Can Microsoft Claw its Way Back into Relevancy?

I never think about Microsoft any more. I'm not alone. But I think that's about to change and I'm puzzled about what Microsoft is doing differently that is bringing it back on to my radar.

A year and a half ago, I wrote an Open Letter to CEO Satya Nadella about Microsoft's strategy. I said that if Microsoft was counting on Windows Phones and Enterprise Cloud to save its bacon, the company would be doomed. Instead, I suggested that Microsoft build on two major core assets:

• Provide Cross-platform Mobile App Development Tools. Seduce the millions of application developers who still use Microsoft's development tools by providing them with the best cross-platform mobile application development tools to enable true "write once/run anywhere" mobile apps.

• Deliver Customer Clouds to Enterprise Customers. Leverage the Microsoft Cloud--(Azure)'s ability to provide territory-specific cloud instances in order to safely house enterprises' customer data in the geographic regions where those customers reside.

Not surprisingly, my advice fell on deaf ears. However, one of Patty's Pioneers and long time clients, Phil Gibson (whom loyal readers will remember as the mastermind behind National Semiconductor's brilliant web strategy, chronicled in all 3 of my books), had a better idea. He commented at the time:

"I agree with you that a company MS's size cannot continue to pursue incremental development. They need to either join efforts from different business silos or attack existing business silos in new and innovative ways.

The area where I think they could break out that aligns to your comments is to enable their developer community, but to do it by joining their experience on the business front with the Xbox gaming audience. Take a page out of Apple's book and engage youth for long term success. Join the youth of gaming with the business savvy of the MS developer community. Enable APIs and hardware as only MS can that connect these two worlds and watch the new market demands that emerge out of the cloud/featured phone/PC audience.

Security matters to gamers too and will matter more as they grow older and wiser and this is part of their expected environment. Our generation is not connected/addicted to gaming, this generation is. They should think ahead."

It's mid-2015: How is Microsoft Doing?

Barely Relevant in Enterprise Computing. Microsoft hasn't commanded center stage in IT strategy discussions for at least five years--possibly even a decade. In the enterprise, Microsoft is a necessary presence, primarily because most of the world runs on Excel, most corporate documents are created and edited using MS Word, and too many meetings are still run on PowerPoint.

Losing Ground in Consumer Computing. Each time a consumer/friend contemplates the need to replace their current PC, they invariably ask the question: "should I buy a cheap Windows PC or is it time for me to switch to Apple?" For many, the need to upgrade or replace a PC often leads them to switch to a Mac.

Nowhere in Mobile Phones. Microsoft's attempts to become a major player in mobile phones have been largely unsuccessful. As of August 2015, Microsoft Windows phones were up to 2.6% marketshare according to Softpedia, compared to 52.14 percent world share for Android, followed by iOS with 40.82 percent. It's too bad that one of the world's leading mobile phone companies was taken out by Microsoft in its clumsy attempts to buy mobile phone marketshare. All Microsoft did was ruin Nokia's once valuable global brand and customer franchise.

Still a Player in Consumer Gaming. Consumer gaming is the one area in which Microsoft still commands fierce customer loyalty. Yet its acquisition of Mojang, the developers of Minecraft--the most popular and creative game environment for the pre-teen and teen set--hasn't been warmly embraced by the Minecraft community.

Also Ran in Cloud Computing. Microsoft's Azure cloud platform was somewhat late to the party (announced in 2010) and is still in catch up mode compared to Amazon's AWS.

Is there Hope for Microsoft?

In the past 6 months, Microsoft has made a number of strategic moves that have made the company less of a "has been" and more of a wannabe for both enterprise and consumer customers.

What's caught my attention:

• Windows 10 (for free)
• Agile Response to Windows 10 Backlash
• Cross Platform Microsoft Office Mobile Apps (for free)
• Operating System Agnosticism: Embracing Linux for MS development
• HoloLens: the next generation 3D Augmented Reality holographic environment for gaming applications, but first for commercial business applications, such as molecular modeling and 3D design.

Windows 10: Finally an Operating System that's Good Enough from Microsoft

With Windows 10, Microsoft has apparently finally succeeded in providing a good operating system and application platform that runs across all devices, and includes very good support for touch screen operations. Many of us feel that the last decent Windows OS was XP. So, finally, after many attempts and ungainly upgrades, Windows 10 appears to be a winner.

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Illustration courtesy of Re-L Mayer

Multi-Platform Support

The other promise of Windows 10 is that it will give customers seamless access to applications across all (Microsoft-enabled) platforms. This is what most of us want. I first fell in love with this seductive experience seven years ago when Amazon released its Kindle app for multiple platforms that lets us start reading a book on one device and continue where we left off on another. Kindle has since set the bar for application (and content) portability. (Notice the Kindle app works cross Operating Systems; it doesn't require a single OS to provide seamless behavior across devices).

Windows 10 runs on PCs, tablets, cloud. Soon, it will be released for the XBox and for the Windows Phone. On September 20th, Microsoft released the XBox Beta for Windows 10. It's now available for download from the Microsoft store.

