It has near-monopoly status and nimble, disruptive competitors. We’ve seen this movie before.

By Jay R. Galbraith, president and founder, Galbraith Management Consultants

Galbraith questions Microsoft's resolve to change. Image: Galbraith Management

The more I learn about the current situation in software, the more Microsoft’s position seems to mirror General Motors’ position in the auto industry a few decades ago. Like Microsoft (MSFT) today, GM was an icon in its industry, held a quasi-monopoly, produced eye-popping profits and was often distracted by antitrust lawsuits. When a company experiences this kind of environment over a couple of decades, it eventually loses its competitiveness. Of course, Microsoft would vigorously deny any such comparison. The top executives in Redmond, Wash., claim to be on top of the trends in the industry. They are confident they can develop all the software they will need to be competitive.

My concern is not with the leadership of Microsoft; I am sure Ray Ozzie, the chief technical officer, will stay on the cutting edge of the technology. But its 15,000 to 20,000 middle managers have never been through a downturn (assuming they’ve worked only at Microsoft). And to me, you are not a real company until you have been through a downturn. Growth and high margins are very good at covering up a company’s bad habits and unresolved issues. When a downturn hits, all of the flaws come to the surface and the company purges itself of its bad practices. A  3% decline in sales in 2008 – Microsoft’s first ever – during the worst recession in decades will not wake up Microsoft. The bad habits will persist. More

Touchscreen phones are on fire, comScore reports, and Apple is leading the pack. For now.

Three months ending Aug. 2009. Source: comScore MobiLens

There's a thundering herd of imitators behind it, but Apple's (AAPL) iPhone still dominates that fastest-growing segment of the U.S. smartphone market, according to a comScore report issued Tuesday.

Touchscreen mobile phone adoption in the U.S. grew at a breakneck 159% rate last year, comScore reports, easily outpacing the 63% growth of the broader smartphone market.

By last August, nearly 34 million Americans were carrying smartphones, 23.8 million of them touchscreen devices. And of those touchscreen phones, 32.9% were iPhones.

“The iPhone clearly set the trend in the industry for touchscreen devices, so it’s no surprise that it has the largest share of the market,” said comScore VP Mark Donovan. “But as other players have entered the touchscreen market with compelling devices, competition is clearly heating up.”

Donovan mentioned Google's (GOOG) Android platform in particular, although the closest Android contender in August was the T-Mobile (DT) G1 running a distant seventh after two proprietary LG phones, the BlackBerry (RIMM) Storm, the Palm (PALM) Pre and the Samsung Instinct.

Below the fold, comScore's spreadsheets, including one that shows preference by age group. (The smartphone sweet spot seems to be ages 24 to 34.)

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Rajeev Goel, CEO of upstart PubMatic, thinks his company can help print publishers recapture advertising revenue from their glory days.

Print media is dead! Yawn.

Goel says he can boost media companies' online ad revenue. Photo: PubMatic

You’d think media analysts and bloggers would find another catchphrase. This executioner’s call is as tired as Jon and Kate’s tabloid tussles.

So when Rajeev Goel, co-founder and CEO of PubMatic, told me that not only would print publications survive, but he knew how they could, he definitely got my attention.

PubMatic offers what it calls "real-time ad price prediction technology." In other words it lets publishers of premium content (read: traditional magazine and newspaper companies) decide in real time which ad networks on which to sell unused advertising inventory.

Others, including Google's (GOOG) DoubleClick and the Rubicon Project, make similar promises. But Goel touts that PubMatic is the only advertising optimization company completely devoted to publishers, pushing his close competitors into a separate category. Not to mention he’s doing this all in real-time.

Still not convinced? I wasn’t either. But Goel says his two-year-old company has already been able to increase publishers’ advertising revenue from 30% to 70%. (In one case, PubMatic was able to catapult revenue by 300%.) He only charges a 15% commission fee.

We sat down with Goel to see how he thinks PubMatic can help the ailing print industry.

Fortune: What trends and mistakes do you think publishers are making in choosing ad networks? More

And a few things we don't love about Motorola's forthcoming Google-powered phone.

Droid does (and doesn't) wow our writer.

The Droid is a fierce phone. Motorola's newest smartphone has a number of features that match and even best its biggest competitor, Apple's (AAPL) iPhone. It has a fast processor. It’s got a large display with almost double the resolution of the iPhone as well as a slide-out keyboard. And it’s got a five megapixel camera with flash and zoom and a video camera that renders your Flip camera unnecessary. Add to that a new sharp-edged form factor straight out of Star Trek. And the marketers have given their campaign a bunch of attitude with their “iDon’t” commercial that pits the Droid directly against the iPhone.

