Tag: microsoft

Was the netbook the Trabant or Model T of the computer world?

After only five years the netbook computer comes to an end having being killed by tablet computers and vendor hostility. We will remember these systems as the Model T or Trabant of the PC world?

Taiwanese technology website Digitimes reports Asustek have shipped their last eeePC netbooks, bringing to an end a product that promised to change the computing world when they were first released in 2007.

At the time the eeePC netbook picked up on a number of trends – cheap hardware, the maturity of the open source Linux operating system, affordable wireless access and, most importantly, the accessibility of cloud computing services.

There’d been a pent up demand for usable portable computers for years but Microsoft and their hardware partners consistently released clunky, overpriced tablet computers that simply didn’t deliver on their promises.

For users wanting a cheap, fairly robust portable computer then netbooks were a good choice, at the price you could even risk having one eaten by lions.

into the lions den with an Asus eeePC netbook

Unfortunately for netbook a few things went against the idea.

Customers don’t like Linux

An early blow to the eeePC was that retail users don’t like Linux. Most computer users are happy with Windows and MacOS and weaning them off what they know is a very hard sell.

Sadly on this topic I have first hand knowledge having suffered the pain of co-founding a business in the mid 2000s that tried to sell Linux to small businesses.

Asustek discovered this when they found customers preferred the more expensive Windows XP version over the original Linux equipped devices.

Unfortunately Microsoft’s licenses damaged the economics of the netbook and held the manufacturers hostage to Microsoft who, at the time, wasn’t particularly inclined to encourage customers to use cloud services.

Manufacturer resistance

Microsoft weren’t the only supplier unhappy with netbooks. Harry McCracken at Time Tech describes how chip supplier Intel worked against the products.

For manufacturers, the netbooks were bad news as they crushed margins in an industry already struggling with tiny profits. However all of them couldn’t ignore the sales volumes and released their own netbooks which cannabilised their own low end laptop and desktop ranges.

In turn this irritated the army of PC resellers who found their commissions and margins were falling due to the lower ticket prices of netbooks.

The rise of the tablet

The one computer manufacturer who stayed aloof from the rush into low margin netbooks was Apple who had no reason to rush down the commodity computing rabbit hole. It was Steve Jobs who launched the product that made netbooks irrelevant.

“Netbooks aren’t better at anything… they are just cheaper, they are just cheap laptops” Jobs said at the iPad launch in January 2010.

Immediately the iPad redefined the computer market; those who’d been waiting a decade for a decent tablet computer scooped the devices up.

Executives who wouldn’t have dreamt of replacing their Blackberries with an iPhone, let alone using an Apple computer proudly showed off their shiny iPads.

The arrival of the iPad in boardrooms and executive suites also had the side effect of kick starting the Bring Your Own Device movement as CIOs and IT managers found that their policy of Just Say No was a career limiting move when the Managing Director wanted to connect her iPad to the corporate network.

Rebuilding PC margins

Around the time of the iPad’s released the major PC manufacturers declared a detente over netbooks and joined Intel in developing the Ultrabook specification.

Intel designed the Ultrabook portable computer specification

The aim of the Ultrabook was to de-commodify the PC laptop market by offering higher quality machines with better margins.

While the Ultrabook has worked to a point, competition from tablet computers and the demands of consumers who’ve been trained to look for sub $500 portables means the more expensive systems are gradually coming down to the netbook’s price points.

Today’s Ultrabook will be next month’s netbook.

For the PC manufacturers, the lesson is that computers have been a commodity item for nearly a decade and only savvy marketing and product development – both of which have been Apple’s strengths – is the only way for long term success in the marketplace.

Those US based manufacturers who haven’t figured this out are only go to find that Chinese manufacturers – led by companies like Taiwan’s Asustek – will increasingly take the bottom end of the market from them.

The car industry is a good comparison to personal computers in commoditisation – with the passing of the netbook, the question is whether we’ll remember the eeePC  as a Trabant, Model T Ford or a Volkswagen Beatle.

