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Microsoft Corporation (MSFT), Nokia Corporation (ADR) (NOK): Where You Don’t Want to Be: The Microsoft Keiretsu

Technology writers have tweaked the Japanese word kereitsu over the years to mean a collection of small companies following in the wake of a bigger one.

Thus, Apple Inc. (NASDAQ:AAPL) has a kereitsu — companies that make Apple software, add-on products, or that supply it with parts and manufacturing services.

Unlike a Japanese kereitsu, which is based in part on interlocking ownership of stocks and directorships, you can leave an American kereitsu. And when the big fish starts dying, it’s best you do that.

Microsoft: The Big Fish Dying

Microsoft Corporation (NASDAQ:MSFT) has one of the oldest American keiretsu around – only International Business Machines Corp. (NYSE:IBM)‘s (IBM) is bigger – but it’s clear that the company is floundering. The shares are down about 10% over the last year and its Windows 8 is now judged a failure.

Microsoft Corporation (NASDAQ:MSFT)

Now the Gartner Group has confirmed the trend with a report showing global PC sales slid in the fourth quarter, as Windows 8 was shipping.

Microsoft Corporation (NASDAQ:MSFT)’s problems are well-known. It signed a patent non-aggression pact with Apple Inc. (NASDAQ:AAPL) that locked it into a design for its Windows RT touch screen system, which turned out to be second-rate. No amount of advertising could convince people that the big tiles or integration with desktop Windows was worth buying.

The company hopes that a quick roll-out of a product originally called Windows Blue, and now called Windows 8.1, in June will turn things around. And historically Microsoft has had a pattern of delivering badly reviewed and highly rated software in alternate releases since the century started. Windows ME (boo) was followed by XP (yay!) was followed by Vista (boo) was followed by Windows 7 (yay!) and now Windows 8 (boo). So 8.1 should be yay, right?

Not necessarily. Bugs take time to squash, software takes time to improve. Microsoft Corporation (NASDAQ:MSFT) had roughly two years before past Windows releases, and now thinks it will make things all better with something that comes out in eight months? Of course, it couldn’t wait the requisite two years either – too bad there’s no Moore’s Law of Software. Stuff still has to be written by hand.

HP Remains Vulnerable

The Gartner report offers both good and bad news for Hewlett-Packard Company (NYSE:HPQ). The good news is that it remains the leading PC maker. The bad news is it’s the leading PC maker.

No company is as vulnerable to Microsoft’s demise as HP. The company doesn’t just make Windows PCs, but the peripherals that link to them. The need for printers and scanners is also decreasing, as the Windows era fades into history. HP was said to be making a move into the hot new era of 3D printing, but the DesignJet was actually a re-packaged Stratasys machine, and the deal was ended. Since then, nothing.

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