Triumph of the Uncool: Mediocre Microsoft Ain't Going Anywhere

By John Boitnott | Small Business

Oh Microsoft, you are so lame. Now please excuse me while I go play my Xbox and then buy that reasonably-priced Windows machine at the electronics store.

Microsoft: It doesn't create groundbreaking products and it doesn't engender rabid, maniacal devotion. However, the mediocre giant gets the job done. Because most people aren't really able to afford the "latest and greatest" gadget if it costs them an arm and a leg, Microsoft's products still fit the bill for many American consumers. The Wall Street Journal just reported that Microsoft is enjoying an incredible quarter, exceeding expectations, and revenues have spiked 100 percent compared to the same period in 2013. With a market cap now outpacing Google for the first time in months, the company has earned appreciation from investors despite a CEO who all-too-publicly put his foot in his mouth when speaking about salaries of female employees.

However, just because people are picking up what Microsoft is putting down doesn't mean all of its products will be successful or that trends in certain product markets don't look discouraging at times. The mediocre behemoth has a long history of failed launches (and the reputation that goes with them). It has quite a bit to change, reconsider or reposition in a myriad of product areas, from the ongoing Windows 8 debacle to the company's underwhelming smartphone efforts. Don't count Microsoft out though. It has survived this long, and of course has the mega marketing budget to shove its services in front of millions of people.

The Mediocre Value

Take a look at the long haul. Even though Microsoft is making headlines right now for growing revenues, there was never a year (at least not since Microsoft's beginnings) when the company was in financial trouble. Year after year, they've been raking it in. They remain one of the elite tech companies in the world. Ask your average American to list their top five tech companies and Microsoft will most likely sneak in there.

It's not that their products are bad--they're just not great. It's kind of like Starbucks. We know that some people truly love their Starbucks, but by almost all accounts the coffee there isn't going to win any awards. What we do know is, when you are in an unfamiliar landscape and don't know any other alternative, Starbucks is a port in the storm (to illustrate, here is one Starbucks that qualifies for me on my long drive between the Bay Area and Southern California).

Microsoft is almost precisely the technology version of Starbucks. If someone needs a less expensive computer that he or she knows will run effectively (at least for a while), they still all-too-easily go to their local electronics store (or the internets) and quickly purchase a Windows machine out of habit. One of the overwhelmingly influential factors here is that Apple computers break your bank way too easily. However, there's quite a bit besides that helping Microsoft, and why you most certainly can't count the company out.

1.) The household name. Everybody knows Microsoft and quite a few people could correctly list some Microsoft gadgets like Xbox or software like Office. Everybody knows what you're talking about when you say "Microsoft."

2.) A corporate client base that refuses to let go. As much as Apple has increasingly found a place in corporate America, a massive swath of that world steadfastly will not budge from its investment in Microsoft's products.

3.) It's costly--but not too costly. People innately link cost with value. In a blind focus group, if people are given the exact same product but told different price points for each, they tend to value the more expensive one as "better." However, in order to sell millions, products need to be expensive but still attainable--much like how Microsoft prices its lineup.

4.) A relentless marketing strategy. When you make millions of dollars, you can afford the best in marketing. Microsoft didn't become a household name by luck. There are some marketing sharks behind it. They spend money so they can make money.

What about the Little Guys?

If you dig deep, you'll find plenty of startups and small businesses with better products than Microsoft. In fact, if these companies had a sliver of Microsoft's budget, they might be a household name themselves. For example, Ajax Union is an up and coming online marketing firm hoisting companies into the mobile world seamlessly. Ninja Blocks is taking home automation to the next level. You've probably never heard of either of these companies, but it doesn't matter. I could go on and on.

Any one of these companies may or may not be the next Microsoft in a few years--but that's par for the course. After all, over 80 percent of small businesses don't make it. Microsoft blossomed at a time in the technology industry when it was relatively easier to go big because there was less competition (and noise) than there is now. These days you can't swing a tablet without hitting a tech company.

The Microsoft Method

Nobody can copy what Microsoft has done because the landscape has changed so much from the early years. However, one thing is certain: Even with mediocre products, Microsoft isn't going to dive into obscurity anytime soon--if ever. The company will continue to bring in the big bucks because their products have essentially been grandfathered in by prior generations and there is highly significant demand for products that work while not hitting the average person too hard in the pocketbook. The Microsoft team also figures out what is popular or has mass appeal, and spends money to market it all decently. The people speak with their wallets; and if they demand "just okay" technology, Microsoft is staking its future on being there to provide it for them.

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