Why is Everybody Getting into Wireless Earbuds?

In just over a week we have heard rumors that both Amazon and Microsoft Surface might be bringing wireless earbuds to the market. This should be no surprise to anyone, but not for the reason that most highlight which is: wanting into some of Apple’s action with AirPods.

There is no question about Apple’s success with AirPods. Apple managed to get AirPods across gender, age, and even income level despite their price point not putting them in the “most affordable” category. The experience is described by many as magical. In a study, we, at Creative Strategies, conducted with Experian when AirPods first came out, customer satisfaction was the highest for a new product from Apple. 98% of AirPods owners said they were very satisfied or satisfied. Remarkably, 82% said they were very satisfied. By comparison, when the iPhone came out in 2007, it held a 92% customer satisfaction level, iPad in 2010 had 92%, and Apple Watch in 2015 had 97%.

Assuming Microsoft and Amazon are just after the revenue that a good set of wireless earbuds could generate is a little shortsighted.

Voice and Ears

Ambient computing and voice-first are certainly big drivers for both Microsoft and Amazon. As computing power is spread out across devices and digital assistants are helping to bridge our experience across them, voice has grown in importance as an interface. Many consumers are, however, less comfortable shouting commands across a room or speaking to technology outside the “safety” of their own home. As voice moves into the office, the need and desire to be able to speak quietly to an assistant and hear it back is even more evident.

Wireless earbuds that can be worn comfortably throughout the day allow us to build a better relationship with our assistants and, even more so, build our reliance. Interestingly, I would argue, this is where AirPods have not been as successful as Apple might have hoped for but certainly, through no fault of their own but more due to some limitations Siri has.

For both Alexa and Cortana, who do not have a smartphone they can call their own home, wireless earbuds are a great way to be with a user in a more direct and personal way rather than being relegated into an app. As I often say, this is not about consumers having only one assistant but making the assistant they use more often more intelligent and therefore creating a vicious circle: the more I use it, the more it gets better, the more I want to use it.

Eyes and Ears

Aside from voice and ambient computing, another trend that will benefit wireless earbuds is augmented reality. Starting with phones, consumers can build on the habit of wearing wireless earbuds while consuming information through their phones. Creating a habit and making wearing wireless earbuds natural rather than bearing the stigma that Bluetooth headsets had when they first came to market.

In a non-distant future, as we see more use cases focusing on displaying information across apps and we will move from phones to glasses, wireless earbuds will play an even more critical role in our augmented reality experience.

No Longer an Accessory

Whether they are critical to our relationship with a digital assistant or they help us immerse in an augmented reality experience, what is clear is that headsets overall are no longer an accessory but a device in their own right that for many vendors will grow into a platform.

Sensors already allowed headsets, whether buds, over the ear or on the ear to become smart to improve user experience, like when detecting if you are wearing them or not to determine if you want to pick up an incoming call from the phone or the headset. Plantronics and Jabra have had these kinds of features for years. Improvements in miniaturization added functionalities that turned some earbuds into wearables, or hearables devices, if you prefer. Devices that can track full workouts like the Bragi Dash. Considering the great work Microsoft had done with Band (not so much on the hardware but capabilities) they could even think beyond Cortana and leverage some of that know-how to deliver a fully-fledged hearable solution increasing stickiness and return on investment.

I would not be surprised if Apple considered the role AirPods or Power Beats Pro could play as a wearable device as an alternative to Apple Watch for those users who do not want to wear a watch but are interested in fitness tracking. I would also expect Samsung to consider a “sport” or “active” version of their Galaxy Buds to cater to a similar market.

 

AirPods have certainly become the benchmark for wireless earbuds in the same way iPhone has been the benchmark in the smartphone market. The “AirPods killer” is the earbuds’ version of the “iPhone killer” in the smartphone segment. Yet, I find that when it comes to wireless earbuds, there is much more dynamism in what brands can deliver and how they differentiate building on what their core competencies are, including artificial intelligence and machine learning, which will make it harder to compare like for like.

The Microsoft Surface Is A Yachting Cap, Not A Yacht

Following Microsoft’s Earnings, a lot of people started talking about how “successful” the Surface 2-in-1 computer was becoming. That reminded me of the following anecdote:

    Tristan Bernard (1866–1947), was a French dramatist and novelist.

    A friend saw Tristan Bernard on the promenade at Deauville wearing a jaunty new yachting cap. When he remarked on it, Bernard replied that he had just bought it with his winnings from the previous night’s play at the casino. The friend congratulated him.

    “Ah,” said Bernard, “but what I lost would have bought me the yacht.” ((Excerpt From: Andre Bernard. “Bartlett’s Book of Anecdotes.” iBooks. https://itun.es/us/sJzuv.l))

When we find ourselves tempted to congratulate Microsoft on the success of its Surface 2-in-1, let us remember that it is but a yachting cap, not a yacht.