Windows 10 for the Windows Phone will reportedly debut on October 6th, 2015, along with the company's new Surface 4 running Windows 10. But this first Windows Phone release is a stopgap mobile OS, known as Threshold 1. Threshold 2 will reportedly be available in early November and that build is expected to have more of the Windows 10 features.

Many of Patty's Pioneers--all early adopters--have run Windows 10 through its paces. John Gidman reported:

"Finally, through much determination (and help from professionals) I am up on Win10 and Surface.

I have been using Windows since version 1.0 and used every version (except Vista and 8) since as part of my job.

I have been using PC's and Microsoft OS's since 1985.

The Surface is the slickest PC ever and Win10 is far and away the best version of Windows as an end user.

Pretty good and pretty useful.

But, not as useful as an iPad running iOS 9.

The world has changed."

Peter Horne forwarded a post from Matt Weinberger at Business Insider Australia, entitled: I haven't opened my Macbook since Windows 10 came out. Pete commented:

"This article really sums up my experience. In the cloud world the OS doesn’t matter anymore... Win 10 does a better job in many ways; and so you stay there.  Further, the shift of MS from Windows monopoly to office monopoly means they too don’t care about the OS anymore..."

So, Windows 10, is by all reports, a solid, relatively easy-to-use operating system. But getting people to upgrade to it was going to be a really long, drawn out process. That's why Microsoft offered it free to consumers.

Making Windows 10 Free

Making Windows Free (to consumers) was the smartest thing Microsoft could have done, although it was overdue. Ben Popper wrote a useful article in Verge, titled Why Microsoft is Giving Windows 10 Away for Free, in it, he says:

"The decision to forgo that traditional revenue stream and attempt to broaden the install base of Windows 10 highlights the tough choices Microsoft must make as it tries to claw its way back into the competition for mobile. It also needs to marry the strength of the slowly waning desktop world to its offerings on phone, tablets, consoles, and the cloud. The goal is to create "universal" apps that work on Windows 10 and across Windows mobile, as well as on computing platforms like Xbox and the forthcoming HoloLens."

By making Windows 10 a free upgrade for current users of Windows 7 and 8.1., and making it easy for customers to easily roll back the upgrade if it causes problems, Microsoft has achieved a record-beating upgrade rate. 75 million people upgraded in the first five weeks! (For anyone still on the fence about whether or not to upgrade to Windows 10, here's a useful "how to" article.)

Dealing with the Privacy & Updates Backlash for Windows 10

Among the first and most vocal criticisms that surrounded the launch of Windows 10 were concerns about the fact that Microsoft automatically updates the OS, without telling you what the updates contain, and that its privacy settings default to letting Microsoft spy on most of what you do (which is true for Facebook, Google, et al, as well). To compound the problem, Microsoft also automatically updated customers' Windows 7 and 8 PCs with the new forced updating behavior.

There was an incredible outcry. Microsoft listened and is apparently adding transparency back into the automated updates, so users can see exactly what changes are being made. Pioneer Eric Castain forwarded a link to this Forbes article, Windows 10 Updates U-Turn, by Gordon Kelly, and agrees with Kelly that it was a shame that it was enterprise customers who forced this transparency, rather than consumer customers. Kelly writes:

"Speaking to press this week [9/2/15] Microsoft Corporate Vice President Jim Alkove said the company will stop hiding the contents of Windows 10 updates and what changes they will make once installed.

In fact Alkove went as far as admitting these changes come directly from user complaints:

'We’ve heard that feedback from enterprise customers so we’re actively working on how we provide them with information about what’s changing and what new capabilities and new value they’re getting,' he declared.

But did you spot that vital keyword? Yes, Enterprise.

While Microsoft should be commended for recognising concerns about the secrecy imposed on Windows 10 updates, at the same time ignoring the calls for greater transparency for all users is frustrating...

Yes big business customers are crucial, but users of Windows 10 Enterprise have the power to delay and even stop updates indefinitely to see how things pan out. By contrast Windows 10 Pro has no indefinite stopping power and Windows 10 Home users can delay just one month (without workaround hacks) before these vaguely described updates are forcibly installed."

In response, Microsoft quickly emphasized all the ways in which end-users could modify their privacy settings to turn off many of the more invasive features. Our Pioneers (who are quite paranoid about privacy and security) now seem comfortable with their ability to control privacy options on Windows 10. 

The best article I've found to walk you through what to do about customizing your privacy settings was written by Preston Gralla for ComputerWorld, entitled 4 Overblown Windows 10 Worries.