Is Facebook the new Microsoft?

Are the internet giants – Google, Facebook, Apple and Amazon following the same path as Microsoft did in the 1990s?

One of the problems with dominating your field is that to find new growth opportunities involves becoming distracted with your core business and damaging your reputation. This is what hurt Microsoft over the last decade and now threatens the internet’s big four.

App.net CEO Dalton Caldwell wrote an open letter to Facebook CEO Mark Zuckerberg describing how the social media giant is trying to wipe out competitors through bullying them into being acquired.

If a business doesn’t succumb to Facebook’s seduction, then they risk being wiped out by the social media giant setting up their own version of the product which they can push out to a billion subscribers.

Jason Calacanis explores this strategy with Facebook’s launch of Poke, designed to compete with the instant messaging service Snapchat.

In many ways this is the same model that Microsoft employed in the 1990s as it worked towards dominating the desktop computer market – bully innovators into selling to them and, if that fails, copy the product and crush the opposition.

It worked for Microsoft because they controlled the distribution channels through their tight relationships with computer manufacturers.

Microsoft created their own applications, or features in their products, which would be bundled onto Dell, Gateway or Compaq computers. Once users had functionality built into Windows or Microsoft Office then they didn’t have to buy a third party app.

Bundling network protocols destroyed the business models of LANtastic and Novell, in the browser wars Microsoft killed Netscape by putting Internet Explorer on the desktop and in the office suite predatory pricing killed WordPerfect and Lotus while resulting in acquisitions of companies like Visio.

This way of business cemented Microsoft’s domination of their desktop, office productivity and server markets at the turn of the century. It was a true river of gold that continues to flow today.

Unlike the personal computer software markets, bullying or buying your way into market dominance doesn’t work online as the barriers to entry that protected Microsoft from competitors are nonexistent on the web.

Both AOL and Yahoo! learned this the hard way as their acquisition sprees through the dot com boom didn’t prevent them from sliding into irrelevance.

A good example of how hard it is for the Internet giants to execute a plan for world domination is the rise and fall of Google’s Knol as described by Seth Godin, who thought his own Squidoo startup would be crushed by the Internet giant. It turned out not to be so.

For the web incumbents the fundamental problem are, as Jason says, that they are not focusing on their core businesses and they have plenty of Plan Bs as Seth Godin described.

The manager who fails with Knol or Poke moves onto another division with a pat on the back and a safe claim on their bonus. The startup founders on the other hand are fighting for survival.

All four of the Internet’s giants have similarities to Microsoft in the 1990s as every single one dominates its niche and wonders how to expand outside their core business – for Google, and possibly the other three, there’s the added problem of managerialism as a large cadre of managers worries more about maintaining privileges over competing in the marketplace.

Managerialism ended up crippling Microsoft and continues to do so today, whether Facebook and Google can avoid that fate remains to be seen.

A bigger problem for Facebook is losing trust – Microsoft’s conduct, particularly with WordPerfect and Netscape in the late 1990s made a generation of developers and entrepreneurs cautious about dealing with the company.

For many that suspicion remains and is one of the barriers the company now has to overcome in the smartphone and cloud computing markets where it is one of the crowd of scrappy challengers.

In the social and online worlds, collaboration is one of the keys to success. If Facebook, or any of the others, lose the trust of the community then they’ll become irrelevant a lot faster than WordPerfect or LANtastic did.

Becoming irrelevant is the real worry for Facebook’s tenured managers and their investors.

ABC Nightlife December 2012

Paul joins Rod Quinn on ABC Radio Nightlife across Australia to discuss the tech issues of the day.

Paul Wallbank joins Rod Quinn to discuss how technology affects your business and life. For December 2012 we’ll be looking at business security, Windows 8 and the saga of Apple Maps.

If you missed the program, you can listen to the recording through the ABC website.

Answers to listeners’ questions and links to some of the programs we discussed, including removing Norton Anti-Virus and getting your Windows start button back, are on a later blog post.

Some of the topics we discussed included these below.

