. Nevertheless, Microsoft plans to show off a Windows 8 tablet in June, reportedly with an interface inspired by Window Phone 7.

It's strange the company has shown little interest in using the actual Windows Phone 7 OS to challenge the iOS-based iPad and Android tablets, despite the obvious parallel between the three mobile operating systems. Until Microsoft has the guts to put out a Windows Phone 7 tablet, it's out of the fast-rising tablet game.

Losing: Windows Phone 7

Microsoft hasn't talked about Windows Phone 7 sales since December, when it said 1.5 million Windows Phone 7 devices had shipped during the platform's first six weeks. It's not hard to see why Microsoft is struggling in the smartphone business with sluggish sales and constant software update problems due to hardware bugs and reported carrier distribution delays.

Windows Phone booster Paul Thurrott said in January that in the first three months of Windows Phone 7 Microsoft released zero software updates, while Apple released six updates in the first three months of iOS. You can't play catch up if you aren't updating your OS, Microsoft.

Losing: Mine's bigger

Apple and Microsoft are rivals when it comes to products and profits. For nearly two decades Microsoft has dominated Apple in the earnings department. Apple, however, broke Microsoft's win streak in its most recent quarter with a $5.99 billion profit for that period, just sneaking by Microsoft's $5.23 billion. Apple has beaten out Microsoft on a number of business metrics in recent months.

In May 2010, Apple surpassed Microsoft in value as measured by the total value of its shares, and then in October, Apple beat Microsoft's quarterly revenue (but not profits).


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