What Ever Happened to Microsoft?

| Analysis

In the spring of 2012, there’s a lot of talk about Apple, Google, smartphones, Facebook and the iPad. Yet, quietly, Microsoft plods along with MS Office and Windows 8 in a Post-PC era. What’s Microsoft really up to these days? Where are they going?

I’ve been curious lately about Microsoft. Here at TMO, the focus is Apple or things that impact Apple. Of course, as Apple has grown and its product line has expanded, it has many more new competitors, and so we talk about them too. What about Microsoft as an Apple competitor? Along the way, as we inch into the Post-PC era, Microsoft seems to have dropped off our radar.

Windows 8

Patience is a Business Virtue?

From what I’ve been reading, Microsoft’s new strategy is patience. The company realizes that it has a very small, single digit share of the smartphone market. It was completely blindsided by the iPad. Well, except for the Courier project, which looked great, but was killed because it would undermine Windows. 

Microsoft’s new strategy is that they have the entire future ahead of them, time to rethink everything, calmly plan for the long term, and hope that a new strategy of Windows 8 across multiple platforms will bring a sense of coherence. One article added, “The secret sauce, which features a dash of Bing and SkyDrive, is still simmering.”

The notion by the Windows camp is that Microsoft has one chance to get it right, and the only hope, Obi Wan, is to plan for an ecosystem anchored by Windows 8 and a common user experience.

Mix and Match

That common experience is what intrigues me. It’s Microsoft’s new vision. Basically, the Microsoft experts are saying that the company is tying its future to the idea that no matter what platform you’re on, Xbox, desktop, tablet or phone, you’ll see a very similar UI. No only does that reduce costs, but it reduces the customer learning curve and reduces the severity of the Post-PC era. Clever.

Even Apple is trying to achieve that to some extent. One example is Lion’s Launchpad, an app that more or less mimics the iPad home page. But Apple’s heart doesn’t seem to be in it. Nor ours.

The problem, as I see it, is that different sized devices with different hardware capabilities and different work flows demand concessions to the UI. A tablet or phone needs a small array of app icons so you can just touch one to launch it. We don’t touch our Lion displays, so launching can take varied forms. It gets much more complicated from there.

Also, the limited power of battery powered devices dictates that you don’t have the processor speed to enable the fabulous graphics available on the desktop. The OS engineer is faced with cramming a full-featured OS into a tablet or dumbing down the desktop to match.

The Big Factors Loom

For Microsoft, it’s not just a matter of technology. It’s also a matter of execution and urgency. With 200,000 iPad native apps and a total of 600,000 that can run in the iPhone mode, plus all the hundreds of thousands of Android apps, Microsoft is fooling itself if it thinks that droves of exhausted developers now have the bandwidth to jump on a third Windows 8 tablet bandwagon. That’s another reason, however, why Windows 8 has to be similar across devices — ease of entry into the Microsoft ecosystem.

Microsoft also has to execute in a crisper, more determined fashion than ever before. Over the years, we’ve seen how Steve Ballmer hasn’t been able to corral and unite a disparate collection of ruggedly independent, turf protecting executives. That infighting was, apparently, what did Courier in. Meanwhile, at Apple, there was an ultra-strong, dictatorial visionary who brought all his executives onto the same page. In that regard, patience isn’t a virtue for Microsoft executives who get too much time to ponder their own fate instead of the company’s.

We haven’t heard a lot from Microsoft lately. Their historical hutzpah has been tempered by the ominous scope of the future task at hand. All of us will be watching with great interest to see how the company reinvents itself and whether this strategy of patience is wisdom born of desperation or corporate delusion.

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27 Comments Leave Your Own

webjprgm

Suppose you were just appointed CEO of MS by the board of directors with full power to do whatever you wanted to revitalize MS.  What would you do?

Fire all the top execs to get rid of the turf war culture?

Revive the Courier project?

Keep doing what MS has always been doing and sit happily and lazily in your mansion with your piles of cash while the company slowly deteriorates over time?

Sell it’s assets and give the money back to the shareholders? (Like people have joked about other companies they considered failed/failing.)

Make a Google Glass competitor?

Make the MS Surface technology actually affordable and push that direction?  Run Win 8 on it?


That’s a question I’ve posed to myself a few times.  I don’t think I have enough knowledge about how MS works internally to know what to do, nor do I have any CEO skills.  But it’s still fun to think of sometimes.

