Roger McNamee Explains Why Windows Is Dying

MSFTDec 07 11:00 PM
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Earlier this year, investor Roger McNamee of Elevation Partners told CNBC that Microsoft's Windows was a dying business.

Today, he offered some more details why.

In a presentation about his investment philosophy, McNamee hypothesizes that Windows no longer offers a measurable return on investment to enterprises, who will eventually allocate their spending to other products.

As evidence he offers:

Developers are hardly creating new Windows apps at all, but are focused on the web, Apple operating systems, and open source platforms.

Microsoft requires a subscription to get the most advanced Enterprise edition of Windows, which he calls a "tax."

Eliminating a Windows desktop saves $1,000 in support costs per year.

The explosion of mobile platforms, particularly iOS and Android, means that Windows will account for less than 50% of all Internet-connected devices in 2011.

McNamee thinks the reallocation of tech spending will happen over the next five years, and gives this prediction a "very high" confidence rating.

As bearish as he is on Windows, McNamee does not think Microsoft is going to go out of business because of its Windows decline. Instead, he thinks Microsoft can leverage its Exchange "monopoly" (his words, not ours) to grow profits for the next five years.

He also says the Skype deal "may be brilliant" because it let Microsoft get a global telecom company for only $8 billion.

The Water Cooler
13 Comments

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Murray Jr on Dec 7, 8:14 PM said:

Sigh. Another one of these articles actually gets play. Makes me want to fire up a Netbook and launch Open Office.

Concerned Citizen on Dec 7, 9:51 PM said:

@Murray Jr:

Wait a second. Apple users I know love using boot camp on their Macs, and they love using Office too. Bing is actually making inroads, unlike Cuil did (nt). Win 7 phones have one of the best GUIs there is, and so will WIn 8 for PC. People can buy a 12 inch laptop that weighs 2 lbs made by Toshiba or an 11 inch gaming notebook with graphics under the hood to play any game or run any application (Alienware). These computers run 86 or 64 Windows. There is a remarkable amount of choice there for consumers. There are even 19" Notebooks running Windows. Does Apple have that?

Also Lync will be a game changer, and remember, everyone in the known universe uses Skype.

Im no Win fanboy, but I find Windows useful. What I don;t find useful is some Mac douche telling me that somehow his locked into system is somehow superior because it looks better and comes in space age colors. Well, the Nazis had cooler uniforms than we did too - that didn't help them get **** done now did it?

Bella Dona on Dec 7, 8:44 PM said:

Matt you're getting quite predictable: Ms is dying, G is thriving.

Never found a minute to mention how Google makes it's money and how much of it is due to fraud thanks to ads almost identical to content?

Search for a highly sought after term (diamond rings for example) in a run of a mill computer or laptop with default settings and think like a Jane Doe from small town OH would. Do ads seem like ads to you? What will happen to Google when FTC and EU asks them to mark ads as ads clearly?

CrabTX on Dec 7, 8:56 PM said:

Is this the same dude that said Web OS was going to blow away the iPhone?

http://www.youtube.com/watch?v=C6E5U5il4CQ

Gill Bates on Dec 7, 9:03 PM said:

The reason why Microsoft is dying has nothing to do with their products or business model. It is because Bill Gates is slowly taking all his money out of it and putting it into charity. Who would want to invest in a company that the founder doesn't even believe in?

Jill Kates on Dec 7, 9:12 PM said:

Interesting way to look at it but Microsoft is not Groupon. Until their earnings crash, mutual funds, pension funds and retirees will buy those shares for safety and that tiny dividend,

ReputationMan on Dec 7, 9:39 PM said:

As a business owner with an office in india, i have seen how the mind share of microsoft has diminished. Five years ago you could only get windows and asp developers. Today, the situation has reversed as developers here focus on php and linux based systems or on mobile. Governments here mandate the use of open source for their applications and in our office we have to ubuntu desktop OS. This loss of developer support is a key reason to question MS's long term health.

freddy bee on Dec 7, 11:00 PM said:

@ReputationMan:

Ubuntu - that's hilarious.

ReputationMan on Dec 8, 12:46 AM said:

@freddy bee:

In my experience operating systems rarely induce hilarity, but more usually frustration. On our case we had a choice, license ourselves with 40 windows systems and all the necessary virus protection or change. The change to ubuntu has removed licensing costs and the costs of virus protection as we have not any issues with linus viruses ir malware. Moreover our rather ancient systems which would not run vista or 7 now perform very well with quick boot ups and all the necessary apps we require. I know linux heads argue that ubuntu's GUI is too snazzy, but for windows users it was quick to understand and does not require any special knowledge or skills. We looked at other forks of linux, but this suited us as it offered specific flavours for netbooks etc. of course the designers refused to forsake photoshop so you can't win em all.
Is that what you found hilarious: the name or that someone would choose something so quaint as ubuntu.

Steve Eldridge on Dec 7, 10:21 PM said:

Not the least of the issues is the fact that MSFT has been flat for a decade. No talented technology people will go to work for a company that can't offer competitive opportunities in the form of stock. The management of the company was enriched in the late 90s and crowded out the opportunity for up and coming talent. Working at a company with mediocre management fatten up on powerful stock options and payouts is a real downer.

And not one of the companies attempts to merge their platforms into the web haven't borne any real fruit. They are stuck on a clumsy platform that supports everything from Windows XP to Windows 7 which itself has three versions (Home Premium, Professional and Ultimate). This hodgepodge of operating systems, browsers and applications each that must support any number of iterations of operating systems and hardware making it nearly impossible to bring the installed base on to a stable new foundation.

Apple's decision to orphan old hardware and push innovation forward has paid off for them.

Windows XP (released 2001) still shows up in weblogs today and this creates a significant challenge web developers to offer HTML5 style development for Windows users who have yet to upgrade.