Microsoft remains the dominant company in the segment, but it is clearly under siege. With an inability to do sustaining marketing, its customers are overwhelmed with negative news surrounding foundation products. This is a prime example of marketing as a competitive weakness, and it has become Microsoft's greatest exposure as it is forced to compete against products that shouldn't yet be competitive.
There are some bright spots for the firm, however. It is expected to pass Sony in the console gaming segment by avoiding Sony's Osborn-like mistake (Osborn was a company that went under by prematurely promoting a product it didn't yet have) and by building a better game development platform. Microsoft should be able to expand its dominance in embedded systems by continuing to focus more on customer needs than on per-unit revenues. And Janus, the subscription-based media delivery product, has the potential to have a massive impact on the digital music business. But the market is Microsoft's to lose, and as a company it has clearly demonstrated that it is easier to chase a leader than to be one.
Oracle is now the heir apparent for the Microsoft crown. The world we are moving to is one with massive centralized services, and Oracle is positioning itself to be the dominant software company in this new world. The firm has a culture suited to rapid acquisitions, and at this point even the hostile nature of many of them may not make much of a difference. The first test will be PeopleSoft, but Oracle's successful completion of this merger should set the stage for a number of rapid-fire acquisitions that will complete the set. Still, integrating companies will be a lot easier than integrating products. And .Net exists -- but if you remember Microsoft's inability to articulate the advantages of its offerings, you'll see a much more level playing field and one that may now favor Oracle.
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