An analyst at Goldman Sachs, the investment bank, said in a report that Microsoft would see slowed revenue growth next year as long as it “maintains the status quo” with its current attitude toward tablet computers.
Microsoft faces a growing threat from tablet computers — smaller touchscreen devices that run stripped-down operating systems and are more geared toward content consumption than creation. Tablets are beginning to take the place of notebook computers thanks to a generation interested only in accessing the Internet.
Microsoft will probably only see 7 percent revenue growth — compared to early estimates of 12 percent — thanks to its current attitude toward tablet computers, according to Goldman Sachs. Microsoft hasn’t developed a presence in the tablet computing space, despite making several attempts to break into it.
Microsoft’s strategy to date has centered on what it bills as a stylus-using “slate” computer that runs on Windows 7, rather than a true tablet with a lightweight operating system like Apple’s iPad or Samsung’s Galaxy Tab, which runs Google’s Android operating system. The initial attempts were a bit disappointing. But there may be room for a stylus tablet in the academic and enterprise spaces. The Kno, another slate computer, is specifically geared toward students and the company designing it has already raised a sizable $55 million in funding.
Microsoft is essentially still trying to re-establish itself as a provider of software for the typical consumer. The software giant has revamped its PC operating system, Windows 7, and released a more user-friendly mobile operating system to keep the typical consumer’s attention. It launched a new version of its Web browser, Internet Explorer 9. It’s also offering several Web-based applications for Windows Live users, and continues to hold a strong position in the video game market with the Xbox 360.
Parts of that strategy show evidence of success. The Windows Phone 7 development community has grown to 15,000 developers in a short period of time, and Internet Explorer 9 was downloaded 6 million times in its first month of release. But for the most part, Microsoft is late to the game — the iPhone and devices running on Google’s Android operating system, as well as browsers better than Microsoft’s older Internet Explorer browsers, have been around for some time now.
One of its largest revenue sources continues to be Microsoft Office and its other enterprise options. Goldman Sachs said it expects Microsoft’s cloud computing product, Azure, should continue to grow. But the company cannot shift its focus away from the consumer that it has traditionally had some trouble appeasing, and the flavor of the month for the consumer is tablet computers.