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Microsoft TechNet Takedown: Another Sign MSFT Is Doomed

Microsoft (MSFT) investors have had plenty to be upset about lately, what with a double-digit decline on poor earnings and a massive $900 million write-down related to Surface.

But for those who think the narrative of this tech giant is as simple as PC vs. mobile, take a look at the blogosphere lately and read about the Microsoft TechNet tiff that is causing an uproar among once-loyal IT professionals.

Microsoft has been on a mission of consolidation and cost-cutting lately, coupled with a general plan to push things to the cloud with a subscription-based model that demands annual fees instead of one-stop licensing.

There’s no surprise why: Mobile is where the growth is for consumers, with Apple (AAPL) and Samsung (SSNLF) leading the charge and Microsoft falling behind along with its PC- and laptop-focused friends Dell (DELL) and Hewlett-Packard (HPQ). The only way to keep the revenue flowing is to focus on businesses that will fork over annual fees, and the only way to keep earnings strong is to slash costs wherever possible.

Take Microsoft ditching Hotmail and Live Mail and creating one new brand,, as a case study.

A similar mission has crept into the enterprise space, too, with the latest victim being TechNet, a kind of forum for developers as well as a licensing platform for various Microsoft products.

Here’s where it gets interesting.

TechNet was a great deal for small businesses, with an annual fee that allowed you to download most Microsoft desktop or server software for a few hundred dollars to “evaluate” it — with five licenses per product.

Thanks to cost cutting and consolidation, TechNet is about to disappear — and many think Microsoft is trying to crack down on piracy with its move. But the developer community is up in arms because even though a few bad actors might be pirating software keys, the death of Microsoft TechNet is going to make life much harder for the larger number of developers and IT professionals who want or need MSFT software to be flexible and responsive to their needs.

A senior software developer named Cody recently emailed me about Microsoft’s move to close Microsoft TechNet, “outraging IT professionals.” He goes on to say the following:

[Microsoft] alienated the very individuals driving profits for those services… TechNet is a critical program for evaluating Microsoft products. It permits testing of those products that is often prolonged, overlapping, and intermittent. TechNet is also a valuable training resource required to achieve expertise far beyond normal IT certifications. Without TechNet it is difficult for professionals to deliver sound advice or develop Microsoft based solutions.

He goes on to say that Microsoft’s strategy is ill-advised, prone with alternatives with questionable security and steep fees.

And for the record, Cody is not alone. There are 7,000 signatures right now on a petition to save Microsoft TechNet.

Microsoft stock has long relied on the support of businesses instead of consumers for its software, be it pro Windows licenses for the office or its iconic Excel spreadsheets or even Microsoft server utilities. The argument has always been that cutesy gadget companies like Apple are for fun, but MSFT is all about work.

And increasingly Microsoft’s future is driven by a connection to the workplace. Perhaps its best hope in mobile being its Windows Phone OS rising as former enterprise darling BlackBerry (BBRY) falls to pieces after the BB10 launch that was so poorly received.

When you piss off hard-working Microsoft developers just to squeeze a few more thousand bucks out of corporate customers via licensing fees, it’s no small thing.

Microsoft, it’s Office software and Windows remain entrenched, so they certainly are not going anywhere. And the fact that folks are petitioning MSFT to save TechNet proves that people want to work with the company instead of shopping for alternatives.

Besides, some kind of cloud-based Google (GOOG) Docs option for mail or office software clearly is not a replacement for a robust suite of Windows office software, and won’t meet the needs of most large businesses anyway.

But the Microsoft TechNet closure says a lot about Microsoft’s business model: Go after more licensing fees, cut costs where you can and hunker down for a post-PC age by squeezing as much out of the current lineup of products as you can.

Because help from new products like Surface might not be on the way.

That will work for a while. But after the Surface flop and such negativity around Microsoft shares, you have to wonder who in the world would buy this stock in the current environment.

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Jeff Reeves is the editor of and the author of “The Frugal Investor’s Guide to Finding Great Stocks.” Write him at or follow him on Twitter via @JeffReevesIP. As of this writing, he did not own a position in any of the stocks named here.

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