The Apple Mac Takes Its Place In The Post-PC World

PC Resurgent

The PC market turnaround is real. ~ Bob O’Donnell (@bobodtech) 10/15/14

Q: IS THE PC MARKET TURNAROUND REAL?

A: No.

Macs are resurgent. Google Chrome is slowly gaining ground. However, sales of traditional personal notebook and desktop computers that run the Windows Operating System and are known as “PCs”, continue to falter.

3RDQMAC

In the second quarter of 2014, Apple’s Mac sales grew by 18% while overall PC sales declined by 1%.

In the third quarter of 2014, Apple’s Mac sales grew by 21% while overall PC sales declined by 1.7%.

MacvPCgrowth

On the other hand according to NPD, PCs went from 75% share to 68% in two years.

234c1507-1be9-445e-af87-dc9079cb6416-620x306
Source: “PC market still shrinking, with smaller firms squeezed out“, Charles Arthur

Conflating Apple’s Mac, Google’s Chrome, and Windows powered PCs conceals, rather than reveals, what is happening in the personal computing category. PCs were expected to get a big bump in sales from the end of life of Windows XP. A bump occurred, but it hasn’t signified a recovery, it has only slowed the PC’s decline.

PC Dead

So you believe the Windows PC is dead? ~ Oren Kaufman (@HorhayAtAMD) 10/20/14

PCs dead? I think not…when are people going to finally wake up? ~ Bob O’Donnell (@bobodtech)

Q: IS THE PC DEAD?

No.

No reasonable, rational observer of the tech marketplace is claiming the PC is dead. That’s a straw man — an exaggerated depiction of an opposing argument easily disproven. However, there is nothing unreasonable or irrational in asserting the PC will never again regain its once preeminent position in computing. In 2006, the PC dominated computing with around 95% market share. Today, the PC is but one of three branches of computing and, in terms of market share, it is rapidly becoming the lessor of the three.

PCyoy

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Macs Resurgent

(T)his is claim chowder for those claiming death of PC form factor. ~ Oren Kaufman (@HorhayAtAMD) 10/20/14

Q: DO INCREASED MAC SALES REFUTE CLAIMS THE PC HAS LOST PREEMINENCE?

A: No.

Mac sales are up, but they are not increasing overall desktop and notebook sales. Instead, Mac sales seem to be displacing PC sales. Despite the increased Mac sales, notebooks and desktops as a whole continue to decline.

PCwoMac

iPads

Windows 8 launched during a time when lots of people said that tablets would kill the PC. Does anyone still think that? ~ Harry McCracken (@harrymccracken) 9/30/14

Looks like AAPL made more money on PCs than tablets. What was that about the PC being dead again? ~ Bob O’Donnell (@bobodtech)

Q: DO INCREASED MAC SALES REFUTE CLAIMS IPADS/TABLETS HAVE SIGNIFICANTLY IMPACTED PC SALES?

No.

We have to keep things in perspective. PC sales are mildly declining. Smartphone sales are rapidly growing. Tablet sales are flat, but they still easily outsell PCs.

There are now close to twice as many iPads as Macs in use. ~ Benedict Evans (@BenedictEvans) 9/22/14

Just think about that for a second. Macs have been around for 30 years. iPads have been around for 4 years. Yet already, there are twice as many iPads in use as there are Macs.

Despite the Mac’s recent surge and the iPad’s stalled growth, iPads easily outsell Macs and the iPad’s base is therefore growing much faster. Just look at the sales numbers. In the third quarter of 2014, Apple sold 39.3 million iPhones. They sold 12.3 million iPads. And, in a record breaking quarter, Apple sold 5.5 million Macs. That means the much criticized iPad is outselling Macs by more than 2-to-1 and iPhones are outselling Macs by more than 5-to-1. The surging Mac is not catching up. It’s falling further and further behind.

iPadoutsellMac

As the chart above shows, even though iPad sales are flat and Mac sales are surging, iPad sales are still, far, far greater than those of the Mac. The Mac is not going to help the notebook and desktop form factors reclaim their once dominant position in computing. Rather, with every passing day, the notebook and the desktop’s total share of the computing pie becomes ever smaller.

Next quarter, Apple will sell its billionth iOS device (around 950m so far) ~ Jan Dawson (@jandawson) 10/20/14

Apple will probably sell more iPhones & iPads this quarter than there are Macs in use (~80m). ~ Benedict Evans (@BenedictEvans) 10/20/14

IDC said worldwide PC shipments for the third quarter of 2014 were 78.5 million, down -1.7% year-over-year. ((IDC had an odd way of reporting this news. They said, “Global PC Shipments Exceed Forecast with Mild Improvement in Consumer Demand”. Translation? The decline wasn’t as bad as they expected it to be. But it was still a decline of 1.7%.))

Would not be surprised if 90 million iOS devices will ship next quarter. ~ Horace Dediu (@asymco) 10/20/14

Let’s try to put the above information in perspective. Last quarter, the desktop and notebook form factor sold 78.5 million units. Next quarter it is likely iOS alone — the minority platform — will outsell the entire PC industry. Add in Android and “other” and it’s no contest.

