• TechCrunch, Monday, September 15, 2008 11:15 AM

Microsoft still dominates the desktop. Thus, it is still one of the world's most powerful companies, but a close reading of Microsoft's annual report reveals that all is not well in Redmond. Why, because Gen Y consumers have shown a greater willingness to try new technologies and services from companies other than Microsoft. Indeed, the likes of Facebook, Apple and Google have changed the way young people consume technology, says TechCrunch writer Dan Kimerling, "and that is a very dangerous position for a software company to be in, especially one that is not known for being nimble on its feet.

Take, for example, Facebook. For younger consumers, Facebook Mail, Facebook Chat and the site's automatically updating address book have replaced Outlook (Microsoft's email client), as many now use the social network as their primary digital identity. For older Web users, sites like LinkedIn function as a kind of virtual Rolodex.

Meanwhile, the likes of Google Docs and Zoho are starting to steal market share away from Microsoft's Office. Kimerling says the software giant needs to start listening to what the consumer wants and designing products to fit those needs. Gen Y, he says, wants products focused on "mobility, ease of use, speed and simplicity," not buggy, bulky, one-dimensional desktop apps.

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