We’d love to hear your views so join the conversation with your on-air questions, ideas or comments; phone in on the night on 1300 800 222 within Australia or +61 2 8333 1000 from outside Australia.

Tune in on your local ABC radio station or listen online at www.abc.net.au/nightlife.

You can SMS Nightlife’s talkback on 19922702, or through twitter to @paulwallbank using the #abcnightlife hashtag or visit the Nightlife Facebook page.

Windows Phone 8 launch

Can Windows Phone 8 reclaim Microsoft’s lost mobile crown?

This week’s launch of Window 8 Phone is part of Microsoft’s strategy to remain relevant in a world where personal computers and laptops are being left behind by smartphones and tablet computers.

In many ways, the tablet and mobile market is an opportunity lost by Microsoft – for a decade the market had been desperate for decent tablet computers and smartphones. The Windows tablet and PDA product in the early 2000s ran on was expensive, heavy and clunky hardware that discouraged even the most determined user.

The failure of Microsoft and their partners cost the company dearly when the iPhone and then the iPad stole the market from them. Today Apple’s iPad owns the tablet computer market while the iPhone on its own makes more money than all of Microsoft’s products put together.

Microsoft’s response to this threat to their core business has been slow and wasn’t helped by the company Windows Vista disaster, a mis-step that broke the PC upgrade cycle.

Fortunately Windows 7 put Microsoft’s core business back on an even keel as they contemplated their customers’ move away from the personal computer.

The strategy now for Microsoft with Windows 8 is the “run anywhere” philosophy where a document created on your tablet computer can be accessed just as easily on your PC or on a smartphone. This relies on a cloud computing service and the same operating system running on all devices – interestingly this “hybrid cloud” idea underpins Apple’s iCloud as well.

Being able to run documents across all Windows devices was a key part of Microsoft’s launch today with a demonstration of how Office 2013 files can be accessed.

To get the full features of Windows Phone though you’ll have to be running Windows 8 AND Microsoft 2013 on your tablet and personal computer.

Vendor lock-in isn’t surprising as this strategy lies at the heart of Microsoft’s business model – the problem is the market is moving away from the Windows platform and many of the devices, and people, Windows Phone users will be communicating with are using Android or Apple systems so many of the gee-whiz functions are lost.

One of the functions displayed is Rooms, which allows like minded people to share various features. As the Microsoft media release says;

Sometimes you want to share and chat with one group, not your entire social network. Rooms allow you to create private groups of people who have Windows Phone 8 — like your family members best friends or fantasy football league — and easily connect with just them. Chat, share calendars, shopping lists or photos in an ongoing conversation where only those invited can join in. You can share some aspects of Rooms with friends and family on other smartphones as well.

The problem is that when your family members, best friends or fantasy football league competitors aren’t using Windows 8, the Rooms function becomes little more than a glorified shared calendar – Dropbox and Google Docs provide more features.

For the family user Windows Phone 8 does have unique feature in allowing a children friendly profile called Kids Corner, where parents can quarantine the little ones from the main address books and features while allowing only certain apps to run. Unfortunately there’s only one Kids Corner so the little darlings will have to fight it out over the Angry Birds account.

That Angry Birds app is the harbinger of where Microsoft’s multiple screen strategy will either succeed or die in the ditch as it will be the available applications which will determine whether customers will buy the device over the iPhone or Android competitors.

Looking at the Samsung, HTC and Nokia phones that will be released running Windows Phone next month, all seem to be decent pieces of hardware although the Nokia 920 seems to be a hefty unit compared to the competition. Overall though all three phones seem to be decent competitors with their own strengths compared to the Android and Apple opposition.

The success of Windows Phone will define Microsoft’s place in the post-PC world, now its up to the company and its partners to sell them.

Tech’s tough days

Apple and Amazon’s quarterly reports steal the attention from Microsoft’s Windows 8 launch

Today sees another tough day for tech stocks with both Apple and Amazon missing their projected earnings which again finds Microsoft being stood up at their own party.