Apple will pass 1bn cumulative iOS device sold this year. Android will pass 3bn. ~ Benedict Evans (@BenedictEvans) 9/18/14

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Macs But Not PCs

IMO Mac sales are increasing because Apple is great at leveraging their monopolies. iOS only works with OSX so Mac sales up. ~ Oren Kaufman (@HorhayAtAMD) 10/20/14

Q: WHY ARE MAC SALES RISING WHILE PC SALES ARE FALLING?

I’m certain the “Halo Effect” is a contributing factor to the Mac’s increased sales. The more iOS owners there are, the more likely it is some of them will choose a Mac as their next notebook or desktop computer.

I’m even more certain Apple’s “continuity” feature is going to make Macs ever more attractive to iOS users. The close integration between the iPhone, the iPad and the Mac, makes the Mac a natural choice for many iOS owners.

Having used Continuity, Handoff across MacBook, iPad and iPhone, I can say it’s awesome. I would have expected Microsoft to get there first. ~ Patrick Moorhead (@PatrickMoorhead) 10/23/14

But here is my pet theory as to why the Mac is growing while the PC continues to decline.

In 2006, almost anyone who owned a computer owned a PC. Today, we can choose between a PC and a variety of non-PC computing alternatives, including phones, tablets, Macs, etc. Many people feel little need to upgrade their existing PCs. Others feel no need to own a PC at all.

I still believe the traditional notebook and desktop form factor is overkill for most mainstream consumers. ~ Ben Bajarin

However, many people absolutely and positively need the power and flexibility provided by a notebook or desktop computer. These potential PC buyers differ from those in 2006. In 2006, the PC was (almost) the only game in town, so everybody got a PC. Power users got powerful PCs and people who needed minimal computing power purchased the cheapest PC they could find. Today, people who barely need a PC are opting for phones and tablets instead. That leaves only power PC users as a potential PC buyers.

The power user never has, and never will, buy a cheap PC. They know their computing needs will only be met by powerful computing machines. Here’s the important bit. Many power users are realizing if they’re going to be spending a thousand dollars and more for a computing device, the best PC…is a Mac.

In other words, for the budget conscious, the Mac compares poorly to the budget PC. But to the power conscious, the Mac compares very favorably to the top-of-the-line PC. Macs are a premium product and more and more, the only people buying notebooks and desktops are power users who are shopping for premium computing devices.

[pullquote]Increased Mac sales are not proof the PC form factor is becoming more popular. Rather, it is proof notebooks and desktops are becoming a premium niche[/pullquote]

In my opinion, Mac sales prove the exact opposite of what the “PC-IS-RESURGENT” crowd is contending. Increased Mac sales are not proof the PC form factor is becoming more popular. On the contrary, increased Mac sales are proof the PC form factor is becoming a premium niche.

Post-PC

Maybe we aren’t in a post-PC world. Maybe it’s an also-PC world. ~ Farhad Manjoo (@fmanjoo) 10/20/14

Q: ARE WE IN SOMETHING OTHER THAN A POST-PC WORLD?

No.

If a person as informed and as intelligent as Farhad Manjoo doesn’t know what “Post-PC” means, then I’m guessing most of us don’t understand what the term means either.

The Stone Age did not end because we stopped using stones. The PC era isn’tending because we stopped using PCs. ~ Horace Dediu (@asymco) 10/24/14

Post-PC does not mean the PC goes away. It does not mean we only use phones and tablets to do our computing. It simply means the PC is no longer the center of our computing universe.

“PCs are going to be like trucks,” Jobs said. “They are still going to be around.” However, he said, only “one out of x people will need them.” ~ AllThingsD, 2010

Emphasis added.

Apple has always emphasized the importance of the Mac in the post-PC world. Shortly after taking the reins at Apple, Tim Cook had this to say about the Mac:

[pullquote]As people walk away from the PC, it becomes clear that the Mac is what you want if you want a PC.[/pullquote]

And we haven’t given up on the Mac. A lot of people are throwing in the towel right now on the PC. We’re still spending an enormous amount on really great talent and people on the Macs of the future. And we have some really cool things coming out there. Because we believe as people walk away from the PC, it becomes clear that the Mac is what you want if you want a PC.

Two years later, that statement is looking mighty prescient.

Apple’s position is, whether it be a Mac or an iPad or an iPhone, people should use the right tool for the task at hand. In 2006, we owned one computing device. In 2015, we will own multiple computing devices. Truth be told, we already live in that reality today. Multiple computing devices are the norm not the exception.

Globally, the average connected devices per person is 2. In USA it is 2.8 ~ Ben Bajarin (@BenBajarin) 8/21/14

90% of students in the UK own both a laptop and a smartphone. A further 40% have a tablet computer ~ BBC News

Ironically, it was Bill Gates, in 2007, who predicted the multi-device computing world that we live in today:

Mossberg: What’s your device in five years that you’ll rely on the most?