Offering MS Office Free on iOS and Android Strengthens its Franchise

At the Apple announcement on September 9th, Microsoft was given top billing in the iPad Pro demos. This surprised many. If Microsoft is giving its OS away, shouldn't it be charging for its application monopoly? MS Office? Apparently, maintaining a monopoly on our Office applications is much more important than charging for them. A year ago, Microsoft began offering MS Office for free on iOS and Android devices, as well as Windows devices. Back to Verge's Ben Popper:

"It’s not just Windows that Microsoft has made free. New CEO Satya Nadella wisely moved to make Microsoft’s crown jewel, Office, available for free on iOS and Android, easing the pain of working across multiple devices. Microsoft believes it can give it away and still make money.'There’s still premium value that we’ll add on top of that,' Microsoft's head of Office marketing Michael Atalla, told The Verge. 'There will still be subscription value, most clearly and easily identifiable in the commercial space, but also in the consumer space around advanced authoring, analysis, presentation, and unlimited storage with OneDrive.'"

Embracing Linux

It has always been possible to run Linux on a PC and for Linux to co-exist in the Microsoft Cloud. But Microsoft has never explicitly written software on the Linux OS for commercial applications. Recently, Microsoft announced that it had developed Azure Cloud Switch (ACS), a software defined networking OS, using Ubuntu--a popular form of Linux. In describing this recent addition to Microsoft's cloud environment, The Register's Simon Sharwood wrote in a post entitled Microsoft has developed its own Linux. Repeat. Microsoft has developed its own Linux:

"Sitting down? Nothing in your mouth?

Microsoft has developed its own Linux distribution. And Azure runs it to do networking."

In his Tech Republic post entitled, Microsoft has built a Linux OS, and it makes Perfect Sense Nick Heath adds his analysis:

"In part, Microsoft's change of heart has been driven by its customers, as developers and enterprises make increasing use of open source software. The Linux distro Ubuntu is overwhelmingly the most popular OS on Amazon's Elastic Compute Cloud - so it only makes sense that it is also available on Azure.

In light of this pragmatic acceptance of open source by Microsoft of late, it's perhaps less of a surprise that it was willing to make a Linux-based OS for datacenter networking....Microsoft seems to be becoming more willing to dabble with open source in general.

The firm has open sourced large parts of its .NET development framework, hitched Windows to the popular open-source container automation platform Docker, and even hinted it may one day lift the lid on the code that powers Windows."

The bottom line: Microsoft needed software-defined networking for its Azure Cloud. Most of Microsoft's corporate customers are already using Linux in their data centers and for networking applications. So what's the big deal? It shows that the "new" Microsoft has become as agnostic about operating systems as have their customers. The operating system no longer matters. It's not where the perceived value resides. Computing now happens in the cloud where the operating system no longer matters.

HoloLens: Capturing the Hearts & Minds of 3D Developers & Gamers

Remember Phil Gibson's prophetic advice: "I agree they should enable their developer community, but to do it by joining their experience on the business front with the Xbox gaming audience....Join the youth of gaming with the business savvy of the MS developer community." It looks to me as if that is exactly what Microsoft has done with its new HoloLens platform. Early reviews stress how seductive it is to see your holographic creations hovering and interacting in front of you in space. Microsoft now says that developer toolkits will be available in early 2016, targeted first for commercial applications, like molecular modeling and 3D industrial design.

HoloLens being used to add design elements to a physical motorcycle    Photo: Microsoft

Spawning a New Generation of Developers?

Minecraft isn't just a gaming platform. It's a programming environment. It's wonderful to watch our kids (and, in my case, grandkids) creating their own games using the Minecraft environment and sharing their creations with their friends. Adding holographic capabilities to these creations is the next step. It's likely to be even more seductive. Mature developers are learning how to add lines of code into their interactive graphic programs to enable holographic augmented intelligence features. DNA and proteins will reproduce while hovering in our offices and conference rooms. Models of airplanes and cars will swoosh through our corridors. The kids who grow up designing these interactive models and worlds will quickly overtake the older geeks. The promise of XBox+HoloLens+development environments that seduce the next two generations of programmers may indeed be Microsoft's salvation.

Will Microsoft Regain Relevancy?

It's still a long shot. Free Windows 10 will stop the hemorrhaging, particularly in developing countries, where a cheap PC with a free OS is now a must have (after a cell phone and a motorbike) and, of course, food and shelter. The Surface may become more competitive for professional, business and middle-class consumers. But note John Gidman's caveat: it still doesn't compare to the iPad + iOS 9 experience. Many corporations have already standardized on iPads for executives. 

The critical question: what will Microsoft do to regain a foothold in mobile phones?

Does Microsoft need to be in the phone hardware business? No.

Does Microsoft need to be a major player in mobile environments? Yes.

If the operating system no longer matters, as Peter Horne opines, and the real customer experience takes place on our mobile devices and in the cloud, then it seems to me that Microsoft NEEDS TO OWN that mobile device + cloud experience.

I'm not convinced that running MS Office applications on my Android or iPhone is enough of a draw to keep Microsoft top of mind or to fuel a multi-billion dollar ecosystem. But at least I'm paying attention to Microsoft again.

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Comments

[Vince Accardi]

Great article. I was especially delighted to see Phil show why he is an industry leader with his visionary insight.