Ballmer's 'lost generation' note finds resonance

At least one seasoned analyst agrees with Steve Ballmer's admission Microsoft has "lost a generation" of users — but from this number-cruncher's point of view, the situation is worse than Microsoft's CEO concedes.

"Our research is indicating that Microsoft is unable to connect with the new generation of users," wrote Global Equities analyst Trip Chowdhry in a research note to his clients on Wednesday in which he downgraded his expectations for Redmond's stock performance.

Chowdhry's assessment echoes Ballmer's mid-July remarks to attendees of Microsoft's annual Worldwide Partner Conference, when he said that Windows Mobile had missed a "whole generation of users" before promising that Windows Phone 7 would stanch the bleeding.

There's one enormous difference in Chowdhry and Ballmer's analysis, however. Ballmer was talking about Microsoft's mobile strategy; Chowdhry is referring to Microsoft's bread and butter: Windows.

Chowdhry notes that companies are increasingly allowing workers to choose between Macs and Windows PCs — and the percentage of employees opting for Macs is rising.

He also noted that the same trend is happening among college students, with 70 per cent of freshman going Mac — an increase of 10 to 15 per cent from only a year ago. This generational loss, Chowdhry opines, is bad news for Redmond, for when those students move from classroom to office, the odds are high that they'll pick Macs when given the choice.

Such pessimism is having its effect on Microsoft's stock price, which hit a 52-week peak of $31.58 in late April and is currently hovering around $25 — a 20 per cent decline. ®