Gates: I don’t think you’ll have one device.

I think you’ll have a full-screen device that you can carry around and you’ll do dramatically more reading off of that – yeah, I believe in the Tablet form factor…

…and then you’ll have the device that fits in your pocket…

…and then we’ll have the evolution of the portable machine. And the evolution of the phone will both be extremely high volume, complementary–that is, if you own one, you’re more likely to own the other.

~ AllThingsD

Now tell me, does that sound like the vision embodied by Microsoft’s 2-in-1 Surface ((If you think the Surface is doing well, you need to read this article by Mark Rogowsky and look at this chart by Jan Dawson.

Surface-financials

Source: THOUGHTS ON MICROSOFT’S Q3 2014 EARNINGS)) computer or does that sound more like the vision embodied by Apple’s iPhone, iPad, and Mac portfolio of computing devices? (And don’t forget the upcoming Apple Watch, either.)

To be honest, I don’t much care what your opinion is. The market is the only opinion that matters and the market has emphatically expressed its opinion by overwhelmingly voting for multiple devices. If you don’t think multi-device is the direction computing should be taking, argue with the market, not me.

Conclusion

I believe as we move further and further into the post-PC (or multi-computing device) era, two things are going to happen.

First, the base number of notebook and desktop computers will remain at, or near, current levels. However, the form factor’s overall share of the total number of personal computing devices will continue to shrink as phones and tablets rapidly spread across the globe.

Second, those who need less computing power will eschew the notebook and desktop form factor. Those who need the form factor, but eschew the power and complexity, will gravitate toward devices like the Chromebook. And those who need both the form factor and the power it embodies, will move towards Macs.

What was unthinkable only ten years ago is happening. The traditional Windows PC is being squeezed by Chromebooks from below and by Macs from above and is rapidly moving from monopoly to minority status. The Mac on the other hand is emerging from the shadow of the Windows PC and, among power users, is taking its place as the majority player. ((26.8% of the notebooks and desktops sold in the U.S. between July 4th and September 1st were Macs.))

Analyzing the Surface Pro 3

I’ve spent the past week with a Surface Pro 3. I’ve used every previous version of Surface and given what the promise of a 2-in-1 PC was supposed to be, the Surface Pro 3 is the closest yet to fulfilling that promise. I was very harsh on the original Surface and, while my overall thesis (which we will get to) on the 2-in-1 PC form factor has not changed, my stance on the Surface itself has softened. Don’t consider this a review of the Surface Pro 3. There are many good reviews of the Surface Pro 3 and serious buyers should read those as well. I’d like to do a more analytical take on the form factor.

Comparing to a Tablet or a Laptop?

The first point we need to address is which computing form factor, laptop or tablet, must we use to create a comparison for the Surface Pro 3. Which type of buyer is the Surface attempting to appeal to? The potential laptop buyer or the potential tablet buyer? Microsoft’s own marketing gives us a clue. They are clearly targeting a customer looking to buy a laptop in the near future.

Screen Shot 2014-08-19 at 8.56.49 PM

On that basis how does it compare to a laptop? Overall, it is a decent notebook. Many features are exceptional, like the extremely high screen resolution of 2160 x 1440. This should literally be the standard resolution on all medium to premium priced Windows PCs. While I appreciated the screen compared to other Windows PCs I tested, I am spoiled by the 15″ Retina MacBook Pro, my primary notebook, with a resolution of 2880 x 1800. As I used the Surface Pro 3, I had to leave my Mac experience behind and just think of the Surface as a competitor to other similarly priced premium Windows PCs. Two of my favorite premium Windows PCs are the Lenovo Carbon X1 and the Dell XPS 13. Despite what many may believe about the Surface Pro 3, I would consider it to be in a class of premium Windows PC products. Given that a traditional clamshell notebook is the Surface’s competition, we have to again evaluate it as a viable notebook competitor.

Overall, I was pleased and impressed with the Surface Pro 3 as a notebook. The size and weight certainly put it into the class of ultra-portables. The Touch Cover keyboard case has been dramatically improved. But there was one area that was a rub for me. What I call “time to on.” Time to on is the time it takes to open my laptop and start working. Every busy person who walks from meeting to meeting knows how valuable it is to sit down, open your notebook, and quickly be ready to start a meeting. Since Microsoft wants to compare the Surface Pro 3 to a MacBook Air, I compared the “time to on” of both machines. For this test, I only looked at the time it took for me to open my notebook and get to a point where my computer was on and usable. For both tests, the MacBook Air and Surface Pro 3 were placed in the exact same position on the desk in front of me. I simply tested how long it took for each machine to be usable from a “sleep state”.

