Microsoft is in Better Shape Than One Might Think

| Particle Debris

Microsoft has been having an identity crisis. Ever since Apple released the original iPad, Microsoft believed that their vision for business would set a preferred course. And then the company discovered that the whole world had changed. Can Microsoft adapt and survive? It depends on your perspective.

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I haven't rushed to write about Microsoft and Nokia because I don't think one can encapsulate the complexity of this acquisition in a quick editorial other than to stir the pot. And by stir the pot, I mean that writers who don't like Microsoft and want the company to fail are saying that no one can turn this ship around, and Microsoft is doomed to steady decline. There is no room for a third smartphone or ecosystem.

Writers who like Microsoft are saying that this will be a much needed infusion of mobility focus. The idea is that personal electronics have become so capable that Microsoft has to end its old ways of, generally, just creating software and adopt the Alan Kay advice:

People [companies] who are really serious about software should make their own hardware.

The issue isn't whether Microsoft has fallen badly behind or whether they're too big to change. Large companies can change and play catchup if they have the right leadership. What I think matters is whether the new CEO and his troops can conjure up the will to change in the face of what is basically a corporate emergency: all hands on deck.

Recently, a great writer, Elmore Leonard, passed away. In honor of him, Mashable published his 10 rules of writing. Number 10 is: "Try to leave out the part that readers tend to skip."

It made me think of Microsoft. The company needs to just stop shipping products that no one wants to buy. That suggests that its new CEO will have to kill the Surface Tablets, just like Steve Jobs brutally slashed entire product lines when he came back to Apple in 1997.

Few people want to buy a tablet that has a keyboard and runs Windows.

That's not to say that Windows is dead on the PC. There are still millions of business customers who need what Windows offers on a PC. The number is dwindling, but that only matters if Microsoft never builds stepping stones to the future, as Apple did.

When I think about Microsoft now, I see a company that has some advantages. Microsoft...

  • Understands cloud and web services better than Apple.
  • (Finally) Got religion when it comes to OS security.
  • Has done well protecting its intellectual property in patent lawsuits.
  • Has a search service that was built for the right reasons.
  • Understands the needs of business and government. It just needs to drop the aura of being such a doofus company with a doofus CEO in our modern times.
  • Will inherit a great set of communication patents from Nokia.
  • Is planning to replace an ineffective CEO.
  • Now has an influx of Nokia employees who understand mobility -- if only they can be unleashed.

I am not sure that Stephen Elop is the right person to lead Microsoft, but I was strongly swayed towards him after I read his "Burning Platform" memo written in 2011. You should read it. I'll wait ...

If Mr. Elop brings that kind of energy and urgency to Microsoft, things will get better. If he can destroy the institutional attitude that agenda tops awesome products, that's a start. If he can teach the company to compete with itself, that's also a start. Of course, no one can say for sure that he, or any other CEO, can turn the company around. However, the seeds are there. A wisely executed plan to make mobile phones that people really want to own could substantially increase market share.

The best article I read this week about Microsoft was not from a traditional tech news publication. It was from The New Yorker. "Why Microsoft Had to Buy a Phone Company." It's a great read and sets the stage for the future. It suggests what could be under the best of circumstances.

The first thing Steve Jobs did when he returned to Apple in 1997 was to savagely axe every project and every product that wasn't making money. And then he started building a product that people really wanted to own, that they lusted for. The original iMac.

That wouldn't be a bad plan at all.

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Tech News Debris for the Week of September 2

The fact that there are so many strong opinions about cord-cutting means that the TV industry is ripe for disruption. Those who have a platform and a voice rip the TV industry on all fronts, but average Americans know that they have neither the technical savvy or will to cut the cord and still satisfy everyone in the household.

This essay by Rocco Pendola sums up the situation. "Cord Cutting is for Freaks, Not Most Americans." The habits, finances and technical abilities of the average American household is what perpetuates the insanities. For Apple and TV, it's not just product design and content agreements that matter; it's cultivating the right target market segment.

