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Why I Still Think Microsoft Will Win With Windows 8

2012 October 31
by Greg
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Last February, when I wrote that Windows 8 will put Microsoft back on top, a lot of people thought I was nuts. Nobody could touch Apple and Google’s Android had too big of a head start.  Microsoft was toast and anybody who denied it was just ignoring the obvious.

Well, Microsoft launched Windows 8 last week to mixed reviews.  None were glowing, a few were negative and almost all expressed some kind of reservation.  So how do I feel now?  I’m doubling down.

Given that Windows 8 is an almost completely reimagined product, from the interface to the basic technology, the reviews are surprisingly positive.  Combined with the rest of Microsoft’s assets, is strategically brilliant (and amazingly interoperable).  From a business perspective this is one of the most important products in history.  Here’s why:

Mobile First

Microsoft rose to power as the king of the desktop.  Controlling the operating system for 95% of the world’s computers, they largely ruled the tech world.  So much so, that they were hit with an antitrust suit to curb their enormous power.  However, the world has changed and now Windows runs on less than 50% of connected devices.

Rather than try to defend a bad position, Microsoft has organized its new operating system around mobile.  Tellingly, much of the criticism of Windows 8 is about the frustration that desktop users will feel about being dumped.  This is the kind of bold, ruthless move that built the company we learned to both hate and depend on.

Notably, it is a move that Apple still hasn’t had the guts to attempt.  Their laptops and desktops run OS X, while iPhones and iPads run iOS, which are both perfectly good operating systems, but the experience between the two is not always as seamless as it could or should be. (For instance, it kills me that I can’t watch HBO GO on my Apple TV).

Whatever the charms of Google and Apple (and they have many), neither has attempted the kind of fearless, shoot for the moon move that Microsoft has just pulled off.  Ballmer and company should be commended for not only their vision, but for executing it well.

Microsoft’s Continued Dominance in Productivity

Despite what many think, Windows isn’t Microsoft’s biggest or most profitable business. In fact it ranks third on both counts.

The most profitable division by far is the Business Division (largely made up of the Office software suite), which accounts for more than half of Microsoft’s earnings, followed by “Servers and Tools” that provides back-end software for many large enterprises.

As tablets become more important in the workplace, Office will be a major mobile asset for Microsoft.  It is the one remaining area where Microsoft retains its monopoly and, though often overlooked in tech circles, programs like Word and PowerPoint are absolutely essential for business people.

Getting Office software to work on iPad is a nightmare.  This is a major oversight on Apple’s part. The iPad is great as a media device, but for productivity it leaves a lot to be desired and that has left a large opening for Microsoft.  It looks like they are walking right through.

The Subtle Genius of Surface

Of all of the aspects of the Windows 8 strategy, producing the Surface tablet is probably the most brilliant strategically.  On the face of it, they are introducing a business-based tablet that is a logical successor to the net book:  All the computing power that you need for daily use as well as a touch interface and a keyboard.

However, look a little bit more closely and there are a few nuances that make the Surface a really smart move.  First, Android has a much weaker position in tablets than in phones and therefore manufacturers are not nearly as invested in Android there.  Second, tablets have a much greater need to run Microsoft Office software than smartphones do.

Most of all, Microsoft will pay no penalty for manufacturing their own hardware.  Apple is already fully integrated and Google, with their purchase of Motorola, is heading that way. So however much manufacturers might protest the crossing of this particular line, Microsoft is still the best friend that they have.

So we should see the Surface tablet for what it is, a virtual guarantee that manufacturers will support Windows 8 for tablet computing.  The product itself can live or die, but the business is almost sure to thrive.

The New Digital Battlefield

As I’ve written before, while social and mobile have driven technology for the past few years, the new digital battlefield is at home, in the car and in-store.  Microsoft is leading the pack here.

Their Xbox platform, with tens of millions of subscribers, is miles ahead of Apple TV and Google TV in terms of consumer base and seem to be winning the race to ink up cable deals.  They’ve also been successful with their smart car initiative, which includes Ford Sync, Kia Uvo and Fiat Blue & Me.  Google and Apple aren’t even active in the category.

Perhaps not surprisingly, Microsoft is making headway in retail solutions and have built a joint retail innovation lab with Razorfish, the digital agency.  Again, neither Apple nor Google has any offering to speak of in this area.

So Windows 8 is not only the first operating system to unify mobile and the desktop onto one platform, through SkyDrive and SmartGlass it will also unify your TV and (possibly) your car and your shopping experience onto one voice, touch and motion interface.  That’s bold and impressive.

Competence

While I don’t think anyone would argue that Microsoft has always been the world’s greatest technology company, they have consistently been a great technology business.  No other enterprise has been so successful for so long through so many technological cycles.

When the rise of the Internet threatened their business, they turned on a dime and met the threat.  Now that mobile has imperiled it again, they have again reacted with vision, competence and good business sense.  While their franchise will never be as hip as Apple’s or as technologically forward as Google’s, they manage to get the job done.

For all of the nit picking, one thing everybody agrees on is that Windows 8 offers good user experience and interoperability across a variety of platforms while improving basic performance.  That’s quite an achievement by any standard.  If it were easy, certainly somebody else would have done it by now.

As much as I’ve become invested in the Apple ecosystem over the past few years, I have a feeling that, as my business computing continues to entwine itself with my personal computing and entertainment, I’m going to become increasingly ingrained in Microsoft’s.

- Greg

12 Responses leave one →
  1. October 31, 2012

    Windows 8 is “bold” in the same way that it’s “bold” to jump out of a burning building.