The average “time to on” in five tests with a MacBook Air was 1.63 seconds. That’s the time it took to flip the lid up, wake up, and let me move the mouse and start using the notebook. The average “time to on” of the Surface Pro 3 in five tests was 6.68 seconds. That was the time it took to tilt it up off the desk, set it back down, flip the keyboard down, flip out the kickstand, swipe the log-in screen (no passcode set), and actively be using the mouse and the notebook. Now, a 5.05 second difference may not seem like a lot, but when you compare the difference in “experience” to having a near instant on notebook to a somewhat clunky process to get the Surface up and running, the two seem like worlds apart.

The Surface as a Tablet

I’m not going to spend a ton of time on this part, since consensus seems to be that comparing the Surface to a tablet (iPad) is a losing battle. I actually think Windows 8 is becoming a better large screen tablet platform than Android, but that is because Microsoft is getting some decent larger screen dedicated tablet apps where Android is not. However, very few are buying an Android tablet as a PC replacement, and even fewer are buying Android tablets with screen sizes above 9″. One other positive improvement was Microsoft’s adding of a better portrait mode experience with Windows 8.1. Previously Windows 8, running on tablet form factors, was terrible in portrait mode. Some discount this mode but our observational research shows extremely high amounts of use in portrait mode for many tablet use cases. I’ve argued portrait mode is an important experience with any product attempting to be a tablet. Microsoft finally got portrait mode usable.

Another plus for the Surface was the stylus. Not a feature I see being attractive in pure consumer markets but in vertical enterprise environments like in medical, construction, legal, etc., where notes and pen/paper are still heavily used, I can see the appeal. The stylus was not perfect, but still worked better than any stylus solution I’ve used to date.

The Surface Pro 3 is a bit too large for me in pure slate mode. Most of the time I use my iPad I am laying down in bed, or reclining on the couch or a chair. Most often, I’m also holding the iPad up and not resting it on my body or chest. While the Surface Pro 3 is the thinnest and lightest Surface yet, it still caused discomfort while holding it for long periods of time. In all honesty, the Surface Pro 3 would be an outstanding tablet, if the iPad and iOS tablet ecosystem was not in existence.

Who is the Surface Pro 3 for?

This is the main question. I have no doubt there is a market for the Surface. As I point out, the Surface Pro 3, while competitive, will be bested experientially by the pure notebook clamshell form factor. However, as I pointed out earlier, in the Microsoft ecosystem, given the touch landscape for devices and Windows 8 in general, the Surface Pro 3 is a competitive product with other premium Windows notebooks.

While, I struggle to see the opportunity for the Surface in pure consumer markets, I do feel Microsoft has improved the hardware so that, for key vertical segments, the Surface Pro 3 is a viable solution that will suffice as a laptop but can add perks of tablet mode for those in specific fields where those features are useful.

In this week’s Tech.pinions Podcast we discussed the 2-in-1 PC at length. I still believe the demand or market pull for this product is limited. That being said, there are plenty of things Microsoft, Intel, and partners can do to extend this category. Given the trends in tablets we are seeing, where new quarterly data is showing up signaling usage declining in key areas by tablet users, I fear the tablet was not the potentially disruptive force Microsoft and Intel believed it to be. Which means it is reasonable the entire touch based desktop/notebook/2-1 solutions were built out of a reaction to a concern that didn’t really exist.

Each product has its role, its context, and its value. For some, a pure slate will be a form of entertainment. For some, a laptop/notebook replacement. Still, for others, it is a luxury. And in some enterprise markets it will be a necessity. Intel and Microsoft would love to believe the 2-in-1 form factor is the future of the notebook. This may be the case, and those two companies can certainly force their will on the ecosystem. Intel hopes that this form factor will make up over 70% of the notebook shipments in 2018. But my contention is if that happens, it won’t be because the market demands it.

Microsoft’s Surface Ads: The Good, The Bad, The Ugly

Microsoft has introduced three new ads for its Surface Pro 3 tablets called “Power,” “Head to Head,” and “Crowded.” You can view them HERE.

The Good

The ads are well done. Clever, funny, short and to the point.

I’ve seen some griping that the ads are entirely negative:

      “I don’t know why they would compare themselves to someone else, instead of saying just why people should be buying yours,” said Joe Balsarotti, president of St. Peters, Mo.-based Microsoft partner Software To Go. “By doing that, it’s admitting that Apple is the standard. Way back when I took marketing classes, that would have been a big no-no.” ~ via CRN

I disagree. Negative ads work. Further, I see these ads as differentiating and defining Microsoft’s products. That’s a good thing.

      (O)ne Apple partner told CRN the ad campaign is “smart.”

      “It positions the surface as a hybrid touch-laptop device, which I think is very smart,” said Michael Oh, CEO of Boston-based Apple partner Tech Superpowers. “The advertising is more of a positioning move. A brand awareness tool. It would be obvious to compare [the Surface Pro 3] to the iPad, but the MacBook air is smarter to go after, because the Surface is a bridge device to get people over to the Windows 8 side of things.” ~ via CRN

I like that Microsoft is defining its product and I think the ads do a good job of explaining the advantages of a 2-in-1 product. However, as we’ll see below, I don’t think 2-in-1s are where Microsoft wants to be.