MacTad

I really don’t want to get nitpicky, because the article itself is interesting, though I might edit it differently, but the word you spell “huzpah” OS actually spelled “chutzpah.” The “ch” sounds like you’re about to cough up a large ball of phlegm.

John Martellaro

MacTad: It takes a lot of chutzpah to challenge the OS X dictionary’s additional offering of hutzpah.

akcarver

MacTad: It takes a lot of chutzpah to challenge the OS X dictionary?s additional offering of hutzpah.

Of course, if MacObserver had hired me as a proofreader, that mistake would never have seen the light of day. smile

palenoue

Considering the Kin disaster, the Zune fiasco and the Courier debacle, among many, many other failures, I don’t think we can expect anything (except joke fodder) from Microsoft until 90% of their management/execs are fired and replaced by competent people who don’t have MBA’s.

Tereora

Yes MS might be late to the party but guess what - when they get there the hardware is going to be up to do the heavy lifting windows requires - thanks to all the work done to date by iOS and Android!

But the compelling feature for me is “multiple user login” where your profile is in the cloud. Get that right MS and you will gain huge traction. Coupled with skydrive and it could be great. Unanswered question; will ‘your’ metro apps sync to any device you log in to? 

Apple has never really delivered on this one in MacOS let alone iOS. (While they are at it - how about fixing iTunes, iPhoto etc so a database can be shared between different users on the one hardware?). Of course you sell more devices if they work for one person only - but I know of many situations this would be an compelling sales advantage.

d'monder

I don?t think I have enough knowledge about how MS works internally to know what to do, nor do I have any CEO skills.

Neither does Ballmer.  And I don’t see how anyone could do any worse. smile

Likkie

John Martellaro said:

MacTad: It takes a lot of chutzpah to challenge the OS X dictionary?s additional offering of hutzpah.

Of course, if MacObserver had hired me as a proofreader, that mistake would never have seen the light of day.

No mention if “coral” instead of “corral” ?  You failed to interview smile

ipaqrat

It’s debatable that Microsoft feels any genuine compulsion to advance in the areas. They may lack the ability altogether. They instinctively make or buy/bundle, software for people like themselves - diligent, studious, formulaic types. A few times over the years, they came up with a few points of light, but mostly they can’t seem to unclench and dive into the risky cool kids’ pool. Shareholders would probably sue them if they took a serious risk. Whereas Apple shareholders would sue if Apple played it safe.

nealg

John,

Very interesting piece.

The strategy of patience for MSFT has had mixed results. It didn’t work for Zune because they were up against Apple who kept on innovating. It did eventually work for XBox but that may have had more to do with their competition.

For the desktop, too radical a change may be too much for the MSFT faithful and they may jump ship. Or not. Too many variables to really be able to say at this point in time. And then the big question is how will enterprise like the new Windows? If they start losing more of their enterprise base, then the boat may take on too much water before they get the things right. Developers for the new platform I don’t think will be a problem. MSFT should be able to get enough to come on board with the lure of their money, which may take away from Android if developers don’t seem to be making much money there.

My overall bias/guess/bet is that MSFT will not get it totally right but will get it right enough for them to stay afloat but I think not as successful as they have been. In that regard, I took a small Jan 30 put position in MSFT to keep things interesting and keep me watching. And I think all this bodes well for Apple share over the next 1-2 years.

Neal

ppgreat

Microsoft still relies on its desktop monopoly. And I don’t think simplistic Fisher-Price tiles meant for mobile devices is going to be able to traverse the breadth of its product offerings. You’re always going to have to compromise on an all-in-one solution.

ibuck

Palenoue:  until 90% of their management/execs are fired and replaced by competent people who don?t have MBA?s.

I also tend to attribute serious management gaffes to folks with MBA’s, maybe wrongly. But there’s a lingering suspicion that the MBA crowd screwed up our banks and management and many other industries by forcing too many ill-considered ratios and formulas into business analysis, and too many other cold, objective techniques into employee performance evaluations. When you can coldly terminate someone with 30 or more years of good service a few months before their pension kicks in, it’s not too much of a leap to do other heartless things, like the foreclosure tactics of banks, and derivative gambles that wrecked our economy.

