I don't think Microsoft has to worry about its survival: Windows and Office will remain cash cows for the forseeable future. But they, like IBM before them, will lose all relevance to new directions in technology -- in fact, it's arguable that this has already been the case for years.
The biggest argument for this that I can see is their online services division -- i.e. Bing -- which lost more than half a billion dollars in one quarter (they lost a similarly gigantic amount in Q1 2009), and hasn't had a profitable quarter since 2005 [see http://www.businessinsider.com/chart-of-the-day-microsofts-o... ].
Even Microsoft publicly acknowledges that succeeding in online services is key for future growth, but they show no sign of being able to even begin approaching profitability in that space -- instead, they are losing more and more every year.
"For the foreseeable future"? I foresee a future where windows as we know it is obsolete, even in the office, and MS's future as a whole is in doubt.
iOS and Android don't look like Windows killers today, and they aren't. But they are harbingers of things to come. In 1975 the MITS Altair didn't look like a mainframe / mini-computer killer, and it wasn't. In a mere 10 years since the Altair (a toy computer) hit the shelves the entire industry had been overturned, and mainframes/mini-computers were dying out while micro-computers came to the fore. Micro-computers grew up a lot in that time frame, but the essential elements of their superiority were there from the beginning (simpler, cheaper, more mass-production friendly, performance tied to components not overall construction, faster/cheaper innovation loop, etc.)
The same is true for mobile OSes and for web-apps. They have a lot of growing up still to do to compete with Windows everywhere, but the core is still there, and they have far less to grow than the Altair did. In another 10 years how much more sophisticated will be the iPad, iOS, android tablets and phones, and their native apps etc? In another 10 years how much more sophisticated will be webapps? In 10 years a VPS (or equivalent "cloud" instance) with hundreds of gigs of RAM and a terabyte of SSD storage and the CPU power to match will probably cost the equivalent of $20 a month in today's dollars. Add to that powerful new technologies like web sockets and all the other html5 technologies, along with new things we haven't even imagined yet. In 10 years gmail will be nearly 3x as old as it is today, imagine the innovations that will happen in that time.
And I'm supposed to imagine that somehow there's no chance that Windows will lose its footing amidst all this innovation? Perhaps it won't, but I can't predict the future, and from what I see it looks like there are huge very real risks to Microsoft's cash cow.
A very valid view, and one I subscribed to until quite recently, when an article pointed out to me that IBM still makes billions every year from mainframes.
The computing environment is not a zero-sum game. Mainframes were not replaced by microcomputers, except at the edges. Mostly microcomputers filled a space that hadn't been there before, and came to be a larger market, but a new market.
Mobile computing is the same deal. It's a whole new class of device that will end up being much, much bigger than desktop computing ever was. There will never, ever be "a computer on every desktop". The people who never bought desktops will buy mobile devices. This isn't blue-sky thinking -- they're buying iPads, right now.
In 10 years time hundreds of millions of people will still use desktop computers everyday, and I would be entirely unsurprised if their software was provided by Microsoft. Desktop computing is what Microsoft are good at. But billions of people will be using mobile computing devices provided by a bunch of manufacturers and running on, possibly, Android.
Desktop computing won't go away and Microsoft won't die. We'll just forget why it ever seemed important that Microsoft had a monopoly, just like nobody cares that IBM has a monopoly on mainframes now.
Mainframes were disrupted by midrange computers, and then midrange computers were disrupted by microcomputers (x86 PCs). This is not to say that mainframes and midrange computers vanished from the market, but the two technologies have been relegated to comparatively small niches. For instance, IBM now has about a 90% share of the mainframe market, but mainframe sales account for just a fraction of IBM's total revenues and profits. Broadly speaking, IBM sustained and grew its revenues and profits by expanding beyond mainframes; first to PCs, and then to services.
The issue for Microsoft is that PCs follow mainframes and midrange computers, and are disrupted by some next generation technology; the next generation technology appears to be a combination of thin devices and cloud services. PCs will persist, but could become a comparatively small niche market over time. As the PC market shrinks in size, the traditional Windows and Office products will yield declining revenues and profits for Microsoft. In order to sustain its revenues and profits over time, Microsoft will need to transition to the next technology (thin devices and cloud services) or to another set of markets (e.g., services). This is difficult, but feasible, as shown by the IBM example.
"For instance, IBM now has about a 90% share of the mainframe market, but mainframe sales account for just a fraction of IBM's total revenues and profits."
Look at how much of the rest of IBM's revenues come from services related to mainframes. A significant part of IBM's service and support revenue is tied directly to IBM's mainframes -- a bit like Microsoft's Office, which isn't a core product, but it's tied to Windows, and it's part of what makes Windows profitable.
What differentiates IBM's mainframes from the few remaining competitors (there are only something like 10 companies in the world in that space) are advantages that Windows has no analog for -- Windows' biggest advantage right now is, comically, Windows (i.e. market share).
While I agree mobile is a new market, I don't think you can directly equate mainframe->micro with desktop->mobile. There are too many places where people with a desktop is actually overkill, and moving to a cheaper, more stable mobile solution is actually very advantageous.
Microsoft isn't going to go away. Desktop computing isn't going to go away. However, the desktop computing could become 15-20% of what it is today, and that 15-20% will be for one of two reasons: the user is in a field that requires the resources (coding, graphic design, etc) or the enterprise has a huge investment in custom software (which kept the mainframes around).