For Amazon, along with the costs involved with a new range of Kindles, there’s a huge write down in their Living Social investment, another indicator that the group buying bubble has passed into history alongside tulips, 19th Century Argentinian railway bonds and South Sea investments.

It’s worrying that while Amazon’s quarterly sales have increased by 23% over last year’s figures to $11.546 billion dollars, their cost of sales has also gone up 23% from $8.325 to $10.319 billion. This is a trend to watch closely over the next few quarters.

Unlike Amazon, Apple still made a fat profit with income going up to $8.2 billion for the quarter, an increase of 24%. This missed many Wall Street analysts’ estimates.

Apple’s missed earnings were put down to supply chain constraints and development costs, but what jumps out looking at the cash flow is the six billion turnaround in the company’s Accounts Receivable. One assumes this is the value of pending invoices on the new ranges of iPhones, iMacs and iPads sent out to their sales channel.

If that’s right, Apple are looking at a big boost in their cashflow next month, although there’s few companies who would like to have five billion dollars in outstanding invoices in today’s economic climate.

Once again though, Apple have managed to steal Microsoft’s thunder. Despite the glitz and glamour of the Windows 8 launch in New York, Microsoft’s announcement has been muted by the tech and business press’ reaction to the earnings reports.

What is clear from all three companies though is that hand held devices – the Apple iPad, Amazon Kindle and Microsoft Surface – are going dominate the tech and financial coverage of all three companies for the rest of the year.

Apple’s line in the sand

The refreshed Apple range will add pressure to Google and Microsoft.

The comprehensive refresh of Apple’s product lines announced by CEO Tim Cook this morning is a clear warning to Google and Microsoft that the market leader in the post-PC computer marketplace is not going away.

With both Google and Microsoft having a major product releases over the next week, the pressure is now on both companies to match Apple’s announcements and product range.

For Microsoft, the stakes are now substantially higher for their Windows Surface tablets. The Fourth Generation iPad and iPad Mini (or is that iPod Maxi?) are going to be the benchmarks the Redmond tablet PCs will be measured against.

An interesting part of the Apple presentation was marketing chief Phil Schiller trash talking the Android competitors with a side-by-side comparison between the iPad and the Nexus.

These comparisons are becoming a hallmark of Schiller’s marketing in the post Steve Jobs Apple, whether this is good or bad remains to be seen, but it is a difference compared to the old boss’ way of doing things. Although Jobs wasn’t adverse to poking fun at some of Microsoft’s confusing habits.

For geeks, and those who like shiny things that go “beep”, it’s an exciting week and Apple have shown why they are masters at controlling the tech media.

It’s now up to Google and Microsoft to see if they can match Cook’s announcements and meet Apple’s price points.

Can Microsoft beat the PC marketplace’s structural decline?

Windows 8 faces big challenges in replacing Microsoft’s cash cows

In New York on Thursday Microsoft will have a marathon launch of their Windows 8 system and the futures of many of their hardware partners lie on the success of the new system.

For Microsoft, Windows 8 could be the last throw of the dice for the desktop operating system that has sustained the company for thirty years.

The figures aren’t good for Windows as Microsoft’s 2012 profit and loss shows, here are the figures broken out by operating unit segment from the company’s annual report.

Year Ended June 30, 2012 2011 2010
Revenue  bn $  bn $  bn $
Windows & Windows Live Division 18,818 18,787 18,789
Operating Income (Loss)
Windows & Windows Live Division 11,908 11,971 12,193

The core Windows & Windows Live Division has stagnant revenues and a slowly declining profit margin. We’ll leave the huge losses in the online division for a future post.

Since the days of the first MS-DOS deal with IBM, Microsoft’s core business has been the licensing of operating systems to PC manufacturers and now that model is in trouble.

For instance Dell had an 8% drop in revenue resulting in a worrying 22% drop in operating profit, their PC dominated consumer division suffered a fat 22% drop in sales and recorded a miniscule .5% profit margin. Similarly Asus had 25% drop in sales to record a 2011 loss.