BTW, I haven’t lost my job, house or portfolio due to these hijinks, although I saw and felt the pain others endured. And not being required to tell homeowners who owns their loan is just plain ethically and morally wrong. Is it just a coincidence that MBAs appeared en masse just prior to these inhumane practices?

akcarver

akcarver said:

John Martellaro said:

akcarver said:

MacTad: It takes a lot of chutzpah to challenge the OS X dictionary?s additional offering of hutzpah.

akcarver said:

Of course, if MacObserver had hired me as a proofreader, that mistake would never have seen the light of day.

No mention if ?coral? instead of ?corral? ?? You failed to interview

Corral is correct in the column.

aardman

The correct strategy is not Windows everywhere.  It’s Office everywhere.  On Windows, on Mac, on Linux, on iOS, on Android, even on Blackberry.

MS should also break itself apart into an OS company and an Apps company.  Each will be leaner and more competitive and corporate strategy will be “How do we make a better product than the competitor?” rather than “How do we preserve the Windows and Office monopolies?”.

Winski

Two words….... Steve Bomber.

END…....

MacFrogger

John said:

Microsoft?s new strategy is that they have the entire future ahead of them, time to rethink everything, calmly plan for the long term, and hope that a new strategy of Windows 8 across multiple platforms will bring sense of coherence.

I think it may be simpler than that. I think MS’ strategy might be envisioned in some way as the opposite of Apple’s. That is, AAPL has historically focused on the consumer market while the Enterprise was written off (though thankfully that appears to be changing). It’s certainly hard to argue that AAPL’s enormous success in the consumer space has driven whatever recent (admittedly small) gains it has made in the Enterprise, as even AAPL-hostile corporate IT people must accommodate their iPad/iPhone-loving VPs.

So my theory is that MS will instead focus sharply on the Enterprise, and hope that success there will allow them - over time - to compete with AAPL in the consumer space. How will they do this? They will take advantage of their existing strength in the Enterprise, and use “fear marketing” to try and persuade IT leaders to hold off on the widespread adoption of iOS and Android devices. (This will be much more easily accomplished with Android, due to fragmentation and malware issues.) Their ally in this will be the legions of MS-trained and certified IT pros, many of whom are as anti-AAPL as readers of this blog are anti-MS.

Look for MS and its hardware partners to introduce solid tablets - not iPad quality but good enough - that run the full MS Office suite that will sell at very low Kindle-like price points. Yes, price-conscious companies will buy them en masse and provide them “free” to employees, who will of course be allowed to take them home and will not buy an iPad because they have a “good-enough” MS tablet for free.

For example: My employer provides BBs for anyone that wants one and even pays the monthly bill. Twenty or so employees take advantage of this “deal”; about 5-6 of us have iPhones that we bought on our own dime and pay the monthly bill ourselves. (Interesting aside: the only Droid purchaser dumped it after a year and bought an iPhone.) Yet I’d say about half of them hate their BBs and keep them only because they are free!

See where this is going? I think MS will try and leverage its dominance in the Enterprise in every way possible to ultimately make a more serious move into the consumer space, and to the extent they can afford to be “patient” (John’s original premise) its because they can. As they will be the only alternative to AAPL in the Enterprise, because frankly Android has too many problems that will preclude its widespread adoption.

John Martellaro

MacFrogger: as Apple’s iPad competitors have found it, it might be difficult to offer a business class tablet that is capable but costs less than the iPad thanks to Apple’s buying power.

MacTad

@John Eh, they offered the alternative for the goyim who wouldn’t get the business about the “ch” sound. I just happened to go to school in a system that was, at that time, something near 20% Reform or Conservative Jewish with a few Orthodox thrown in. So much so that we got the Jewish holidays off too. In addition, our school choir sang at both a Reform and an Orthodox temple in celebration of the Warsaw Ghetto uprising, and; the choir director always managed to get in a performance in at least one temple when we were on tour each Spring Break. I was in choir. The director at the time was Catholic, so that wasn’t the reason. *sigh* I miss those days.

MacTad

@akcarver Ah ha! I *knew* that I wasn’t the only one who saw the need for extra personnel here! I’d hoped to be asked fill what should be an editor’s position. However, I think even having a proofreader would be a step in the right direction.

theLedger

What the slow sales of Microsoft based phones are proving is the the trend bringing your own device is real. Aside from PC’s which are still entrenched in businesses because of applications (and even that is changing), where employees have a choice they are making choices that are based on a different set of values than a centralized IT department.

And that trend is away from Microsoft and growing. Microsoft can no longer count on central planning to buy all their products in bulk. They have to win the heart of the individual and that is a whole different strategy.

