Microsoft phased out 13 products in last 8 months, analyst says

Competition or a changing market can hasten the axe

Employees aren't the only victims of Microsoft Corp.'s declining profits, as the company has killed, frozen or spun out 13 software and Web services since last fall, according to a report released Monday.

Matt Rosoff, of the independent analyst firm, Directions on Microsoft, said more product cancellations are likely "as Microsoft continues to reduce costs."

Potential victims include products that overlap with others inside Microsoft but have less internal executive support, wrote Rosoff. Others include products such as Encarta, whose market has disappeared due to competition -- in Encarta's case, Wikipedia -- or products introduced to compete against firms no longer seen as threats to Microsoft, such as Office Accounting and Dynamics Entrepreneur, both killed now that Intuit Corp. has been replaced by Google Inc. on Microsoft's radar.

Products that are likely to survive cost-cutting purges can be tiny, such as the MSN dial-up Internet service, as long as they still turn a tidy profit. Or they can be money-bleeding products like XBox or the search engine Bing that are considered key to defending Microsoft's money makers such as Windows or Office. Or they may merely need the support of leaders such as Bill Gates, as MSN Direct and the .Net Micro framework did, wrote Rosoff.

Rosoff's list of products cancelled by Microsoft since October 2008 can be seen here.

Sometimes Microsoft outright kills a product. Take Encarta, which was a victim of Wikipedia and Microsoft's move away from packaged consumer software, Rosoff said

Other times, Microsoft folds struggling products into better-performing ones, such as Office Live, a collection of online services for small businesses that is being merged into Windows Live, or PerformancePoint Server, a pricey, short-lived business intelligence app that Rosoff said overlapped too much with SharePoint Server, into which it is being folded.

Some products are made free due to a plethora of free rivals. Examples include anti-virus service OneCare, which will be replaced by a free product code-named Morro, and SharePoint Designer, a Web site designer which will also be given away free to accelerate the SharePoint ecosystem.

Others were niche products that were spun out, such as Microsoft's quiet spinoff of its RoundTable videoconferencing hardware to Polycom in April. That move was used to "eliminate" the product "quickly without alienating current customers," wrote Rosoff.

Another example was Microsoft's transfer last fall of its MSN Groups service to Multiply.com.

Sometimes products are old and gently nudged aside. Microsoft put Office Accounting into maintenance mode, meaning the company will support it through the end of its lifecycle but no longer plans to update it.

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