Finally, these ads are SO much more tasteful than many of the older Microsoft ads.

The only problem with Microsoft is that they have no taste. ~ Steve Jobs

Scroogled

All the money in the world can’t buy you taste. ~ Horace Dediu (@asymco)

Many of Microsoft past ads were awkward, puerile and embarrassing. Compared to those, these ads are like a breath of fresh air. I attribute the change to Satya Nadella. He strikes me as a class act. It gives me hope that future Microsoft advertising will be a cut above their previous efforts.

The Bad

Criticizing another’s garden doesn’t keep the weeds out of your own.

Question: Why does Microsoft continue to rely upon Speeds and Feeds?

Answer: I don’t think they can help themselves.

People don`t ask for facts in making up their minds.They would rather have one good, soul-satisfying emotion than a dozen facts. ~ Leavitt

Question: Is pen input as attractive to customers as Microsoft thinks it is?

Answer: I doubt it.

      “This is my favorite thing. I can write with a pen.” ~ Narrator

That’s your favorite thing about the Surface? Seriously?

New Surface ads pushing pen input are how you know that, unfortunately, Gates is still running the tablet show at Microsoft. ~ Tom Reestman (@treestman)

The iPhone has been around for seven years. People have gotten very used to the fact that — when it comes to tablet computers (including smartphones) — the finger is mightier than the pen. Pen input is great for niche markets but Microsoft doesn’t want its products to be niche.

Question: Is “full Adobe Photoshop” as attractive to customers as Microsoft thinks it is?

Answer: I doubt it.

“Full” Adobe Photoshop is available on the MacBook Air. And the absence of “full” Adobe Photoshop didn’t stop the tablet from becoming the fastest adopted product in history. So what, exactly, is Microsoft’s point?

Question: Can the Surface really go head-to-head with the MacBook Air?

Answer: No. Microsoft paired the new advertising with a promotion that offers $650 in store credit to customers who buy a Surface Pro 3 and trade in their MacBook Air. This is a tacit admission the Surface is simply not price competitive.

It’s incredibly tough to imagine anyone would leave a MacBook Air for a Surface Pro 3. More specifically, that they’d leave the ability to run OS X on hardware of that caliber for Windows 8 on anything. Especially because the MacBook Air can run OS X and Windows 8. ~ Rene Ritchie

Question: Why is the Surface going head-to-head with the MacBook Air?

In The Art of War, one of Sun Tzu’s most profound principles was “to avoid what is strong and strike what is weak.”

As water seeks the easiest path to the sea, so armies should avoid obstacles and seek avenues of least resistance. ~ Sun Tzu

Why then is Microsoft going after the MacBook Air? There are so many easier targets. Why doesn’t Microsoft target Dell, HP, Lenovo, and other PC vendors instead? As Rene Ritchie put it:

People who buy PC laptops and hybrids are already Windows-only customers. All the things Microsoft is actually showing off in their ads — great specs, capacitive touch, pen input, etc. are probably something Windows-only customers would be really interested in. ~ Rene Ritchie

So why is Microsoft picking on the MacBook Air instead of other PC vendors?

Answer: Because it has too.

Other PC vendors are Microsoft’s so-called OEM partners. Microsoft doesn’t want to (literally) advertise the fact that they’re competing directly against their own partners — but they still are.

Question: Why isn’t Microsoft competing in the tablet category?

Answer: There is no good answer.

      “(I)t’s not just a tablet it’s really a laptop” ~ Narrator

“JUST” a tablet, eh? Clearly Microsoft either still doesn’t get tablets or they’re in denial.

According to the Pew Research Center, tablets are now the fastest adopted tech ever:

FastAdopt

In 2015, more tablets will ship than PCs.

Crossing

And tablets have pushed Apple into first place in computer sales:

Q2 2014 PC vendor share: Apple (including iPads) 26%, Lenovo 22%, HP 20%, Dell 15%, Acer 9%. ~ Ben Bajarin (@BenBajarin)

Yet Microsoft has virtually NOTHING to offer in this area.

Question: Why is Microsoft targeting PCs — a diminishing market segment?

Answer: I don’t know.

Each Microsoft ad ends with the tagline:

      “The tablet that can replace your laptop.”

Clearly, Microsoft is positioning the Surface as a laptop alternative rather than an iPad alternative.

If being more PC-like is what tablets need to increase sales, then PC sales wouldn’t be declining in the first place. ~ Tom Reestman (@treestman)

PCs are still very important but 1) they are not a growth sector and 2) Microsoft already owns the PC sector. Microsoft’s number one problem is their Windows and Office cash cows are trapped on PCs. They should be trying to move OUT of PCs, not doubling down on winning the PC marketplace.

jobspuck600

Steve Jobs favored the quote: “Skate where the puck is going to be.” With the Surface, Microsoft seeks to do the very opposite — to metaphorically skate backwards to a place where the puck will never be again.

