Steve Ballmer assured analysts and the world that Microsoft is hard at work developing a Windows 7-based tablet to compete with devices like the Apple iPad. It is also putting the finishing touches on Windows Phone 7, and preparing to launch the innovative Kinect controller for the Xbox 360. The problem for Microsoft is that these are not its bread and butter markets, and its dominance with business customers is slowly slipping away while it dabbles in consumer gadgets.
Microsoft has always had a consumer side. Microsoft Windows has been established as the de facto consumer desktop operating system. Internet Explorer enjoys a dominant market share among Web browsers. Still, it seems that most of the efforts Microsoft makes in the consumer market are unsuccessful.
Some Microsoft consumer technologies--like the Zune music player--have been technically sound, yet have failed to capture the attention of consumers or dent the dominance of the Apple iPod. Other consumer technologies--such as the Xbox 360--are a success in the market now, but operated at a loss for so many years that breaking even probably won't happen soon. Then there are the abject failures like Microsoft BOB, or the recently executed Kin social phone.
Microsoft, Google, and Apple seem to all suffer from such an intense desire to dominate markets and crush the competition that they jump into every market at once and end up doing a half-assed job at everything rather than a focused and excellent job developing the products and services their brands were built on. It's a sort of "throw every gadget, application, and technology at the wall and see what sticks" business strategy.
Historically speaking, fighting a war on too many fronts simultaneously is almost always a fatal flaw. It spreads valuable resources too thin, resulting in weakness, and eventually collapse. Just ask Napoleon.
Does Microsoft need a tablet? Will Windows Phone 7 be a success? Mobile platforms like tablets and smartphones are a computing revolution that Microsoft can't ignore, but Microsoft needs to be sure it is looking beyond the impulse to compete for the sake of competing, and that its tablet and smartphone efforts fit into a larger strategic vision that makes sense.
Microsoft holds a virtual monopoly on the desktop operating system, and office productivity software markets, as well as a comfortably dominant position with Internet Explorer and Microsoft Exchange. Instead of consumer-oriented products like music players, and gaming consoles, Microsoft should focus its efforts on its core business customers.
At the same time, though, Microsoft can't expect to just coast on the coattails of its former glory and rely solely on those products--at least not the way they are today. Microsoft needs to look at the direction technology is going--virtualization, cloud, mobility--and figure out how to adapt its core portfolio to continue meeting its customers' needs in an evolving marketplace.
Microsoft has those efforts going as well with Azure, and the recently-unveiled Windows Azure Platform appliance. But--if Microsoft would focus its resources on initiatives like that rather than consumer gadgets it might have much greater odds of success.