Venkatesh made a comment to a post on my InfoWorld blog which has been troubling me all weekend. He asserts that Microsoft’s dominance on the desktop has inhibited its ability to dominate the online world. I agree.

Microsoft has been struggling to live up to its means in the online world, as Ballmer himself has noted. What he didn’t address is why. He seems to believe that it’s just a matter of time and innovation.

What he may be missing is that by holding so tenaciously to the desktop, the company is ripe to be disrupted, not to do the disrupting. This is Clayton Christensen’s classic “innovator’s dilemma”.

I have a tremendous amount of respect for Microsoft, and believe the desktop as we know it (mostly “fat” client) will be around for awhile. But I also worry that Microsoft may be giving up its future to ensure the profitability of its past. It is starting to figure out open source - that is good. But to truly compete with Google, it needs to abandon its fetish for the desktop.

Or maybe not? After all, people like me predicted the end of bricks-and-mortar retailing during the height of the bubble. As it turned out, the Internet only partially supplanted traditional bricks-and-mortar retail. The best strategies may well combine the two.

What do you think?