Last week, former Microsoft VP Dick Brass wrote a very thought-provoking op-ed in the New York Times entitled Microsoft's Creative Destruction which sparked some interesting commentary from media, industry insiders and observers, and so I thought I'd toss my two cents into the mix as well.

Where should I begin? Since the dotcom boom, people have been predicting Microsoft's doom in almost every market that it's in, from browsers to search engines, smartphones to music players. Around 2002 or 2003, when I was an analyst at Summit Strategies, one of our annual predictions was something along the lines of "Microsoft—Still Relevant, But No Longer Dominant".

Okay, we were probably a little ahead of our time. But I think that the times have now caught up with this prediction, and it sums up Microsoft's market position fairly well today. As the Brass article states, Microsoft's biggest coup was to make desktop computing and personal productivity software ubiquitous and affordable. But in recent years, the company has not been an innovator. Like so many other companies in our industry, Microsoft has found that its original, game-changing innovation can be a tough act to follow.

Seibel Systems (which invented CRM), Digital Equipment (which revolutionized the industry with mini-computers) and Wang Laboratories (which invented word processing) leap to mind. In each case, the paradigm shifted, but they were exceedingly reluctant and slow to follow. Seibel didn't believe customers would ever buy CRM in a software-as-a-service (SaaS) model, but eventually launched a SaaS offering after watching salesforce.com eat its lunch. Digital and Wang both resisted PCs—in the eyes of their CEOs, no one would want a PC when they could have a dumb terminal hooked up to a mini-computer, or a computer that just did word processing.

While I don't think Microsoft is on a path to extinction, it does appear to be suffering from a similar mindset that led to these dinosaurs' eventual irrelevance and/or demise. Over the years, I've observed a pattern that when other companies built better mousetraps, Microsoft often dismisses their relevance and importance until the market demands that it pay attention. As a result, it has become more of an imitator than an innovator, with companies like Google, Apple and Amazon beating it to market to create the new categories that can really spike growth.

So far, Microsofts dominance in the operating system and desktop productivity markets has funded its catch up game in new areas, and it continues to hold a huge market share advantage in these spaces. However, as profitable as these areas still are for Microsoft, competitors are whittling away, even in these strongholds. Not only are Linux, open source and Apple making headway, but Google is intent on making the traditional desktop operating system irrelevant for the average user.

I agree with Dick Brass—Microsoft has a lot of creative, talented people but has lost much of its original, innovative spark. Is this due to internal politics and bickering, as Brass contends? It's probably best left to Microsoft insiders to determine the exact cause. But from the outside in, it looks to me like Microsoft needs some new leadership that will change the current climate and re-orient the business so that Microsoft can regain its creative edge and start shaping the future with its own innovations.