The pain being suffered by PC manufacturers’ sales and margins will almost certainly be shared by Microsoft as companies like Dell, HP and Asus simply can’t afford to pay the licensing fees which have sustained the Redmond business model for so long.

Microsoft and their partners hope – or pray – that the PC decline is a temporary hiccup in computer sales similar to the traditional lull seen before the release of a new system.

History’s not on their side with research company Asymco expecting sales of tablet computers to overtake PCs sometime in late 2013.

This is not a cyclical trend – the PC industry is in structural decline; the traditional Windows upgrade cycle is dead and Google are running interference with their Chromebook networked laptops.

Moving onto tablets and smartphones in this light makes sense for Microsoft and given the PC manufacturers have failed dismally to deliver decent tablet computers or phones over the last 15 years so it’s understandable the software giant wanted to develop their own hardware or team up with a struggling company like Nokia.

The declining margins in personal computers means we’re seeing the end of the Windows desktop ecosystem. With the rise of the web and cloud computing the type of operating system we use is like arguing between Toyota and BMW drivers; one might be more prestigious but both will get you where you want to go.

For Microsoft the challenge is to replace those Windows licensing rivers of gold with similar revenue streams through their phone and tablet products but with Apple and Google already dominating those fields, is it too late for the company that dominated personal computing? The next six months will tell us.

The risks of tablet pricing

Are Windows tablet manufacturers repeating last decade’s mistakes?

We often forget that tablet computers weren’t invented by Steve Jobs. For a decade before Microsoft and their partners like Toshiba or Dell had been selling ‘slate-like’ devices.

The market wanted tablet computers, particularly business users in sectors like logistics and health care, but the Windows products on offer were heavy, clunky and expensive.

It took the iPad to deliver what the market wanted —  a lightweight, easy to use and reasonably priced tablet computer. This was the reason Apple were so successful.

With Asus’ pricing announcement of their new range of Windows 8 tablets it appears the mistakes made by the PC industry with tablet computers ten years ago are going to be repeated.

The fundamental thing that will kill Windows tablets is cost and these tablets are too expensive compared to the Apple and Android competitors.

While having Windows compatibility and the opportunity to save to USB drives or corporate networks is handy in a tablet, there seems to be little reason for customers not to buy a mid-priced laptop.

It appears though these price points are part of Microsoft’s strategy. Steve Ballmer hinted at this in his Seattle Times interview last weekend.

Q: The iPad has the largest share of the tablet market, but its soft spot, it seems to me, is the price.With the Surface, are you planning to compete with the iPad on price or on features?

A: We haven’t announced pricing. I think we have a very competitive product from the features perspective. …

I think most people would tell you that the iPad is not a superexpensive device. … (When) people offer cheaper, they do less. They look less good, they’re chintzier, they’re cheaper.

If you say to somebody, would you use one of the 7-inch tablets, would somebody ever use a Kindle (Kindle Fire, $199) to do their homework? The answer is no; you never would. It’s just not a good enough product. It doesn’t mean you might not read a book on it….

If you look at the bulk of the PC market, it would run between, say, probably $300 to about $700 or $800. That’s the sweet spot.

The problem is the tablet computer market isn’t the PC market and those price points have changed.

What’s more, the features that attract users to tablet devices or smartphones are different to that of PCs.

Basically PCs, tablets and smartphones are different products.

Applying PC pricing structures, or marketing models, to the tablet market is a risky strategy.

Steve Jobs didn’t do this and Apple succeeded with the iPhone and iPad without damaging their Mac sales, whether Microsoft can pull of a similar achievement with the opposite strategy remains to be seen.

One platform united under Microsoft

How the software giant wants to lock corporate customers into their products.

Microsoft’s annual Australian TechEd conference on the Gold Coast this week comes at an important time for the software giant as the company launches a range of products to meet the major threats to its tech industry dominance.

With the move away from desktop and laptop computers to smartphones, tablets and cloud computing services Microsoft’s profitable server and office franchises have become less relevant in a rapidly evolving market place.

