Firstly I should state clearly that it is not easy at all for a company with a US$207 billion market capacity to go bankrupt, this is only an imaginative post which includes my personal predictions about the future of the IT industry.
Why Microsoft will go bankrupt?
Business is always risky and everyone knows that so there will never be a miracle without failures. Microsoft is powerful at present and this doesn’t means that it will be as strong and influential forever. There are several issues that may lead United States tech giant Microsoft to go bankrupt.
1. Antitrust
No one can bear a company with 90% market share to be monopoly, so there will be huge forces that make Microsoft difficult in marketing. Such as fines, law limits and other cases. In history, monopolies cannot live well finally due to these reasons, so Microsoft surely cannot avoid these problems.
2. Cash Flow
Microsoft always loves to invest and it never manages its cash carefully. Although Microsoft is holding $25 billion of cash and short investments, the value is not enough to compete with Apple, Dell, Google, etc. In history, most of companies went bankrupt due to Cash Flow problems, now Microsoft is spending at an increasing rate.
3. Competition
To compete with Apple, Google, Oracle, IBM and many other tech giants, only to dominate the OS market is not enough, also Microsoft has to compete with them in Servers, Hardwares/Gadgets, Search Engine, Social Web, etc. It cannot concentrate well on its main industry despite its large community, but to invest a lot in other fields and lose. I can confidently say that if Microsoft were to just focus on the OS market and ignore other industries, then it will be much more successful. That’s the main reason why Google rules the search engine market!
4. History
No company can live for as long as they want just like humans, Microsoft is old enough (to die). But this point is not so strong as there are dozens of companies like Ford which have lived for over 100 years.
What will happen when this prediction really comes true?
Actually it’s very difficult to assure that this will happen. My blogging partner Xavier said that in may happen anytime probably around 2020 and I agreed with his statement. If so, then let’s find out what will happen to Microsoft after a decade.
Market share of Windows dropped to less than 1%. Why I say less than 1%? In my own opinion, an IT company with 1% market share is more than enough to survive, just like Opera. (Some people mock Norwegian-based browser Opera as a joke – a company with 15 years browser innovation is currently still holding JUST 1% of market share.) Some may disagree if I say Macintosh will be dominate the OS market, but as an avid Apple fan and a technology analyst, I would say it will. At least, *NIX will play an important role. (We can say that there are only two Operating Systems, one is called DOS, the other one is called UNIX.)
People love Google because of its Personal Virtual Machines (refer to my previous post: From A 14-Year-Old: What Will Google Do In The Next 10 Years?), they can use VMs anywhere and anytime. Microsoft Operating System without the support of Cloud-Computing will be useless.
People love sleek and stylish Gadgets designed by Apple. It’s a fact that the folks at Apple are able to design wonderful gadgets such as the popular iPod and iPhone. From the sales of these products, Apple can continue making lots of money just from hardware.
Servers will be powered by Oracle. After the acquisition of Sun Microsystems, Oracle now has Sun Servers, Solaris OS, MySQL and Oracle Database, etc. Probably Oracle may acquire Zend (Sponsor of PHP) and Apache Foundation in order to control all web servers in their hands.
Losing to its fellow tech rivals, Microsoft will surely go bankrupt as there will be no supporters in financing the company.
I’m not telling you to sell the shares of MSFT (but you can do, I’m not responsible), but at least, the share price is higher than its actual value. The P/E of MSFT currently hovers at around 13.45 and the respective yield of ROI is 2.23%. This situation is not good for its stock.
What do you think about the bankruptcy of Microsoft? Leave your comments below…