Further, as tablets take over the low end of the PC market, only those who really need the full power of the PC will continue to use PCs. This means most PC buyers will be power users who will want MORE powerful computers, not hybrids. ((As PCs become the choice of power users, there WILL be a place for the 2-in-1. Road warriors will love it. However, Microsoft needs to appeal to a much broader section of the market than that.)) That is one of the reasons why the Mac has increased sales by 18% while overall PC sales decreased by 2%. ((Mac is up 18% in a PC market that is shrinking at 2% (according to IDC). ~ Horace Dediu (@asymco) 7/22/14))

And we haven’t given up on the Mac. … Because we believe as people walk away from the PC, it becomes clear that the Mac is what you want if you want a PC. ~ Tim Cook

Question: Why does Microsoft think that 2-in-1s are the future?

Answer: Because they have to. It’s the only way they can justify the use of Windows 8 on a tablet.

There is no evidence — NONE — to support the proposition that 2-in-1s are a mass market product.

Microsoft has lost $1.7 billion on the Surface…so far…which reminds me of a joke:

I remember the time I was kidnapped and they sent a piece of my finger to my father. He said he wanted more proof. ~ Rodney Dangerfield

Apparently, Microsoft is like Rodney Dangerfield’s father. Losing $1.7 billion isn’t enough for them. They want more proof. So here it is.

Opportunity cost & damage to OEM relations far greater [than 1.7 billion]. ~ Ben Thompson (@monkbent)

Microsoft’s OEM partners have had so little success in selling 2-in-1s that many of them have abandoned the market altogether.

To know the road ahead, ask those coming back. ~ Chinese proverb

If you look at the Canalys chart comparing Notebook PCs, Worldwide, units by form-factor, Q1 2013 – Q2 2014, you’ll see 2-in-1s have both figuratively and literally flat-lined.

If you’re ridin’ ahead of the herd, take a look back every now and then to make sure it’s still there. ~Cowboy wisdom

Question: If 2-in-1s are so important, than why aren’t either Apple or Google making one?

The wise learn many things from their enemies. ~ Aristophanes

Answer: The most likely answer is Apple and Google know something Microsoft doesn’t. Which reminds me of another joke:

“Pat: Mike, I’m calling you from the freeway on my new cell phone.

Mike: Be careful, Pat. They just said on the radio that there’s a nut driving the wrong way on the freeway.

Pat: One nut? Hell, there are hundreds of them! ((Excerpt From: Thomas Cathcart. “Plato and a Platypus Walk Into a Bar.” iBooks. https://itun.es/us/CWj9A.l))

By their actions, both the marketplace and Microsoft’s competitors are trying to show Microsoft the way. But Microsoft is stubbornly refusing to acknowledge the direction that the market has taken.

The Ugly

Question: What is the glaring omission in the Microsoft ads?

[pullquote]Nature abhors a vacuum; and a vacuum abhors cats; and cats abhor mice; and mice abhor tablets; and tablets abhor Windows 8[/pullquote]

Answer: Window 8.

It’s telling that “run Windows instead of OS X” wasn’t even suggested as a benefit in any of these three new ads. ~ Rene Ritchie

Telling indeed. A Surface 2-in-1 with a Windows 8 operating system is like a gold mine without any gold. The Surface and the mine may be in fabulous condition — but in the end, you’re only going to get the shaft.

A user interface is like a joke. If you have to explain it, it’s not that good. ~ Startup Vitamins (@startupvitamins)

In “The Windows 8 Mistake“, Jan Dawson succinctly explains where Microsoft went wrong:

      Instead of taking a consumer-led approach and unifying two fundamentally similar products, smartphones and tablets, with a single OS, Microsoft tried to bridge the gap between two fundamentally dissimilar products, the desktop and tablet. And all of this was in the service of establishing the PC operating system licensing model and not the smartphone OS licensing model on tablets.

      – – – – –

      A PC model applied to tablets would allow (Microsoft) to continue charging high licensing fees for Windows, make Office applications easily available on the devices, and make them compatible with existing Windows applications from third parties. But it’s important to note that (the Windows 8 operating system) was a decision driven entirely by what was perceived to be best for Microsoft, not by what would be best for the actual users of the products.

[Emphasis added.]

The real distinction is between those who adapt their purposes to reality and those who seek to mold reality in the light of their purposes. ~ Henry Kissinger

Conclusion

Question: Should Microsoft be doing hardware?

I answer in the affirmative with an emphatic “No.” ~ Sir Boyle Roche

Microsoft’s Surface ads are good. However, the best ads in the world won’t help a bad strategy. The worst thing about the Surface ads is they show that Nadella has not gotten his priorities in order — he’s still rushing headlong down the wrong path.

[pullquote]Microsoft has forgotten the purpose for which the Surface was made[/pullquote]

PREMISE #1: Windows 8 was designed to make Windows relevant on tablets as well as desktops.

