Friday, June 19, 2009

Not much left for Microsoft to cut in consumer software business

Microsoft’s decision to stop selling its Money software is its latest pullback from the consumer-software market — putting the personal-finance product in the garbage can with the Encarta encyclopedia, Windows Live OneCare security program and Digital Image Suite photo software.

It might be tempting to start a death watch for similar programs at risk of being eliminated. But based on the characteristics of those dropped, analysts say there aren’t many candidates left.

In most cases, Microsoft didn’t stand to lose much financially or strategically by discontinuing those products. Money, for example, had long trailed Intuit’s Quicken personal-finance software in market share. Microsoft said June 10 that it would stop sales of Money at the end of the month, citing the fact that many financial institutions offer similar money-management tools to their customers online.

Free online alternatives also played a role in the upcoming demise of Encarta, as Wikipedia and other web-based resources rose up to overshadow Microsoft’s digital encyclopedia in recent years.

The subscription-based Windows Live OneCare faced stiff competition from companies that focus primarily on security software. Microsoft is replacing it with a free security offering known as Microsoft Security Essentials. And elements of the Digital Image software were incorporated into Microsoft’s Windows Vista operating system.

Since the beginning of this year, Microsoft has been cutting back in a variety of areas in response to the difficult economy, making layoffs and reining in spending across many product groups.

One piece of consumer software that has survived, so far, is Microsoft’s Streets & Trips mapping and navigation program. But like some of the Microsoft products already eliminated, Streets & Trips faces increasing competition from online alternatives and offerings from specialized technology companies.

Streets & Trips “would be a candidate (for cutting) at some point, as well, given all the availability of mapping software online,” said industry analyst Stephen Baker of The NPD Group research firm, of Port Washington, N.Y.

In general, Microsoft has been moving away from boxed consumer software, either ceasing sales or offering online services as alternatives, said Matt Rosoff, an analyst at the Kirkland-based Directions on Microsoft research firm. The industry overall has been making a similar shift.

But analysts say other Microsoft consumer applications appear safe.

Microsoft’s software for Apple Macs, for example, has traditionally been profitable, despite a reported 63 percent decline in sales last quarter. Versions of Microsoft Office for Mac also play a key role in ensuring that Mac and Windows PC users can smoothly exchange documents.

“As long as Mac Office makes money, Microsoft will continue to support it,” said Joe Wilcox, an independent technology analyst in San Diego. “The question is, how much of an investment will Microsoft continue to make?”

Even more untouchable is the company’s Office software for Windows PCs, which generates billions in profits each year from sales to businesses and consumers. Microsoft has rolled out related online services to supplement Office, and the company plans to introduce a web-based alternative for creating and editing documents online. But the traditional Office software remains a big focus for the company.

The demise of Money was foreshadowed last year when Microsoft discontinued in-store packaged sales of the software, offering it as an online download, before deciding to end sales entirely. The company says it will continue offering customer support for the program through January 2011. It’s also working with Intuit to help Money customers transfer their historical financial data to the next version of Quicken.


READ MORE and COMMENT, more 

No comments:

Post a Comment