For decades, Microsoft has been a technological giant that nobody can ignore. This year has been a unique one for the Redmond, Washington-based company. It announced layoffs and revenue shortfalls, both rare occurrences in the company’s 34+ year history.
With Google breathing down its neck and Apple posting record profits, Microsoft decided to use 2009 to strike back and go on the offensive.
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From the launch of Windows 7 to the rise of Bing and the Microsoft-Yahoo search deal, here is a review of the key events, trends, and products that shaped Microsoft in 2009.
Microsoft’s Early 2009 Struggles
For the first five months of the year, Microsoft wasn’t making a lot of news, and when it did, it wasn’t good. While Steve Ballmer, Microsoft’s CEO, painted a rosy picture of the company’s future with his Consumer Electronics Show keynote speech on January 7th, 2008, Microsoft was struggling with negative sentiment against Windows Vista, a European Union investigation against bundling Internet Explorer with Windows, and the first major layoffs in the company’s history.
There were a few small product partnerships and events that occurred during the first few months of 2009, especially in terms of social media. For example, Microsoft partnered with MySpace on Windows Mobile and Silverlight and announced Microsoft Recite, a mobile notetaking application.
Microsoft also started cutting the fat, and not just in terms of layoffs. It closed some long-standing but obsolete projects such as Microsoft Encarta and Flight Simulator.
Internet Explorer 8
The biggest release Microsoft made during the first three months of 2009 however was Internet Explorer 8, the newest edition of its popular web browser. With the help of random celebrity endorsements, social media, vomiting ads, and its reach with Microsoft Windows, IE8 has reached nearly 20% market share.
Overall though, IE has been on the decline while Chrome, Safari, and Firefox have all been growing. Couple this with the backlash against IE6 (still the world’s most popular browser) and Google’s release of Chrome Frame for IE, and you get a mixed picture of the future of IE.
Currently, Microsoft is working on Internet Explorer 9, which is focused on adhering to the world’s web standards and improving IE’s speed.
2009′s Turning Point: Bing
While the release of IE8 was important, it was nothing compared to the search bombshell that Microsoft had up its sleeve.
For years, Microsoft has tried to take down Google at its own game. However, MSN, Live Search, and all of its other attempts failed to make a dent in Google’s market share. Instead of choosing to fade away into web search obscurity in 2009, Microsoft decided to double down with one of the biggest bets in the company’s history.
At the end of May, it was revealed that Microsoft was launching a new rival to Google called Bing. Bing was not only a rebranding of Microsoft search, but Microsoft’s reinvention of the search engine. Bing Maps, Twitter integration, Visual Search, and other innovations were central to the Bing experience, and to Microsoft’s adoption strategy.
Microsoft’s plan to spur adoption for Bing (and take people away from Google) was simple: first, they’d create and change perceptions about both Google and Bing by utilizing ad campaigns and community outreach. Second, they’d drive trial and bet that the Bing experience would make people stick around.
The ad campaign was tremendous. They held a Bingathon, ran innovative TV ads, and bet big on Twitter, which all paid off — at least in the beginning. In its first month, Bing became bigger than Digg, Twitter, and CNN. From there, Bing kept growing. Microsoft’s success was so pronounced that Google even assigned top engineers to study Bing and reacted to its moves.
Microsoft and Yahoo
Bing’s launch was only the first part of Microsoft’s plan to take down Google. After Microsoft failed to acquire Yahoo last year, the tech giant explored other options for beating Google on its own turf, including ones involving Yahoo. In April, reports surfaced that Microsoft still wanted to partner with Yahoo.
As it turns out, those reports were true. In July, Microsoft and Yahoo signed a pact that gave Microsoft control of Yahoo Search in return for a 10 year revenue share agreement favoring Yahoo. While the deal won’t take effect until 2010, it has essentially given Microsoft another 15-20% share of the search market.
Microsoft has set the stage for 2010 to be an epic battle between Bing and Google search. Still, we have to wonder: can Microsoft actually make inroads into Google’s domination of search, or will it be the same story as before?
Competition on Multiple Fronts
Microsoft not only renewed its competition with Google in search, but it opened up new battles with its major rivals on multiple fronts. In July, Microsoft decided to directly address the threat posed by Google Docs with Microsoft Office 2010, which will include access to a web-based version of its popular office suite.
The tech giant also launched an assault on its other major rival, Apple, which has been steadily making inroads into the computer and OS markets. In July, Microsoft struck back against Apple’s “Mac vs. PC” ads with its Laptop Hunters campaign, which portrayed PCs are more versatile and cheaper than their Apple-made counterparts.
Not only that, but Microsoft went after Apple’s stronghold on the portable MP3 player market with the September launch of the Zune HD. It’s also taking a pre-emptive strike at the fabled Apple Tablet with the foldable Courier Tablet. It even opened Microsoft Stores to compete with Apple’s strong retail presence, going so far as to steal Apple Store employees.
Much like Bing, it will take a year or several years to know whether these campaigns and new products will be successful in defeating Microsoft’s sworn enemies. Nobody can say, however, that Microsoft didn’t try everything to bury its competition in 2009.
Windows 7
Throughout all of these events however, Microsoft had a glaring black eye that everybody could see. Windows Vista, whose many problems and poor sales numbers threatened Microsoft’s stranglehold on the OS market and even its position as a kingpin of technology. With Apple’s Snow Leopard and Google’s Chrome OS breathing down its neck, Microsoft couldn’t afford another OS failure.
The company bet the farm on Windows 7. They had extensive ad campaigns and Windows 7 launch parties to build up the hype that this thing was fast, sleek, simple, and not Windows Vista.
It paid off. Windows 7, released on October 22nd, garnered positive reviews and in fact beat Vista’s initial sales by 234%. Microsoft needed a hit, and as of the end of 2009, Windows 7 has delivered. Its impact on the bottom line is still unknown, but it’s likely that Microsoft will have strong momentum heading into 2010.
What’s Next?
Microsoft was busy in 2009. Bing, IE8, Windows 7, and Microsoft Office 2010 were just a few of the many big projects it launched this year. While we don’t expect to see as many big game-changing products coming out of Redmond in 2010, we do believe that the battle between Microsoft and its competitors will heat up as these products mature and Microsoft pushes to make inroads into search and beyond.
We want to know what you think, though. How did Microsoft do this year? What was its greatest success and its biggest flop? And most importantly, what do you think the technology titan will be doing in 2010? Let everybody know your thoughts in the comments below.
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