Tim Cook doesn't listen to people who criticize him. He just keeps doing his job, and doing it well. And good writers just have to keep writing these kinds of articles to keep readers informed about him. "Several Reasons To Respect Apple's Tim Cook."

Are you intrigued by the Galaxy Gear smartwatch? Did you know that Apple already built one in 2010? Here you go: "Confused by the Galaxy Gear? Apple released a better, cheaper watch in 2010." After you read this article, you may figure out something important. No one is going to pay $199 for a brand new iPhone 5S, subsidized under contract, and then turn around and pay $300 cash for an iWatch. Unless…here are some interesting thoughts by Jason Schwarz, on "3 Essential Elements for Apple's iWatch Success."

Finally, you've been claiming that 4K TV is years away because there's no content and the TVs are too expensive. Sony is, in fact, aggressively nibbling away at those problems. "Sony Launches 4K Service." Prediction: by Christmas of 2014, a 55-inch 4K TV will sell for $2,500, players will be $399, and there will be thousands of movies available. Broadcast is another matter and will be locked into 1080p for a long time.

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Comments

MacFrogger

John,
Re: Unless…here are some interesting thoughts, also by Rocco Pendola, on “3 Essential Elements for Apple’s iWatch Success.”

IMO, Rocco nailed it - best article I’ve seen on smart watches so far.  What he didn’t address though was connectivity - will this thing need its own data plan? Or will it be tethered to an iPhone or other iDevice by low power Bluetooth? After all, it needs to connect to the interwebs to be functional…the latter seems like the better option. By working only with and through other iOS devices, it would enhance the overall stickiness of the Apple ecosystem.

Some excellent debris you scattered this week!

Nathan Hillery

Provocative as always. One quibble - your attribution for the image should be to Shutterstock, not Shuterstock.

Apple was able to change because it was returning to its roots - being a contrarian, making value where others saw none, being unafraid to leap ahead knowing others would eventually follow, building what they wanted themselves, banking on the likelihood that their needs would often be felt by the public.

Microsoft got successful by playing business hardball better than anyone, then grew that business to dominance, then dominated by default. They are not, and likely will not ever be, dominant in mobile or other future computing trends. Can they overcome the ironic weakness of their past strength? I don’t see it, but I’d be the first to praise them if they can do it.

aardman

Mr. M, I will have to disagree with you on your 4K TV prediction.  I just don’t see 4K to be compellingly better than 1080p on a 55 inch screen.  I mean compelling as in run out and buy a new set right now.  About two centuries after the industrial revolution, we have found out that what people demand of the technologies they use can actually plateau.  Supersonic mass transportation is actually attainable, we decided 550 mph is good enough.  Very high fidelity audio file formats are already here, most of us are content with lossy 256 AAC.  Same goes with digital photography, people prefer the Polaroid look.  (In truth, 4K video is an attractive proposition to me—but in a camcorder.  I shoot concert and play videos at my kids school using anywhere from 2 to 4 cameras depending on how many other parents and camcorders volunteer.  With a 4K camcorder, I can get by with just one camera and through judicious cropping and editing, zoom in on the action as needed and still output a crisp 1080P final cut.)

As to the iWatch, I will sound like a broken record, but the other day I read a short feature about some fashion designer and she was waxing poetic about how she can’t live without her iPhone.  Then I came across another one about some supermodel who expressed similar sentiments.  And if you look around you will notice that Apple has a lot of cachet among the stylesetter set.  You will be hardpressed to find similar talk about a Samsung phone or a Surface.  Certainly, Pendola’s thoughts about the iWatch are uniquely insightful and I think spot on.  But I can’t help but think that Apple would be missing a great opportunity if they fail to bring iWatch (and other Apple wearables) to a place where the Samsung, Google, or MS brands cannot follow them: The first true high style and high tech device.  iWatch can be like Swatch but moved at least two notches upmarket and still do the things that Mr. Pendola wants it to do.  That would be another new market that Apple created out of thin air.

aardman

About two centuries after the industrial revoulution BEGAN . . . I meant to say.

mjtomlin

Can they turn around? Yes, of course. They have to do several things:

1. Corporate wide restructuring to allow better collaboration and get rid of the current employee evaluation system - Horrible for employee moral.