    You have great points about the productivity market they’re going for (and I think can succeed in), but I don’t think Apple screwed up by leaving that opening. Apple’s always targeted the consumer market and they built iMac, iPod, iPhone, and iPad for everyday users, without caring about Microsoft.
    John R. Moran´s last blog post ..A Quarter Trillion Dollars

    [Reply]

    Greg Reply:

    I don’t think Apple “screwed up” so much as left an opening. I’m sure that Apple will dominate tablets and phones for quite a while, but there is still every other manufacturer in the world and they all need an operating system.

    - Greg

    [Reply]

    John R. Moran Reply:

    Well, if not a screw-up, you did say it was a “major oversight” by Apple :-)

    I agree the potential for Windows 8 / Surface is huge and it was the right thing for Microsoft to do. But I get a bit nervous when we talk about building an OS to serve the needs of a lot of device manufacturers out there, rather than people.

    I subscribe to the theory that the iPad is a major disruption in computing. It would follow that an integrated architecture around key jobs-to-be-done is what will win (i.e., iPads). Microsoft has a shot at this too with Surface, although the jury’s still out. Other manufacturers producing Windows 8 devices will no doubt arrive, but I wonder how much profit will be left over.
    John R. Moran´s last blog post ..A Quarter Trillion Dollars

    [Reply]

    Greg Reply:

    Again, I don’t think you can look at it in terms of one product, like tablets, phones or TV’s. What’s really important is how all your stuff works together. Microsoft is actually far out ahead in building a true web of things and Windows 8 ties everything together.

    In a very real sense, they’ve leapt ahead.

    - Greg

  2. November 4, 2012

    Greg,

    Back in the 90′s Microsoft’s turn to the Internet was simpler – there was little corporate competition and there was just a single change agent – The Internet. Microsoft had time and we were all pretty locked in – Microsoft managed to accommodate the change with a smothering embrace.

    Today its harder
    - There are multiple change agents – social, mobile, cloud.
    - The competition is bigger, more diverse and well ahead

    Microsoft should have released these products two years ago,

    Not only are Microsoft standing on a burning platform but the new platform is a fast moving one as well.

    It is likely that Microsoft have acted just in time to leap and grasp the new moving platform any later and they would have missed the party.

    I’m sure they will manage to pull this off but I don’t think they will ever be what they used to be – they will survive but times have changed.

    [Reply]

    Greg Reply:

    Martin,

    I think there is a lot of truth to that (in fact, Microsoft made essentially the same argument in their antitrust suit). However, for the past decade Microsoft has become less relevant, and I think they’ve turned that around.

    - Greg

    [Reply]

  3. Thom permalink
    November 4, 2012

    I agree with your argument that business software is the key driver and that Microsoft’s approach – unifying both the tablet app with their office platform is both bold and a well integrated strategy. However, I think there will be cloud services that surpass office capabilities and limitations and will work equally well on any platform. One only needs to play with Confluence or SlideRocket to see how lighter , reimagined office applications are emerging. I think there is a generation emerging that will not want to conform to the constraints and precepts of Office.

    Today we have the BYOD trend. Next is the BYO software tools trend. It’s unlikely that the company with the most to lose will be at the vanguard. It’s more likely that the company with the most to lose will be investing heavily in levees to stem the tide of change. And they will call it Windows 8.

    [Reply]

    Greg Reply:

    Nothing is forever:-)

    - Greg

    [Reply]

  4. November 4, 2012

    Hi Greg,

    It’s a bold move to predict, as you have done, the re-emergence of Microsoft as future major player. But I tend to agree with you.

    Whilst office is their big revenue earner, I see Windows 8 supporting them in a different direction – their CRM, ERP and other enterprise apps. MS CRM is doing well at the moment and Windows 8 native support on mobile devices opens up more revenue streams and embeds them further into these businesses.

    And their hosting services now seem to be taking off…

    Another interesting couple of years coming up!

    [Reply]

    Greg Reply:

    Yes, I think Windows 8 really plays to Microsoft’s strengths. They may not be the coolest, but they are by far the broadest and Windows 8 ties everything together nicely.

    - Greg

    [Reply]

  5. Stefano Tempesta permalink
    November 22, 2012

    Hi Greg
    I believe that Microsoft’s success is on their mobile strategy focussed on enterprises, rather than consumers, but as compared to RIM, Apple and Google, Microsoft (yet) does not have their own mobile handsets. Google acquired Motorola mobile division, Apple does everything at home, do you think MS needs to get into the hardware business to break thru, or its network of partner manufactures would suffice? I bet they (the partners) are a bit pissed by Surface, I wonder what would happen if MS decided to enter the smartphone market with its own models.

    The success of RIM is (was) because they have a full solution, hardware and software. Apple is on the same line, although for consumers. So is this the direction to take to be successful in the mobile market? Android is different, true, but without Samsung and its excellent Galaxy, I struggle to see a large adoption of Android on other smartphone devices.

    Oh, looks like Microsoft is already doing it… http://www.zdnet.com/microsoft-testing-own-smartphone-in-asia-report-7000006803/

    [Reply]

    Greg Reply:

    Stefano,

    I could be wrong, but I don’t think they’re really serious about this. They want the OEM’s to adopt Windows as their core product so that consumer choice boils down to:

    a. iOS
    b. Android
    c. Every other manufacturer in the world.

    My guess is that the surface is a shot across the bow. The main objective is to push the OEM’s to adopt Windows for tablets, not to make Surface the leading tablet or to make any in-house phone a leading phone. Consumer hardware is generally not a very good business.

    Anyway that’s my guess.

    Ciao bello!

    - Greg

    [Reply]

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