Microsoft Corporation (MSFT) Needs Brain Surgery

The company has followed the strategy of not trying to be the first to innovate, but the first to profit. This means selling its own versions of new technologies as opposed to building new things from scratch. This used to work when Microsoft was bigger and stronger than its rivals, but that’s not the case anymore.

The Netscape vs. Explorer example can be quite illustrative about how this used to function: by owning the operating system in the vast majority of computers around the world, Microsoft Corporation (NASDAQ:MSFT) managed to beat Netscape in spite of starting in second position to the browser race.

But things are very different nowadays, mobile computing is here to stay and Microsoft is seriously lagging the competition. Judging by the Surface flop, the company no longer has the strength to make big profits in areas where other companies innovate first.

Microsoft has lost its competitive strength in several key areas, and that requires a new strategy if the company wants to compete effectively. Microsoft needs to start thinking outside the box and transform its culture to move like a challenger, not like the leader it once was.

This would likely require much more than an internal reorganization; a change in top leadership may be in order before Microsoft runs out of time.

Yes, I´m looking at you Mr. Ballmer.

Bottom Line

Microsoft´s problems go way beyond disappointing financial figures for the last quarter. The mobile revolution is running at full speed, and it’s leaving Microsoft Corporation (NASDAQ:MSFT) behind. This is very different to competing from a leadership position, so a change in top management may be required if Microsoft is going to remain a relevant player in the tech industry.

The article Microsoft Needs Brain Surgery originally appeared on Fool.com and is written by Andrés Cardenal.

Andrés Cardenal owns shares of Apple and Google. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple, Google, and Microsoft. Andrés is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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