Microsoft's worst nightmare coming true

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Almost one year ago today, we laid out the nightmare scenario for Microsoft (MSFT) that could lead to its business collapsing. After laying it all out, we concluded, "Fortunately for Microsoft, none of this is going to happen."

We were wrong.

A lot changed in the last year. Microsoft's nightmare scenario is actually starting to take hold. We're revisiting our slideshow from last year to see how things have played out.

Each number that follows has one piece of the nightmare scenario for Microsoft and an explanation of where Microsoft stands in comparison to that hypothetical situation.

1. The iPad eats the consumer PC market.

2. Employees gradually switch away from using Windows PCs for work.

3. Windows 8 fails to stop the iPad.

4. Loyal developers start to leave the Microsoft platform.

5. 5. Windows Phone gets no traction despite the Nokia deal and RIM's collapse.

6. Office loses relevance.

7. Microsoft's other business applications start to erode.

8. The platform business collapses.

9. The Xbox was never going to make up the slack, and Microsoft can no longer afford to keep investing in it.

10. Microsoft suffers a huge quarterly loss. Ballmer retires to play golf.


In the long term ...

Is this just a bad dream?

Last year, we concluded by saying, "Fortunately for Microsoft, none of this is going to happen. Windows 8 will reassert the dominance of the Windows PC. Office and other business products will remain corporate necessities, and developers will never be able to ignore Microsoft. Windows Phone will become a viable third mobile platform, the Xbox will continue to dominate the living room, and new products will surprise the pundits who thought Microsoft couldn't innovate. Even Bing will finally make a profit someday."

This year, it's a lot harder to say much of that. Windows 8 doesn't seem to be reasserting the dominance of the PC. Windows Phone is not a viable third platform. Bing is still burning money. The Microsoft nightmare scenario is actually becoming a reality.

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