2. Separate mobile and desktop class operating systems - Make the OS appropriate for the form factor and resources available it’s running on.

3. Redesign the mobile OS - The tile interface is a novel (and original) idea, but hasn’t exactly won over users. It needs to be rethought or thrown out completely - and for god’s sake, get it out of the desktop OS.

4.  Stop licensing your mobile OS - Would allow for quicker development if they only had a few hardware models to target. Would also allow them to better optimize it.

5. Get Office onto the iPad ASAP (and leave Android out) - iPad has made significant advances into the enterprise. Microsoft needs to maintain a lock in to one of their most valuable products.

6. Buy market share - make deals with carriers to incentivize sales forces.
 
7. Get a new ad agency - Some of the commercials are cute, but misguided. Stop attacking Apple, it’s a waste of time. They need to go after Samsung and/or Android; this is where potential customers are.

MacFrogger

Lots of thoughtful comments here; hopefully I’m adding a few more:

aardman:  Yes, no doubt the iWatch will be stylish - good point! (Can Jony Ive make anything but?!  And of course the design will be patented, for better and worse!)

mjtomlin: Lots of good suggestions, but I agree, disagree, and would extend #7. Yes, I agree they need a new ad agency. The dancing and spinning non-biz looking stand-ins for biz people clicking Surface tablets trying desperately to look hip/cool was ridiculous for sure.  I disagree - at some level - about attacking Apple.  Though I don’t like it, there is no question that Sammy pulled this off quite well.  Also: don’t forget that within corporate/govt IT depts there are a lot of anti-Apple feelings so playing to this sentiment in creative/humorous ways is NOT a losing strategy, IMO. The Surface ads where Siri has to deal with her “inadequacies” were well-received by my IT guys, who feel that their jobs are wedded to their mastery of MS.  And to extend your #7, I would add:  Besides their ad agency, they need to fire their entire marketing department!  I have never seen such a disaster continue unabated and for how many years??? The bad ad agency is merely a symptom of a much larger problem at MS!

MacFrogger

Hey - I just got a star!  What the heck does that mean?

skipaq

It means your are getting famous around here, MacFrogger.

Lee Dronick

  And if you look around you will notice that Apple has a lot of cachet among the style setter set.  You will be hard pressed to find similar talk about a Samsung phone or a Surface.

The Samsung seems to be popular with the tech people. In a way they do set style because many of them are tech reporters for news websites and other media.

Congratulations MacFrogger!

ibuck

I’m not a fan of Rocco Pendola, as he reminds me of a familiar aphorism: Even a broken clock is right twice a a day. I often find his ideas “interesting” (as in the Chinese curse “May you live in interesting times.”) and certainly don’t want him near my portfolio.

mjtomlin

Regarding the iWatch and the “smart” (cringe) watch market…

Radios (mobile, WiFi) consume a lot of power, until battery technology catches up, a smart watch isn’t going to be useful for anything other than as an accessory for your mobile device that you already carry with you, or of course, as a watch with a few “local” features.

So, the first few generations of these devices will be for people that have a cell phone and still wear a watch. The attraction will the ability to glance at your watch (as you normally would to check the time) and be notified of time-based and/or location based events and information. This will only work and be accepted if a few things can be accomplished;

1. it has to look nice, not nerd nice, but elegant and sharp and possibly come in different styles; sport, casual, formal, corporate. (maybe even using a non-rectangular display) this thing will need to compete with the likes of Swatch, Fossil, Timex, etc…

2. Have a reasonably long battery life, not necessarily month long, but at least a week of “standby” time.

3. Be water resistant and fairly durable.

4. Instantly accessible; the screen turns on when you lift your arm to look at it or the screen remains on (visible) all the time

5. FOCUS FOCUS FOCUS It’s a watch, its main focus should be around time-based functions and features. Make it smart about TIME. (“Sport” model should obviously have biosensors and fitness features as well.)

