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Microsoft Still Ranked Most 'Indispensable' to CIOs

While Microsoft may have dropped a few notches on the annual Harris Interactive Reputation Quotient this week, dropping from 2 to 15, Redmond does top a more important status list: it's the most indispensable vendor to big-spending CIOs.

At least that remains the finding in Piper Jaffray's quarterly CIO Survey released to its clients this week, which found Microsoft was by far their most critical "mega-vendor" for the future. In its survey of 135 CIOs, 61 (or 45 percent) picked Microsoft, which had more than double the mentions of the No. 2 vendor, Oracle. The ranking, in order, below those two include: SAP, Cisco, IBM, EMC, Hewlett-Packard and Apple. Interestingly only 10 percent or less picked the latter four, with only 4 percent choosing Apple.

While that's not the first time Microsoft has topped that list, the company widened its lead this year with 45 percent giving Redmond the thumbs-up, compared with 33 percent in 2012.

"CIOs state that 'there are really no alternatives to Microsoft,'" said the report. "[Others said] 'MS services are getting better and will allow us to move more to the cloud,' and 'we are highly invested in their technologies and dependent on them extending their platforms.'"

Piper Jaffray senior research analyst Mark Murphy goes on to note: "We believe Microsoft's dominance in the enterprise is underappreciated, and some of the threats against Microsoft, such as alternatives to the Windows desktop OS in the enterprise or productivity software, may be over-hyped in the near term. That said, keep in mind that our CIO survey does not address the large consumer business for Microsoft, which faces much more intense competitive pressures than its enterprise business."

Looking at what that means in terms of actual spending, Microsoft is still on top in terms of market penetration with a 98.5 percent (all but two of 135 respondents) reporting they run the company's software. Coming in second was VMware with 91.1 percent followed by Symantec (78.5 percent), Oracle (76.3 percent), Citrix (71.9 percent) and IBM Software (64.4 percent).

For Microsoft, 56 percent of the survey group plans to maintain consistent spending with Microsoft, while 29 percent will increase the amount sent to Redmond by up to 10 percent. A smaller sample (7 percent) will increase spending with Microsoft by more than 10 percent while only 5 percent said their Microsoft spending will decline by up to 10 percent.

Overall that translates to spending growth for Microsoft of 2.1 percent, bested only by fast-growing cloud-based human capital management provider Workday (4.7 percent), VMware (3.7 percent) and ServiceNow, a cloud-based provider of IT management tools (2.9 percent).

While both Linux and Windows Server will show increased growth, Linux is on a higher trajectory, according to the survey. Last year 36.7 percent expected Linux to grow in their organization while this year 33.3 said it will grow. But while 34.9 percent expected Windows Server to grow, only 14.8 percent said it will this year. Not surprisingly, Unix and mainframe environments will decline more but also a substantial footprint should remain unchanged. When I talk to those who prefer Linux, they make it very clear that Windows is not an option in their eyes.

Microsoft's more obvious threat is on the desktop, including tablets and phones, where investors continue to raise questions on the company's moves. Its calculated risk to offer its own Surface-branded hybrid PC-tablet has had the consequence of motivating OEMs including Samsung, Acer and Hewlett-Packard to offer Chromebooks -- PC-like devices running Google's Chrome OS.

Another shoe dropped this week when a report surfaced that HP is developing Android-based tablets and phones, not a huge surprise especially in wake of Microsoft's growing ties to Dell. Maybe these OEMs would have done this regardless of Microsoft's Surface play but nonetheless Windows 8 -- good as it is with strong ties to Windows Server -- is going to have to earn its way into consumer hands and enterprises alike.

Perhaps no one put the changes that have evolved out there more poignantly than Tod Nielsen, a Microsoft executive that I recall meeting with on a number of occasions in the 1990s. Nielsen, who famously testified in 1998 with then-Microsoft executive Paul Maritz as defendants in Microsoft's famous anti-trust trial, recalled those days in a speech last week at the Parallels Summit in Las Vegas.

"When I was at Microsoft, and I left in 2000, if you told me when I would be in business meetings where everybody would have a computer around the room and the majority of the computing devices would be non-Windows PCs, Macs or new types of tablets, I would have thought you were on drugs. There was no way it's even possible," Nielsen said.

Nielsen, who went on to head BEA Systems, spent time as COO at VMware and is now an exec with its newly launched Pivotal offshoot, added:  "Today in our industry, it's very common to see PCs just being part of the fabric but they're not the dominant part of the fabric that they once were. If you think how many native Win32 applications you use in your daily life, the only one I use is PowerPoint. Everything else is a Web app and is not native to Windows. It's interesting how things have changed."

While Nielsen's loyalties have invariably changed over the years, Microsoft still remains the most relevant company by two-thirds of software developers surveyed by Evans Data, according to a study released this week. But No. 2 Google was seen as likely to dominate in three years, especially with younger developers under the age of 25.

"The developer landscape is shifting as developer demographics change," said Evans Data CEO Janel Garvin, in a statement. "The age of software developers in North America has been trending younger since 2009, and as a new generation of developers comes on stage they bring new perceptions of the industry and its leaders."

Depending on your point of view, the CIOs surveyed by Piper Jaffray are out of touch, a skewed sample or maybe Microsoft's threats are indeed over-stated. But few would argue Microsoft needs to get younger developers and users in its camp. What's your take? Drop me a line at [email protected].

Posted by Jeffrey Schwartz on 02/15/2013 at 1:15 PM


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