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Microsoft Backs Out Of Wi-Fi Equipment Market
Glenn Fleishman writes "Say it ain't so! Microsoft makes good consumer Wi-Fi equipment but is exiting the market, News.com reports. They'll sell out their inventory, but won't make new models or produce new product. I can't recall a case in which Microsoft had viable products and decent sales and exited instead of spending more money to compete more effectively. Or even when they had non-viable products (Pocket PC's original OS) and spent years and billions before they had something that worked. Perhaps competition from Cisco (Linksys subsidiary), NetGear, and even Apple (which has a disproportionate marketshare) made MSFT blink."
Sales does not mean profits. Even though the sales of WiFi products more than tripled in 2003, the revenue growth of the market wasn't as good. Which means one thing - together with high demand the prices are falling down dramatically, and by now the WiFi equipment is heavily commoditized and thus outsourced to Chinese/Taiwanese/Indonesian manufacturers, which in the hardware world generally means no one else is expecting to make any money off of it (the same for Ethernet network cards, CD-Rs and other products).
The market will grow (in fact there are 700K WiFi networks right now, and much more are expected), but the margin range is just not there - I wouldn't be surprised if by the end of the year the WiFi prices hit such a rock bottom, that some manufacturers will in fact lose money.
Apple is doing very nice - 20.2% of the 802.11g market, the first-mover advantage, and leading in revenues, outrunning even Cisco (according to Business Week). But (a) we still have to find out what the profit margins are on Apple WLAN equipment and whether SteveJ got his R&D expenses back by now, and (b) Apple is one company that is uncapable of fighting price wars. Pitch Apple against a Chinese clone factory pushing millions of WiFi access points and networks cards at half the prices, and market share is eroded. Unless Apple finds some way to lock up consumers into buying its products (easy to do with Powerbooks, not so easy with Airport access point buyers), they won't do well either in this market.
Microsoft had no real way to apply "embrace and extend" into the networking world. When it comes down to it, there isn't much different between equal models accross the brands on the consumer networking shelf.
I've even noticed some AT&T-branded networking equipment showing up at CompUSA stores. More or less, that shelf was getting a little too crowded and stores were going to drop the weakest link if Microsoft or some other player didn't gracefully bow out soon.
Perhaps it is because they don't see anything great and revolutionary in Wireless LAN hardware- you obey a spec, the interesting part to the user is the software interface, and Microsoft controls that still.
The other examples (like PDA devices) represent entirely new niches in the market, or (like mice) represent strong branding oppurtunities- if you make a good product that someone handles everyday, that's decent profits and good PR (I'm a Logitech fan myself, even swapped out the MX300's red LED for a violet one).
I'm sure tech analysists and security experts thought of that long before you did. If your assertions were true, I think the case would have been blown wide open. Besides, it would be far too easy to pick up on any traffic reporting via any traffic sniffer.
...has always made me look to other manufacturers. I mean, seriously. I'm not trying to be an anti-M$ zealot or anything, but I trust hardware manufacturers who SPECIALIZE in hardware, not software. It'd be like buying a Jello-brand car. Sure, they make great jello, but...
It is pitch black. You are likely to be eaten by a grue.
Don't know if anyone remembers these, but there is a precedent for MS releasing hardware and pulling it. They had a 900 mhz. "phone system" that had 2 cordless phones and a computer hub. Sold it for a year, pulled it. They released a speaker system that they pulled within a year or so. And, they have apparently stopped manufacturing SIDEWINDER gaming peripherals (sp?). Might be more. That's off the top of my head.
My good looks paid for that pool, and my talent filled it with water.
I personally would have liked to have seen MS play a little bit harder in the Wireless space. Combined with their Kerberos implementation, we could have seen a commodity EAP-TLS system that worked out of the box. Boom! All of your wireless security concerns gone.
And no....don't talk to me about open-source here. I''ve played around with building an EAP-TLS system with Free Radius and after two days of solid effort it still wasn't working.
A real shame that opportunity has been missed.
I thought there were consumer protection laws that stipulate the availability of service and support for 7 years from the date of the original sale. Isn't two years a fairly short end of life cycle for a consumer electronics product?
I know of no such law. Once your warranty is up, you're at the vendor's mercy for what kind of support, if any, is going to be available to you.
This is more or less what always happens when a vendor discontinues a product line... you've got an orphan product that you might as well toss when it breaks.
Then again, what's the point of servicing a broken $50 router... most flaws that would cause it to stop working usually are more expensive to fix than the thing's worth.
Perhaps competition from Cisco (Linksys subsidiary), NetGear, and even Apple (which has a disproportionate marketshare) made MSFT blink.
We are talking about the same MS, right?
The same MS who jumped into the game console market with Sony and Nintendo? Who wrote Word and Excel, when the market already had Wordperfect and Lotus? Those guys? The ones who wrote Internet Explorer when Netscape was already on it's third release?
You can say what you like about MS, but don't say competition scares them. They look at an unentered market the same way Peg Bundy looks at a bon-bon. They know that they can intimidate and out-spend anyone on the planet. Even the law can't stop them, because they simply view the fines as a business cost.
A better question to ask would be why. Why would they leave a market, just when they're gaining share? This is what they live for. Move number two in this game is to take revenue from the other near-monopolies and turn this market opening into another monopoly, to fuel the next market they wish to exploit.
It can't be that they view the market as a brick wall. They didn't view the DOJ as a brick wall! I'm supposed to believe that after that, Cisco scares them?
I don't know why they left the market, but believe me...they have a good reason, and it's in everyone's best interest to figure out what it is. Especially the people who make WiFi equipment.
Weaselmancer
Weaselmancer
rediculous.
After careful evaluation, the Microsoft hardware group has decided to scale back its broadband hardware and networking business," a representative said. "Instead, the plan is to apply the knowledge we have gained in that category to future products and services."
Translation: After offering a product based on actual standards, which offer us no way to develop a strangle hold on consumers, we've decided to drop this product in order to devote more time coming up with a proprietary solution...