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7 Ways To Save Microsoft In 2011

If Redmond can't adapt to the most competitive landscape in decades, it will fall further behind Apple and Google in key growth markets like phones and tablets.
Leverage Kinect into new markets. The major bright spot in the past year for Microsoft was its Kinect hands-free motion controller for Xbox 360. The system lets users control on-screen action in games simply through hand gestures and other physical motions. Microsoft launched Kinect in November and sold 2.5 million units in the first 25 days.

But while Kinect is a cool toy for gamers, its real potential is in vertical business markets where virtual controls could prove revolutionary. Imagine a surgeon manipulating microscopic tools through a series of hand gestures, or a molecular researcher twisting DNA molecules with the snap of a finger. That's where the value in Kinect's underlying technology really lies -- the question is whether Microsoft has the vision to tap it.

Stanch Explorer's losses. Microsoft's Internet Explorer, which once held more than 90% of the browser market, suffered its largest ever month-to-month market share decline in December, slipping to 57.1% and actually falling behind Mozilla's Firefox in Europe. Part of the reason for IE's decline is reflected in Microsoft's struggles in other areas (see above).

For instance, as more computing goes to non-Microsoft mobile platforms, mobile browsers will begin to dominate. Beyond that, Microsoft isn't used to having real competition in the browser market. But with the arrival of mature versions of Firefox and Chrome, as well as a European Union dictate for Microsoft to offer European consumers equal access to IE alternatives, Redmond must respond.

With its full support for HTML 5, CSS3, ICC Color Profiles, and other modern Web standards, Internet Explorer 9 -- now in beta -- has the potential to help Microsoft stop the bleeding when the final version launches this year.

Restore management stability. In the past 18 months, the entrance to Microsoft's corporate headquarters has revolved faster than the judge's panel on American Idol.

Key executives that have departed, either of their own volition or for "personal reasons," include Business Division president Stephen Elop (now Nokia's CEO), Windows strategy VP Mike Nash, Genuine Software program director Alex Kochis, and Windows group senior VP Bill Veghte, who jumped to HP. Ray Ozzie, who was brought in to kick start Microsoft's cloud efforts, in October announced his intention to leave following a transition period.

Ballmer needs to find a way to put a stop to the attrition, fast. Otherwise, Microsoft's internal instability could derail efforts to respond to the most competitive computing market in decades.

Recapture relevance. If Microsoft can get all of the above right, it can achieve the seventh, and perhaps most important, task on this list of must-dos for 2011 -- become relevant to the tech conversation again. At no other time in recent memory has the company been such a sideline player as it was in 2010, when the business and tech headlines focused on Apple, Google, Facebook, Groupon, and other companies perceived to be the hot brands of the new decade.

Microsoft tried to regain the hip factor in 2009 with a series of commercials featuring Jerry Seinfeld and Bill Gates. The inscrutable spots mostly drew a WTF? reaction from viewers and critics. In 2011, Microsoft needs to let its R&D and engineering capabilities do the talking by coming up with cool new products that will set tongues wagging on their own.

Kinect was a strong start, but the company needs at least a couple of more blockbusters to set the agenda. Otherwise, 2011 could be another long year in Redmond.

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