Microsoft's Flawed Strategy

This week, John Gruber wrote an excellent piece on the slow decline of Microsoft. Interestingly, just a few days later Microsoft CEO Steve Balmer explained to a group of financial analysts Microsoft's new strategy, to raise prices.

Balmer explained, "The theory [cutting prices] was wrong ...You’ll see us address the theory. We’re going to readjust those prices north [using Windows 7]." I'm not sure this will work for Microsoft. In the last several years, they've dropped the ball and people have opened their eyes to other operating systems. Put simply, a significant number of users have moved to OS X and Linnux based platforms. They've discovered they can compute just fine without anything from Microsoft.

While Balmer's comments were made in the context of raising PC prices, it seems the only way Microsoft could do that is by raising the license fee for its operating system to the PC manufacturers. The problem is Microsoft has spent bucket loads of money trying to sell itself and PC's as the "cheaper" alternative. It seems to me Microsoft's move to now raise prices will only accelerate people's interest in Linnux (cheaper) and OS X (better) operating systems. Microsoft has only itself to blame.