But is any of that going to be enough to woo iPhone fans to Motorola's new device? As I wrote in a September feature, the company has a lot riding on it. Thanks to a massive marketing push by Verizon Wireless (VZ), plenty of excitement is building for the Droid’s November 6 launch. But just a year ago there was a lot of similar hype around RIM's Storm, which was also going to take on the iPhone. Though initial sales were pretty good, the smartphone received lukewarm reviews.

Motorola's new offering will have to prove itself once the hype dies down. And with so many Android-powered devices coming to market in the next few months, it may be hard for the Droid, which Verizon Wireless will sell for $199 after an $100 rebate with a two-year contract, to stand out.

Fortune received a Droid to test this morning. I powered it up, and a monotone robotic voice uttered “Droid.” Here are five things I think Motorola (MOT) has done right with the Droid…and a couple features I miss.
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New software transforms your phone into a GPS device – and a pretty good one, too

Navigon's MobileNavigator app for the iPhone has features some standalone units lack. Photo: Navigon.

As my wife will tell you, I have a comically bad sense of direction. I once got lost driving home from the mall.

This makes me a prime candidate for a GPS device. I’ve used a few for brief stints, mostly on long road trips, but never got into the habit of using one for everyday errands. There are a couple of reasons for that. For one, it’s a hassle to dig the thing out of the glove compartment. For another, entering an address on most of these things is a crazy-making experience.

My perspective changed recently, though, when I bought a new GPS unit for $70. Well, that’s not exactly what happened. I actually downloaded a GPS-based iPhone (AAPL) app for $70.

Yes, 70. Seven-zero. I’ll be the first to admit that it sounds crazy to pay that much for software that runs on a phone. The overwhelming majority of phone apps out there cost between 99 cents and $10. More

Apple has 93,000 to Android's 11,300. But how many applications do you really need?

Photos: Motorola, Apple

In the flurry of quickie reviews that appeared overnight after Wednesday's unveiling of Motorola's (MOT) Droid — Google (GOOG) and Verizon's (VZ) latest answer to Apple's (AAPL) iPhone — little has been said about how the two platforms stack up in terms of apps.

At first glance, it seems an unfair comparison. Apple has spent a small fortune promoting those famous 85,000 iPhone applications — a number than has since grown to roughly 93,000 and is on track to hit 100,000 in a matter of weeks.

Source: AndroidLib.com

But it's not as if there are no apps for the Droid. As of Thursday morning there were 11,284, according AndroidLib.com's unofficial count of the offerings in Google's Android Market. Moreover, that number too is growing by the thousands. Android developers added 2,333 new apps in September and another 2,431 so far in October.

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The largest smartphone maker you've never heard of wants to capture the hearts – and dollars – of the U.S. consumer.

Motorola's (MOT) Droid phone is getting a ton of buzz, and that’s by design. Verizon Wireless (VZ) chief Marketing Officer John Stratton has said the marketing campaign behind its iPhone competitor will be the largest in its history.

But the Google (GOOG)-powered device isn't the only smartphone the company is likely to begin selling at the start of November. Though no one has officially confirmed, the carrier is expected to announce a second device that will also run on Google's  Android operating system at half the price: the HTC Droid Eris.

Haven’t heard of HTC? You aren't alone. More

Online jukebox Lala hooks up with Facebook and Google. Together, can they mount a serious challenge to Apple?

Lala's Nguyen aims to challenge Apple's iTunes. Photo: Lala

Apple rules music retail for now: iTunes passed Wal-Mart (WMT) last year to become the top-grossing music store in the world. But that doesn’t mean things will stay that way.

The latest challenge to iTunes comes from Bill Nguyen, the serial entrepreneur who founded Lala.com.

Palo Alto-based Lala is an online jukebox with 8 million songs; you can buy the rights to stream a radio-quality version of any song for 10 cents or download a higher-quality version for 99 cents. He says he’s averaging about $67 per year from paying customers.

By itself, Lala poses no threat to the iTunes juggernaut. But now it’s teaming up with Google (GOOG) and Facebook, arguably the two hottest properties online. Late today Google is expected to announce a partnership with Lala that should drive massive amounts of new traffic to the service.

And just last week, Lala announced that it will team up with Facebook and its 300 million users to push a new form of music distribution: song gifting. Soon, Facebook’s legions of social networkers will be able to do more than chat, update and poke — they’ll be able to buy each other songs, right within Facebook’s payment system.

We caught up with Nguyen soon after the Facebook announcement to ask about his vision for digital music, and why he dares to take on iTunes and Apple (AAPL).

Fortune: What’s the elevator pitch on Lala. What business are you in? More