Microsoft CEO Steve Balmer is unhappy with Chinese software piracy:

Mr. Ballmer’s candid remarks provided a glimpse at the software giant’s struggle with piracy in what will soon be the world’s largest PC market. In China, copies of Microsoft’s core Office and Windows programs are still available on street corners for $2 or $3 each, a fraction of their retail price, despite efforts by the company to curb theft.

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He should be more concerned with open source software, the encroachment on the PC marketplace by tablets, smartphones, and non-windows notebooks. I can get all the functionality I need from Microsoft Office for free from Open Office. It may not be quite as as slick as the latest and greatest from Microsoft, but it is as good as the Microsoft Office products my employer installs on my work PC.

My employer doesn’t like me looking at Facebook at work. No problem. Pull out my personal Droid and I can do FB without being monitored. Of course, I only do this while I’m waiting for my PC to build my application and start it up in design mode, which can take a few minutes. I can also check my personal email from my phone. Why do I need Microsoft Outlook?

My employer uses Lotus Notes. Someone sent out an April Fool’s message suggesting that we’d be switching to Gmail. I wish. Lotus Notes, as configured by my employer, archives my email after six months; Gmail keeps it forever. If I could figure out how to do it, I’d automatically forward all my work email to Gmail. Lotus is a competitor to Microsoft Outlook. Both face deadly competition from free web based Email services.

Apple recently passed Microsoft in market capitalization. In 2000, that would have been unbelievable. But it happened, and it happened because Apple diversified away from the PC business. They still make Macs, but they now use industry standard chips and an open source based operating system. Their real dough is in the iPad, iPhone, iPod and iTunes.

Just like IBM, Microsoft will survive. But it won’t be the industry leader, again, without a complete change in focus and leadership.