To counter this move Microsoft are refreshing most of their key product lines this year including launches of Windows 8, Windows Server 2012 and the high stakes Windows Phone 8.

Underlying these releases is Microsoft’s “one consistent platform” offering a seamless experience between traditional in-house servers, the company’s Azure cloud product along with the services of partners, integrators and resellers.

Core to Microsoft’s enterprise strategy is their Hyper-V virtualisation product that allows businesses to reduce costs and business complexity by easily replicating systems onto different servers or networks. At present Microsoft claims 25% of the Australian virtualisation market compared to VMWare’s 50%.

At the home and small business ends of the market Microsoft also have a “one consistent platform” strategy with services like Office365 offering the same look and feel regardless of whether they are using a smartphone, tablet or desktop computer.

Microsoft hopes to replicate the success they had in the 1990s by locking customers into their integrated cloud and server environment. This is consistent with the “own the customer” strategies of other major players like Apple, Amazon, Facebook and Google.

The flaw in trying to own the customer across all devices is the difference in technologies – what works on a desktop computer with a mouse, keyboard and large screen doesn’t necessarily succeed on a smartphone or tablet computer using a smaller touch screen.

Windows 8’s development has illustrated how Microsoft are struggling with their aim delivering a consistent look across all platforms as early users struggle with the now renamed “Metro” touch screen interface and demand they get their start buttons back.

The inconsistency between platforms also appears with the cloud based Office365 productivity suite which lacks many of the advanced features of the desktop Microsoft Office packages that dominate the PC market.

Office’s advanced functions are one of the areas where Microsoft has successfully held off competitors like Google Apps as office workers – and writers – find the richer features in the desktop application actually matter when using word processors or spreadsheets.

Another of the advantages Microsoft has over Google and other cloud based competitors is their army of software partners, integrators and resellers supporting their products.

One of the pillars of the “One Consistent Platform” strategy are the service providers who have built their businesses on supporting Microsoft’s products. With the move to the cloud many of these integrators and resellers have been threatened by the reduced margins offered by online services.

The stakes are high for Microsoft and their partners as the computer industry moves away from the model which has worked well for them over the last twenty years.

Whether customers will stay with the revamped Microsoft services and products is going to depend on how well the “One Consistent Platform” is executed. As Apple, Facebook and Google have shown, customers will stick with one service if their needs are being met.

Hands on with Microsoft Office 365 and a Windows 8 tablet

Giving the new version of Office a run on a Windows tablet

One of the key planks of Microsoft meeting the challenge presented by online services like Google Docs is their cloud based Office365.

The success of Office365 is important as Microsoft Office makes up a large chunk of the 24 billion dollars in sales, and $15 billion dollar profit, the company books from its Business Division.

Coupled to this threat is also the move from personal computers to smartphones and tablet devices which Microsoft hope to meet with their Window 8 operating system, Surface tablet computer and Windows Phone.

As part of the Australian TechEd 2012 Conference, Microsoft gave a hands on preview of the Office 365 running on a Windows 8 tablet which was a good opportunity to see how both software packages worked.

Office 365

Office365 is very similar in layout and function to Office 2010 – if you’re using earlier versions of Office, particularly Office 2003, then you may find the ribbon bar and changed menus hard to navigate at first.

Integration with Microsoft’s Skydrive is good and seamless. A nice feature in this is how a user can setup multiple Skydrive accounts as separate drives. How well this works while on the road will have to be tested away from a controlled environment like the one at the TechEd meeting rooms.

The touch screen functions are fairly hard to get used to and they don’t work particularly well with fat fingers which Microsoft attempts to overcome with providing a stylus.

Another complexity is that the menus and touch screen functions aren’t consistent across applications. The handy ‘pinch’ gesture to zoom on Windows 8 doesn’t work on the Office applications on the tablet which is a shame and is also a bit irritating for power users.

Office365 adds a range of other features like web publishing, video editing and IT management tools but the hands on demo didn’t give enough time to properly evaluate these aspects.

