If you can't beat 'em, the expression goes, then join 'em. But even that isn't enough anymore in today's "me too" tech world - you have to join them, yes, but then you also have to beat them to be halfway relevant.
That said, earlier reports of Microsoft's demise were premature. The company is on a roll lately, announcing last week that Windows 7 is installed on 100 million systems and is their fastest selling operating system of all time.
Their Xbox division is profitable and raked in $165 million last quarter, and looks to continue to improve on that based on game and console sales. There are now over 40 million Xbox 360s in the wild, compared to close to 70 million Nintendo Wiis and 32 million PS3s. And while PS3 is gaining there are rumours of a cheaper Xbox 360 "slim" version that will change the game once again.
The Windows 7 Phone software and phones are the most anticipated items since the iPhone and early reviews are solid. It should be available by the fall.
Apple also made gains with the iPad, but literally dozens of competitors are preparing to enter the market with touch screen tablets that use Windows 7.
The Zune media player series is still way behind the iPod (and the Zune HD still isn't available in Canada for some reason), although it is probably a superior device from a technology standpoint. One day Microsoft will learn how to market and support this division of their company and then look out!
But one area where Microsoft sees an increasing challenge is marketing their Office suite of productivity software when so many - Google Docs, OpenOffice.org, Adobe.com - are offering similar programs for free.
Because Microsoft can't beat free they're joining the bandwagon. Office 10 will launch next week and in June Microsoft will begin to offer free Office Web Apps with basic functionality as well as a scaled down suite of Office software for download called Office Starter (replacing Microsoft Works). Microsoft is gambling that people will like these applications so much that they'll eventually purchase the full version of Office.
And a lot of people will. For some it's a failure of imagination - they've been using Office for decades now and are unwilling to change or even trust other software. For others it remains a practical matter - business people still rely on Office software, including Word, Excel, PowerPoint and Outlook, and generally want their new software and files to be seamlessly compatible with their previous software. For others still, the availability of online versions only complements the purchase of Office, especially the upgraded version of OneNote - a program that combines all the other aspects of Office into projects that can be accessed and updated over the web.