The non-Windows divisions see that and they are in a mad rush to bring their applications to support multiple platforms to survive.

MacFrogger

the ledger said:

And that trend is away from Microsoft and growing. Microsoft can no longer count on central planning to buy all their products in bulk. They have to win the heart of the individual and that is a whole different strategy.

Agree with you on the trend. But again, its all relative. There is still plenty of central planning/central IT, esp for large cos. And believe me, they are not pulling for AAPL.

John said:

as Apple?s iPad competitors have found it, it might be difficult to offer a business class tablet that is capable but costs less than the iPad thanks to Apple?s buying power.

Its hard to argue that one! wink  But that holds true under all scenarios, meaning it applies whether their focus is Enterprise or consumers. For now, MS’ near term most critical objective has to be to get Win8 established as a platform, period - or there is no future. I think they stand the best chance of doing that - not a good chance, but their best chance - by leveraging their existing (if fading) advantages in the Enterprise. Since they can’t compete on features (with AAPL at least), its hard to envision any strategy for establishing market presence that doesn’t include flooding the Enterprise with “good-enough” tablets/phones at low/no cost (Lumia for $100? How about free? Would you like a hefty discount on Windows desktop licenses to go with your purchase of 1000 corporate Win8 phones?). While such actions may slow AAPL’s penetration of corporate IT depts (due to the “free” effect), it won’t stop it precisely because AAPL will retain quality/feature/style advantages and the trend of BYOD is real (as theledger pointed out). But this strategy holds significant promise of blunting the adoption of Android tablets/devices in this space, as after all, Google is for all intents and purposes as behind in the tablet race as is MS. IT depts will not want to support all three platforms (iOS, Win8, and Android), so if you’re MS who would you target for displacement and in what market?

wab95

John:

Without revisiting my previous comments on this, I believe that MS are taking a page from Apple, and playing the long game. They will continue, as they are, namely to ride that outsized financial momentum from their core products (Windows, Office, Explorer) while adding to new revenues from new acquisitions and partnerships (Skype, Facebook) and look for weaknesses in the market, some of which they will have explicitly created (Google’s search marketshare and revenues), that they can exploit.

I think they are slowly, deliberately, methodically amassing those assets that will place them in prime striking position, should opportunity arise. I would not discount this paying huge dividends.

Second, although it is too soon to be definitive, Win8 may breath new life into the company. They risk pouring that new wine into old bottles (read yesterday’s PC form factor), but their current study of Apple (and they are studying Apple) should enable them to migrate any gains from that platform into emerging technologies, like tablets.

MS’s install base is unthinkably large, and IT patronage and brand loyalty are not to be underestimated.

jonricmd

Uh, MSFT can afford to be very patient - in the past 3 years, NET Income has gone from 14.5B to 18.7B to 23B.  Xbox division is now making money instead of being a drain.  As much as we Macheads joke about “Stockholm Syndrome” of corporate America and MSFT products (server,  Windoze, etc), they are still tied in and MSFT has a LOT of people right there to “hold their hand” and make it work, even though (at least in the past) it takes a lot of work and handholding.  Until corporate servers no longer need PC’s, MSFT will continue to make money hand over fist.

wab95

More on Windows tablets:


That has got to disappoint many in enterprise IT. In other words, Apple have truly done their homework. Not only do they know how to build a tablet, how to optimise it in terms of aspect ratio, specs (including battery life) and feature sets, how to price it and protect its supply line, but what can/cannot be delivered to their client base, including enterprise.

The iPad does not pretend to be anything other than what it is, a consumer-centric tool that plays a unique albeit versatile role in cloud-based digital management, consumption and productivity.

The consumer-centric user experience, and not one built around the enterprise, remains, even with MS entrance with Windows RT on ARM (WOA), the centre of the mat where the contest for tablet dominance will continue to be fought and decided. For anyone to displace Apple’s iPad, the task remains to bring a superior user experience, or at least a comparable one at a lower price point.

wab95

[Edit: I see my comment already posted.]

MacFrogger

Wow John - thanks for that very informative article.  It’s unbelievable really; what an incredible display of MS incompetence!  Whoever is responsible for omitting the easy connectivity/management of Windows RT with Enterprise should be fired on the spot!  Starting at the top with Ballmer of course.

OTOH, now I can sleep easier at night knowing that MS really has no specific Enterprise strategy - that has been my fear all along.

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