Does Microsoft really need to diversify into consumer products?

Watching Microsoft Chairman Bill Gates go through the paces during his last Microsoft CEO Summit keynote on May 14, I couldn’t help but ponder again why Microsoft thinks it needs to be both a business and a consumer software vendor.

From May 13 to 15, Microsoft officials are hosting 115+ CEOs from the Global 1000. Topics on the agenda include, according to Microsoft,”decoding financial markets, establishing cultures of execution and exploring how the Internet will evolve over the next five years.

After watching Gates’ Webcast CEO Summit keynote presentation — where he extolled the virtues of SharePoint, unified communications, business intelligence, scorecarding and other topics of interest to business customers — I can’t help but wonder whether Microsoft might have been and will be able to grow its business better by focusing on the arenas it knows best. (And the ones where it has the most customers.)

The wall-size, vertical touch screen (a Microsoft Research-Office Labs joint venture known as “TouchWall”) — which Gates touted as the “whiteboard of the future” — looks a heck of a lot more compelling than the Surface consumer-focused prototypes I’ve seen.

Microsoft undertands ERP, CRM and desktop-productivity software far better than it does gaming consoles, digital media players and consumer-focused mobile-phone services. In fact, I’d throw search-based advertising into the “why is Microsoft here?” category, too. Ad-funding is just one way of offsetting the cost of online services. Microsoft is building a whole family of subscription-based services that it is hosting itself and won’t be cluttering with ads — Exchange online, SharePoint Online, CRM Online, SQL Server Data Services, BizTalk Services, etc.

Tech innovation is coming first and fastest from the consumer, not the business, side of the market, according to Microsoft’s brass and a handful of other tech vendors (most recently, Sun Microsystems, whose execs voiced last week at JavaOne the same sentiment). That’s Microsoft’s main justification for why it’s dabbling in areas where it doesn’t have the right people, technologies and marketing.

But I can’t help but agree with “MattyDread,” who posted on the Silicon Alley Insider blog yesterday (in response to an item on Microsoft’s vs. Google’s monopoly power). MattyDread said:

source=blogs.zdnet.com