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Microsoft: New light, old Windows

Are Microsoft’s latest moves too little, too late?


ORGANISATIONS SHORTOPINION. 2015 is shaping up to be a red-letter year for Microsoft’s strategy under the more nuanced, focused leadership of Satya Nadella, says Chris Middleton. But is it just winning some battles having already lost the war?

The company has made a flurry of recent announcements, from which we can begin to see a subtly different Microsoft emerging. For example, in May 2015 it announced that it is working on a new smartphone app, Flow, which turns emails into instant message style chat conversations, minus an email’s normal subject lines, greetings, or signatures.

The move is the latest signal of a shift in policy and emphasis at Microsoft under Nadella, towards a more open, inclusive culture and a lighter, more user-focused approach. It is not before time.

Windows 10

In a year of significant change for the company – perhaps the most significant in a generation – Microsoft has announced that Windows 10, the latest version of the operating system, will be released on July 29.

Windows 10 puts unified communications and cloud collaboration at its core, and will be the first proprietary, commercially available operating system to work across desktop, mobile and tablet devices. Microsoft describes it as “familiar, productive, personal, and flexible”. New features include the Edge browser, which replaces the long-derided Explorer.

Significantly, Windows 10 will be the last ‘milestone’ OS release from the company. In the future, seamless upgrades will be offered as a rolling service, in line with Microsoft’s new enterprise cloud focus.

The company has also announced that Windows 10 will be available as a free, full upgrade for “qualified Windows 7 and Windows 8.1 devices, including devices you already own”. The offer will be available for one year from the July 29 release date.

That said, some editions are to be excluded from the free upgrade programme. These are: Windows 7 Enterprise, Windows 8/8.1 Enterprise, and Windows RT/RT 8.1. In short, Microsoft still expects its core business customers to pay.

The right strategy?

In general, the strategic big picture is welcome for customers of the (recently) more user-centric, service-focused Microsoft.Yet the fact remains that Redmond’s power and influence is now principally rooted in an enterprise customer base whose installed legacy is a pale, corporate reflection of Microsoft’s glory years of the mid- to late 1990s, where it easily dominated the desktop with more than 95 per cent OS market share.

Since the Millennium, corporate arrogance combined with a blinkered, Windows-centric world view saw it hand the impetus to Google, cloud services providers, social platforms, and a resurgent Apple, the combined forces of which have left Microsoft with a single-digit share in the mobile space. For non-enterprise customers, millennials, and for many mobile developers, therefore, Microsoft is now largely seen as irrelevant.

There was evidence of this earlier this year. In an effort to make the latest version of Windows more attractive for smartphone app developers, Microsoft announced in May 2015 that it would accept modified iOS and Android apps within Windows.

However, the strategy hit a snag: lack of interest among mobile developers. At the moment, Microsoft is in a lose:lose situation, thanks to years of mishandling of its mobile strategy, and a deeply held perception that, as a result, it lags a long way behind Apple and Google in innovation and focus in the mobile space.

More, the selection of apps for Windows phones is poor compared to iOS and Android, which contributes to Windows phones’ lack of attractiveness. Also, handset manufacturers have failed to catch the eye of consumers in the same way as Apple has, along with Android handset makers, such as Samsung.

In a rapidly ‘consumerised’ business environment, in which we are all workers, consumers, and customers at the same time, that lack of user appeal is a serious drawback, and Microsoft has been losing momentum for a decade.

Harsh truths

The figures are stark. At present, Android-based devices account for roughly 81 per cent of the mobile market, and iOS roughly 15 per cent (bearing in mind that Apple also makes the hardware), leaving Microsoft with less than four per cent market share.

This means that Microsoft is experiencing precisely what Apple went through on the desktop in the late Nineties and early Noughties: irrelevance for most developers – and, today, it is increasingly irrelevant for most mobile users too. But does it have any Steve Jobs-style big ideas to reverse that decline?

Not so far. In a world in which mobile devices are expected to outsell PCs by six to one, Microsoft is becoming overly reliant on Office (countless free alternatives, such as NeoOffice, are available), on its cloud services for business, and on its server software. At present, those lines represent a massive, and still-growing business: Office is expected to account for $30 billion of revenue this year, against Windows’ $20 billion, for example.

So the long-term strategic challenge is that a chunk of that healthy business is deeply associated with the installed legacy of a large swathe of business users, most of whom are now engaged in a slow transition to a more services-focused, cloud-based world. At the back end, that may suit Microsoft, but at heart Redmond is a front-end business – and it has already lost that market to those companies who put mobiles, tablets, app stores, and social platforms front and centre of their own strategies.

The long-term challenge is massive, and generational. Outside of its core of cloud-based business services, where it remains hugely important in the enterprise space, Microsoft is fast becoming irrelevant in the eyes of millennials who have grown up in a very different world to the one that existed in the 1990s.

Windows 10 will be the cornerstone of Microsoft’s fightback. And as it will be the last version of Windows to be released as a standalone iteration, it must – clearly – represent Microsoft’s best bet on the future. Ironically, to make it more appealing to both business and consumer users, it has put back a lot of the features that the unpopular Windows 8 stripped out. The inference is inescapable: Microsoft has been forced back to its old look and feel to keep users engaged.

But back to the future. In the collaborative, user-centric world that Microsoft now – belatedly – sees as being central to its survival, the company needs to get external developers onside if it doesn’t want to be left as an island in the middle of a much larger stream, gradually being eroded by networked market forces that are now much more powerful than it is.

It also needs to get the CIO, the IT director, and senior IT managers and professionals onside as they consider what infrastructures they are building towards in their increasingly hybridised world. For that it needs some big ideas for the future, not just some ‘good enough’ thinking about the present.

But the key question for IT leaders must be: Beyond the back end, why make a strategic bet on Microsoft if most people, in their own lives, no longer use its services – beyond the ingrained habit of opening a Word document, a spreadsheet, or a Powerpoint slide? Increasingly, consumers’ hardware choices are also their work platform choices, thanks to mobile, remote, and flexible working, plus the spread of BYOD schemes.

At present, Nadella seems to be getting a lot of things right – despite his sometimes clumsy PR image. But if he fails to reposition Microsoft strongly enough for a UC-driven, cloud-based, mobile-accessed, and collaborative future, then it will be because he has inherited a legacy of strategic mismanagement.

The noisy, aggressive Ballmer years may one day be seen as an appalling and catastrophic misstep for the company. TS

The Strategist says

Former CEO Steve Ballmer was noisy, aggressive and over-confident at a time when the rise of consumer and enterprise mobility was taking the initiative away from his company. He should have listened more and seen the obvious shift in user tastes. Today, Satya Nadella feels like a more modern, tuned-in leader with some good ideas – despite his occasional gaffes on the conference stage. But the legacy he has inherited reflects his customers’ legacy too. Like them, he has to think about how Microsoft can still be an essential strategic bet for the future. And he has to find the right message to communicate that vision.



Noise is the thing that’s always on.
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