The people who won't be there are (IMO) are the business people who are the people that provide most of the dollars that make up the Windows and Office revenues. And that will significantly hurt MS.
It's not about hardware or particular niches, it's about paradigms and platforms. The Altair wasn't a business device, it was a hobby kit, as was the Apple I. But the PC realm today is not relegated to merely electronics and programming hobbyists. Because the PC as a paradigm and as a platform evolved and grew (flourished one might say) and its fundamental characteristics (lower cost, accessibility and availability for the masses, greater facilitation of innovation, etc.) was the seed for that flourishing. The PC of 1990 or 2010 is orders of magnitude (sagans, in fact) more powerful and capable than its initial forebears, and that's because the PC platform/paradigm was able to evolve much faster than mainframes and mini-computers, and it wasn't saddled with the same limits.
Micro-computers enabled the GUI, they enabled personal computers on every work desk and home office. They put into everyone's hands capabilities and tools that were previously the purview of a select few. There are a great many more experts in typography today because of the power of the PC. The same goes for movie makers, photographers, etc.
Mobile computing isn't just about smartphones or computing on a handset, it's a platform and a paradigm. It's the appstore + sandbox model. It's more intuitive interfaces (e.g. multi-touch). Etc.
If you look at the iPhone or the iPad and say to yourself "these won't replace Windows" you will be fooling yourself. This is not a static industry, indeed it's one of the most dynamic, falling back to static conceptions of the world is a recipe for being left behind. You need to imagine what the possibilities are for the future of these paradigms. iOS has been in users' hands for less than 4 years, the appstore has only been around for 2 years. What will iOS and the application landscape look like after it's evolved for 4x or 5x that time? What will android and its applications look like? And Chrome OS? And WebOS? And whatever anyone else comes up with?
Apple knows what's up, they're morphing the OS X experience to be more like iOS, they can see a future where the experience of using a Macbook is more like that of using the iPhone, where installing applications over the internet is the rule rather than the exception.
Here's a simple hypothetical. Imagine the iPad all grown up, it's faster, it has terabytes of internal solid state storage, it has a larger screen. Plug it into a docking station on a desk and it becomes a monitor with a keyboard and mouse attached and connected to a wired network. It runs all of the grown up office applications anyone ever uses anymore, installed via the corporate intranet app portal or preloaded in the base install. Disconnect it and take it home or to lunch or to a meeting, it has 4G/wifi connectivity and connects to the corporate VPN and internet facing secure services (corporate email and web-based collaboration software) seamlessly. Could such a beast compete with a Windows based system? Certainly. And the real devices of this sort from 2015 and 2020 will blow this simple hypothetical out of the water.
"Desktop computing" won't go away, but it may well be redefined and subsumed by new platforms that come along. Indeed, I think it's far more likely that desktop computing in 2020 will share more in common with iOS and android than it will with Windows as we know it today.
An interesting view of the future and a persuasive argument, though I think your timeline in unrealistic. 20 years ago computers were PCs powered by Windows and they still are; expecting a wholesale paradigm shift and migration in 10 years seems too fast. But then, computing often moves faster than we expect, so I'll met you here in 2020 and we can see who was right :-)
The big difference between IBM and Microsoft is that IBM also makes hardware along with software. Microsoft currently does not make much hardware and holds very few patents in that area. This is a big concern. I think in a few years we'll see a Microsoft made phone, and maybe even sooner if innovation continues at the current pace.
It is true that the consumer side is pushing the enterprise a lot currently, but things that are core to larger corporations like the OS, Office, and backend services are no easy thing to switch-up. That is why you still see lots of companies running Novell/GroupWise. Do you really think it is meeting there needs? There is no one else out there that can support enterprise software like Microsoft (I'm not saying they do a great job all the time) and that is what the enterprise customer is really buying into.
Good points. A question is how long Windows and Office will remain cash cows for Microsoft?
1. One future state is that most people transition from desktop computers to smartphones, tablets, etc. We then dock these devices for doing intensive work.
2. Another possibility is that we have smartphones and tablets, but transition from desktops and laptops to thinner laptops (e.g., netbooks, new Macbook Air, etc).
The issue for Microsoft and others is then - what operating system and office software becomes the standard in this future computing environment: Windows and Office, Android/Chrome and Google Docs, Apple's iOS and iWork, or some other solution (e.g., OpenOffice)?
I'm not seeing how this can happen. Love my iPhone for Email reading / Skype chatting / quick browsing, but that's pretty much all the productive work I can do with it.
My wife is also asking me repeatedly how the hell can I browse the web on that small screen.
With my laptop I can also stay in bed AND type with the lights closed and without much effort. That's not something I can say about devices like the iPad.
IMHO ... in the future devices will simply vanish from sight and get replaced by interfaces based on holograms projected from your furniture.
The biggest argument for this that I can see is their online services division -- i.e. Bing -- which lost more than half a billion dollars in one quarter (they lost a similarly gigantic amount in Q1 2009), and hasn't had a profitable quarter since 2005 [see http://www.businessinsider.com/chart-of-the-day-microsofts-o... ].
Even Microsoft publicly acknowledges that succeeding in online services is key for future growth, but they show no sign of being able to even begin approaching profitability in that space -- instead, they are losing more and more every year.