Window 8

The first thing that jumps out with Windows 8 is the basic interface isn’t intuitive. The tile based system is difficult to use if you’re used to a keyboard and mouse or mobile systems like Apple iOS and Android.

Another worry is the Windows 8 interface – or “Metro” as it was known – uses different applications to the desktop version. The problem with this was illustrated when trying to run a video on the device as the Internet Explorer in the Windows 8 interface was a different version to that on the desktop so videos would run in one mode, but not on the other.

This confusion between software versions is a recipe for user confusion, lost data and possibly even a security weakness. It’s surprising that having effectively two operating systems running on the device was considered to be a good idea.

Looking under the hood at the Control Panel, the Windows NT heritage of Window 8 becomes apparent. Anybody used to tinkering with the settings on Windows XP, Vista or 7 systems will have no trouble finding their way around the new version.

Overall the performance of Windows 8 was impressive. It’s quite fast and responsive and this is something that Microsoft’s demonstrators are proud of.

Tablet blues

The surprising thing was the Windows 8 system was running on a Samsung tablet with still no ship date for the Windows hardware.

The Windows 8 about screen on a Samsung Tablet

With Christmas approaching, Microsoft are running out of time to compete in the tablet market and it seriously raises questions on whether the Surface tablets were prematurely announced.

The experience with Office365 on the Windows Tablet was satisfactory although the demonstration showed there’s some barriers to adopting tablets as the main work computers.

Office 365 shows the strengths Microsoft have in the market, if Microsoft can get their tablet strategy right then they have a good product to compete with Apple’s iOS and Google’s Android.

Time will tell if they or their hardware partners can get products that customers want onto the market.

Paul travelled to TechEd and stayed at the Gold Coast as a guest of Microsoft Australia.

I’m not paid to have doubts

What do you do when the CEO has no doubts?

The Seattle Times has an interesting interview with Microsoft CEO Steve Ballmer this weekend where he discusses what has been one of the biggest years ever for his company.

Midway through the Seattle Times story there’s a telling exchange.

Q: What is Microsoft’s plan if Windows 8 doesn’t take off?

A: You know, Windows 8 is going to do great.

Q: No doubt at all?

A: I’m not paid to have doubts. (Laughs.) I don’t have any. It’s a fantastic product. …

There is no plan B – Windows Phone is running late and their hardware partner Nokia is looking more foolish every day. Last week not only did they flub the launch of their latest phone, but they also managed to alienate the world’s tech media at the event.

It’s nice not to have doubts, but from outside the comfortable corporate headquarters Microsoft looks like they are struggling in this space.

Steve Ballmer might be more credible if he did admit to doubts and at least hint there is a plan B in their smartphone strategy.

Companies need leaders with doubts – doubts about their strategy, about their managers, about the economy and – most importantly – about their own infallibility.

One of the worst aspects of 1980s management ideology was the myth of the CEO superstar. Too many good businesses have been destroyed, and too much damage done to the global economy, by senior executives who have believed in their own infallibility.

Some doubts might help a business, particularly when that company is struggling with some serious threats.

Throwing down the gauntlet

The iPhone continues to disrupt once profitable markets

The interesting thing with Apple’s announcement of  the new iPhone and iPod was the emphasis on gaming with two demonstrations showing off the capabilities of the new devices.

While the iPod and iPhone can’t compete with gaming consoles in a straight out hardware comparison, customers like the idea of being able to play advanced games on their handheld devices.

More worryingly for the console manufacturers is the pricing in the App stores. The traditional gaming model of expensive games subsidising devices starts to fall over when 99 cent, or even $19.99 downloads kill the fat margins.

It’s not just games companies threatened by the iPhone and Android smartphones, probably the biggest threat from today’s launch is to Microsoft.

Last week’s botched Lumia 920 launch throws into stark relief how Windows Phone is struggling to meet its October release date.

The pressure is now right on Microsoft to deliver, the continued evolution of the iPhone is also leaving Blackberry and Motorola increasingly looking flat footed and vulnerable in a market that’s leaving them behind.