MacFrogger

skipaq: “It means your are getting famous around here, MacFrogger.”

But but…I prefer infamy or anonymity over fame - any day of the week!  Oh well, I can live with it.  At least I don’t have six stars like Lee - Ha!  smile  (Aside to Lee: I’m still bummed that Apple didn’t call its Maps App “Mapple”...)

mjtomlin: “a smart watch isn’t going to be useful for anything other than as an accessory for your mobile device that you already carry with you, or of course, as a watch with a few “local” features.” 

If your vision of a smart watch is simply a re-invention of the watch (a few local features notwithstanding), then you are correct.  If your vision of a smart watch is something that includes watch functions, “local features”, and is also a reinvention of the wallet with greater security than that exists now (for your credit cards, etc), then you can begin to see the opportunity.

Tethered to the iPhone in your pocket yes by LOW POWER Bluetooth, and protected by the fingerprint sensor on your iPhone 5S.  LPB means long battery life, and you won’t have to go bumping your watch into POS terminals like NFC.  I have six credit cards in my wallet right now, a Starbucks card, several hotel cards - any idea how much I’d like to shed this stuff?  (Yes, I travel a great deal).  IOW, I don’t actually wear a watch currently but I might IF such a device were to replace this baggage from my wallet so I could just carry around some cash in a small clip…

“FOCUS FOCUS FOCUS It’s a watch, its main focus should be around time-based functions and features. Make it smart about TIME.”  I couldn’t disagree more with you on this though. Let’s go back a decade and imagine Apple working very hard to reinvent the cell phone.  An engineer walks in to Steve and says: “FOCUS FOCUS FOCUS It’s a cell phone, its main focus should be around phone-based functions and talking. Make it smart about CALLING.”  ‘nuff said!

mjtomlin

@MacFrogger:

Apple didn’t set out to make a smart phone… They set out to create a mobile computing platform. And they did in fact focus on the touch based experienced. The iPhone was a side benefit and a much needed device - so called smart phones were about to replace all the mobile devices people carried with them, including iPods. Steve jobs knew that, so the first logical device for their new mobile platform was a phone.

I don’t buy using a watch for NFC… The fingerprint sensor is on the phone… You’ll have to pull the phone out of your pocket to use the sensor anyway. The point of the fingerprint sensor is to verify your identity before EACH transaction. What good is the watch going to do? Defeats the whole purpose.

aardman

@dronick “The Samsung seems to be popular with the tech people. In a way they do set style because many of them are tech reporters for news websites and other media.”

A big shortcoming of online discussions is it is not that easy to tell if someone is being earnest or sarcastic.

wab95

John:

Just a brief comment about MS, particularly in light of the Nokia purchase.

You make excellent points about MS’s strengths. Indeed, I would argue that those strengths with enterprise and government provide MS with sufficient insulation against penury to keep the company afloat for quite awhile.

However, I suspect that ‘afloat’, which is akin to ‘surviving’ is not where MS want to be, given their once dominant past. Moreover, I am less sanguine than some about the Nokia purchase providing lift to MS’s sagging mobile fortunes, given not only Stephen Elop’s burning platform memo (which btw your link misaligns to the Elmore Leonard article) but the company’s inability to reverse its own fortunes despite their collaboration with MS on the Lumia. Leaping from the burning platform is to take an exigency-driven risk in which the stake is one’s own life. The act alone does not guarantee survival; it merely buys time, which may be no more than the time it takes to reach the surface of the water should you land poorly. Thus far, I’d say that Nokia by taking that leap with MS on the Lumia are simply treading icy water, at night with no rescue team in site. Now MS have leapt into the frigid water with them. Some hail this as heroic, but is it really? Are not MS leaping from their own burning platform, at least with respect to mobile tech? If so, then is this not less of a rescue mission on either’s part, than it is a desperate act to buy some time, with the likelihood that the last survivor in this duo will use the dead body of the other as a flotation device, should rescue take some time?

