Mainframes were disrupted by midrange computers, and then midrange computers were disrupted by microcomputers (x86 PCs). This is not to say that mainframes and

Mainframes were disrupted by midrange computers, and then midrange computers were disrupted by microcomputers (x86 PCs). This is not to say that mainframes and midrange computers vanished from the market, but the two technologies have been relegated to comparatively small niches. For instance, IBM now has about a 90% share of the mainframe market, but mainframe sales account for just a fraction of IBM's total revenues and profits. Broadly speaking, IBM sustained and grew its revenues and profits by expanding beyond mainframes; first to PCs, and then to services. The issue for Microsoft is that PCs follow mainframes and midrange computers, and are disrupted by some next generation technology; the next generation technology appears to be a combination of thin devices and cloud services. PCs will persist, but could become a comparatively small niche market over time. As the PC market shrinks in size, the traditional Windows and Office products will yield declining revenues and profits for Microsoft. In order to sustain its revenues and profits over time, Microsoft will need to transition to the next technology (thin devices and cloud services) or to another set of markets (e.g., services). This is difficult, but feasible, as shown by the IBM example.