Is Microsoft Driving Down GM's Road?

Few if any business sectors have been hit as hard by this severe recession as the auto industry. The latest example, of course, is General Motors, which declared bankruptcy on Monday.

Over at InfoWorld, J. Peter Bruzzese speculates whether software giant Microsoft might be headed down the same dark road. Here's some of what he has to say:

There are three primary reasons why GM tanked: First, GM seemed to focus a lot of attention on high-margin gas guzzlers (case in point, the Hummer). Next, GM hit some competition from Toyota and Ford (both of which seemed to be better prepared for the economic crisis). Add to that the obvious, a financial recession, and we have a bankruptcy.

Now where does Microsoft stand in comparison? Some might say Microsoft has faced a few serious bumps over the last 10 years but came out fine. Going back to Windows Me (possibly the worst of the Windows releases), it was able to rebound with Windows XP. But the Vista debacle that began in 2006 has brought along an avalanche of critique. ...When you look at the many upgrades and varieties of Vista and now Windows 7, the slew of new System Center products, and the Xbox division (which may continue to do well with the new body controller idea), you have to ask if Microsoft is overbloating its product line. Is it stretching out in too many directions, instead of improving the core products and lowering the cost to consumers? ...

Microsoft will continue to have a long and healthy life ahead if it does three things: First, adopt a new marketing strategy. Second, let its developers go crazy and really nurture their product, trimming out solutions and honing the primary pillars of Microsoft (Windows, Office, and Windows Server). Third, provide a more reasonable price tag, starting with Windows 7.

While I think Microsoft is a long way from being in the desperate situation facing GM (or any of the American car manufacturers), it's an interesting comparison and analysis. Regarding marketing strategy -- and I know I'm in a minority here -- I didn't hate the Gates-Seinfeld ads nearly as much as others (including Bruzzese) did. But there's no doubt that Redmond doesn't market as well as Apple.

Does Microsoft need to "let its developers go crazy"? Yes, but only if they're developing products that work for the business (in other words, that consumers want) rather than things the developers think are cool. So crazy within a business context would be the way to go. As far as price tags, no doubt, there will be continuing pressure to price downward. I don't see how Microsoft can ignore this.