I posited on Bryan’s MS piece the radical change that he and others outlined was unlikely, given the substantial momentum of MS’s corporate culture, despite its potential value, unless there is sweeping change across the entire senior leadership by persons not under the sway of that momentum, and who can therefore collectively apply that external force that alone can alter the momentum and trajectory of this behemoth. I maintain that this would be essential for sudden radical change.

On the other hand, MS have, in my view, sufficient reserve and altitude to glide into a distant future even while declining from the heights to which the PC era exploits lofted them. Herein, however, lies the rub. While MS have time to come up with mobile and or other post-PC era solutions that people will actually want, whether or not those boosters arise from their Nokia purchase, the longer they are perceived as a glider rather than a flyer, let alone a rocket, the deeper will become popular perception of them as a glider, and the greater will be erosion of their mindshare in that elite class in the thin air.

The first task of their new CEO will be to help the company figure out who and where they are (take a bearing), what contribution they want to make (their mission), and then a reality check on what it will take to achieve the mission (how deep will be the sacrifice). If they accept that mission, then the CEO’s job will be to relentlessly and single-mindedly pursue that mission with the determination of a Magellan in pursuit of his southern pass. Failing that, MS will glide on below the horizon of the post-PC era for as long as their PC era momentum will carry them.

MacFrogger

@mjtomlin: “Apple didn’t set out to make a smart phone… They set out to create a mobile computing platform….The iPhone was a side benefit…”

Not sure I agree with that, but I don’t know enough to disagree with certainty.  Apple historians claim they actually set out to make the iPad first, but Steve saw the potential for the phone and made its development a higher priority.  It seems to me that Apple must have had plans for their own phone in mind at a relatively early point though, which is why when they did their deal with pre-Google Motorola the newly released ROKR had limited (and carefully prescribed) functionality. 

“I don’t buy using a watch for NFC… The fingerprint sensor is on the phone… You’ll have to pull the phone out of your pocket to use the sensor anyway. The point of the fingerprint sensor is to verify your identity before EACH transaction. What good is the watch going to do?”

Your confusing NFC with low power Bluetooth - they are quite different in terms of power usage and other attributes (John has written about this before, and the reasons why Apple may have chosen NOT to adopt NFC).

Yes, the fingerprint sensor would be on the phone, but this could be set up so that you would not necessarily have to pull your phone out every time to verify each transaction you undertake with the iWatch. It could be set up so that the phone and the watch are tightly linked through secure encrypted communication that is disrupted (and requires a new fingerprint scan) only when the distance between the two devices exceeds a certain threshold - say 10-15 feet.  That way, if one or the other is lost or stolen, the watch is rendered inoperable UNLESS there’s a new fingerprint scan on the phone with the watch in close proximity.  But if you scan your fingerprint on the phone, then enable the watch’s functionalities (and it stays within the prescribed radius), the Phone could remain in your pocket securely communicating with the watch as needed - just as your phone communicates with AT&T or Verizon even when its “off”.  The phone in turn is linked securely to the internet via wifi or your data plan to complete the transaction initiated on the watch. 

While certain basic functions (e.g. time and alarm) would always work on the watch, the secure functions (payments and other things) would only be enabled when your phone is on your person (e.g. the 10-15 foot radius) and after a fingerprint scan. This means the watch would only need low power BT, and thus would give the watch a long time between charges. The whole point here is that in such a system, you would not have to pull your phone - or your wallet - out of your pocket.  And I would actually buy such a device, even though I don’t currently wear a watch. Because I’d love to jettison a significant chunk of my wallet, esp for something that is even more secure than my existing slew of plastic slabs…

Lee Dronick

I was being serious. Some neckbeard from a local tech business is interviewed on the local news and is giving his opinion on smartphones. “I recommend the Nebulous ZB183 phoneover the iPhone because it has the U812 chip.” People go buy the ZB183 becauses someone who likes complicated stuff recommended it.

mjtomlin

@MacFrogger:

It is fact that Apple set out to make a mobile computing platform. Steve Jobs said that their original intention was to make a tablet computer, when he saw the interface, he changed his mind and decided to make a phone first. It was a brilliant move on their part - just look where PMP sales are compared to smart phone sales. He knew the iPod biz was going to get swallowed up.

