Report: Microsoft Phases Out 13 Products

Microsoft almost always toots its own horn when it has a successful product or service. For those products and services that don’t achieve their goals, though, Microsoft often has a quiet demise on tap, according to a new study released this week.

One point that jumps out of the report, which was written by Matt Rosoff, vice president of consumer products and corporate news at Directions on Microsoft, is that Microsoft (NASDAQ: MSFT) has eliminated, phased out, spun off, outsourced, or sold off more than a dozen products and services just since October. The report is titled “How Microsoft Phases Out Products.”

These include relatively unknown products such as Automated Service Agents and the Connected Services Framework, but also much better known products and services like Encarta, Office Live, OneCare, and PerformancePoint Server. One of the motivations: money.

Microsoft has an array of reasons why it cuts one product and not another. In fact, eliminating a product or service can have a significant impact on users, according to the study.

“Although Microsoft often cancels products in good times, declining revenues and cost containment may accelerate this process, increasing the risk that customers and partners could bet on a product that’s later eliminated,” the report said.

Of course, the process is not necessarily predictable. Rosoff pointed out that one product could be eliminated even though it was profitable, while another survives because it falls in an area the company, or even a key executive, views as strategic, despite continuing losses.

Because of internal competition, or other factors, sometimes products end up with overlapping feature sets.

For instance, overlaps between SharePoint Server — Microsoft’s collaboration platform — and PerformancePoint Server — which was meant to provide business intelligence tools for Office — led to functions of the latter being subsumed into SharePoint, the report said.

Core changes in the marketplace provide another reason for killing off a product. In this case, Rosoff cited Microsoft’s Encarta encyclopedia, which no longer attracted customers after free online encyclopedia sites eliminated the sales model. Microsoft is killing off Encarta as a product this month, and is closing its Encarta Websites as of the end of the year.

Speaking of free, sometimes if Microsoft can’t beat them, it will instead join them. For instance, when it found that its OneCare anti-malware product had “disappointing sales,” the company chose to replace it with a free product it has codenamed “Moro,” due later this year.

Another option, particularly if Microsoft still wants to sell a product but not necessarily do the development going forward, is to outsource a product or service. Take, for example, Microsoft’s Dynamics SL enterprise resource management package. In 2004, Microsoft outsourced the product to Plumbline Software.

If nothing else, Microsoft might also sell off or spin off a product, Rosoff said. Microsoft spun off its highly-touted RoundTable 360-degree video conferencing system in April 2009 to a telepresence vendor named Polycom. The software giant no longer sells the RoundTable, which it debuted in 2007, though Polycom does.

Directions on Microsoft’s report, as well as a chart of the affected products, is available on the research firm’s Website.

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