As far as purchases made through a watch… without a fingerprint sensor on the watch itself, it will never happen. Way, way too many security concerns. What if someone gets ahold of your watch and phone - you’re f^cked. No ID, no card and no signature necessary to make purchases. The whole point of the fingerprint sensor is to ensure that EVERY purchase made using your account is made by YOU. That means you have to verify each and every time. Currently your ID is supposed to tie you to your account, but that’s disappearing more and more; rarely does anyone compare signatures or look at IDs.

Furthermore, I am not confusing NFC with BLE, I know the differences between them. However, you almost have to include NFC. There’s not ONE terminal out there that supports BLE. Hell, there aren’t many devices that do! In the real world NFC is everywhere. True, it’s not being used much, but it’s already out there - it is the foundation of wireless transactions. Apple isn’t going to be able to change that and there’s nothing wrong with that. Apple can continue to use BLE in their own devices, but if they want to enable their customers to interact with everything else they are going to have to include it.

Look, I’m not taking a myopic view on the “smart” watch because I think it’s doomed, I’m trying to be practical as to what the first few generations of it CAN be. That’s a big difference. Too many people want ALL functionality NOW. That doesn’t work and it’s not the way Apple works. This wearable technology will be progressive. Becoming more functional with each new generation. It won’t be any different on how they approached the set-top box market.

I honestly believe to make this category a success the very first thing that needs to happen is make the damned things look good to the masses and not just the tech nerds. Every so called “smart” watch looks like a freaken 6th generation iPod nano with a wrist strap. It’s ridiculous and embarrassing. NO ONE is going to wear one of those things in place of their Swatch or Fossil or Timex or whatever. They are not elegant, classy, sharp, etc… All the things most people look for when buying an accessory to WEAR. Current “smart” watches appeal to the same type of people that wore calculator watches.

You start with something that looks like a watch, but has additional features by being able to connect to your smartphone. And with each new version add a feature or two until eventually you get to something that makes SENSE.

Here’s where I think it’ll end up…

Dual screens - one low power, always on that shows the watch face and alerts (E-ink), when using the watch that display disappears and the “interactive” screen shows up (LCD). It will have Apple’s fingerprint sensor built into the display for making purchases. it will be able to connect to the internet on it’s own for updates and such.

Apple has patents for both multi-layered displays and embedding Authentec’s fingerprint tech into displays.

Dennis Rice

“Few people want to buy a tablet that has a keyboard and runs Windows.”?

I think you are making a bad assumption.  I do (very badly) want a Windows tablet with a detachable keyboard.  I believe lots of people do, and if Microsoft can ever deliver it, it will explode in the enterprise. 

What is missing—is a Windows Tablet with a detachable keyboard that runs as smoothly as my iPad.  I own a Windows tablet now, and I own an iPad.  iPad is waaay smoother, and I really wish my Win tablet was that smooth.  It has made progress, but is not there yet.

Just do not assume because the product is sub-par today, that no one wants it.  They want it all right—just not a sub-par version of it.

Microsoft has a lot of work to do.

John Dingler, artist

There is a growth of articles giving helpful advice to Microsoft. I am troubled that bad MS will take the advice to heart and use it to pummel good Apple and other corporations that move humanity forward.

wab95

I am troubled that bad MS will take the advice to heart and use it to pummel good Apple and other corporations that move humanity forward.

John, I think there are greater worries in the world today, and that this one should assume a low priority.

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