PREMISE #2: The Surface 2-in-1 was designed to assist the transition of Windows 8 from notebooks to tablets.

FACT: The current ad campaign targets the Surface at notebooks, not tablets.

QUESTION: So what purpose does the Surface serve?

CONCLUSION: None.

By losing your goal, you have lost your way. ~ Friedrich Nietzsche

Satya Nadella said Microsoft will show ‘courage in the face of reality’. Now is the time to display some of that courage.

Some of us think holding on makes us strong; but sometimes it is letting go. ~ Hermann Hesse

Ironically, Microsoft’s Surface ads fully demonstrate the futility of Microsoft’s Surface strategy. If the Surface ever had any purpose, the new ads make it abundantly clear that the Surface is no longer serving that purpose.

We are a software company at the end of the day. ~ Satya Nadella

It’s time for Microsoft to re-remember their purpose, to re-remember who they are, and to acknowledge that sometimes it’s more courageous to let go of what you’ve got than to hold on to what you’re not.

Steve Jobs Reveals The Only Way Forward For Windows Phone

The only way forward for Windows Phone — that is not death — is work. Real work. In the 21st century, real work is inherently collaborative.

Collaboration is the Achilles Heel of all things iPhone, iOS, and Apple.

Steve Jobs, for all his greatness, for all he achieved, did not play well with others. Evidence is legion. Jobs forced the future upon us, refusing to budge to present day concerns. His iconoclast’s vision is reflected in every Apple product and has been since the beginning.

Jobs exalted the individual, from the singular 1984 rebel through to the lone, joyful iPod listener to now, where budding creatives obsessively focus their gaze upon the shimmering, inviting iPhone screen and not upon the people, life and physical flotsam whirring about.

1984_woman_with_hammer_5

ipod-advertising1-1

article-2525875-1A2E94C600000578-599_634x330

Apple marketing dutifully reflects both Apple products and Apple culture, a culture which reveres solitary pursuits and nourishes individual genius.

iphone 5s dreams

This leaves a strategic opening for Microsoft and Windows Phone. Not by creating a disingenuous demarcation between “work” (Microsoft) and “play” (Apple), but by optimizing its platform, its cloud, its tools, its services — and especially its mobile devices — for collaboration.

Steve Jobs empowered us, liberated us, heightened our creative abilities. He transformed us into digital cowboys, technological gunslingers, mad genius loners. Not collaborators. His heroes do not need others nor do they require consensus.

crazy ones

To quote Jobs:

Here’s to the crazy ones, the misfits, the rebels, the troublemakers, the round pegs in the square holes… the ones who see things differently — they’re not fond of rules…

Such people are the opposite of collaborative. Yet, for all but a few crazy ones, greatness may only be accomplished via continuous collaboration and teamwork, not by being that round peg in the square hole.

Out Of Many One

Make no mistake. This is not about an Apple failure. Apple products, spanning the iPhone, the iPad and the Mac, are exemplary. But, their design and intent, empowering the individual, offers a clearing for whichever company develops computing and communication hardware and services which exalt the group.

Enabling new forms of work and new forms of creativity, facilitating time-shifting, globe-spanning, multi-modal collaboration from men and women, girls and boys whose full potential is untapped when pursuing their visions in isolation is the only way forward for Windows Phone.

The pieces to make this happen may already exist:

  • multi-screen function (desktop, mobile)
  • cloud support
  • Yammer
  • Skype
  • Exchange
  • Office 365
  • Office Lens
  • OneDrive
  • OneNote

Each of these are capable of providing highly functioning services, synchronized sharing, and any time, any place collaboration. The problem, of course, is none of these are yet fully optimized for mobile in general, or for Windows Phone in particular.

Jobs Informs Nadella

The recent revisionist history (such as herehere and here) proclaiming Steve Jobs as a world class “collaborator” is simply unfounded. Recall the single biggest change at Apple since the passing of Jobs: Tim Cook’s executive management shakeup, which the company itself positioned thusly:

Apple Announces Changes to Increase Collaboration Across Hardware, Software & Services (emphasis added)

Apple’s pro-individual, non-collaborative, go-it-alone DNA runs deep. This has created an opening for giant Microsoft’s tiny Windows Phone: collaborative creativity, collaborative work.

It bears repeating: by “work” I do not mean those activities presently optimized for PCs inside the enterprise. Microsoft’s fading retort that Windows is the platform for “work” badly underestimates how capable, valued and productive users of Apple devices are. But Apple hardware and supporting services are purposefully created for the individual. The future demands devices — hardware — for the group, not the one.

It also bears repeating: time is quickly running out for Windows Phone.

In his “bold ambition” statement, Nadella mentioned Microsoft’s commitment to “first party hardware” four times. Yet, within his 3,500-word manifesto, he mentioned “Windows Phone” only twice, and even then withholding clear affirmation:

(1) Today the Cortana app on my Windows Phone merges data from highway sensors and my own calendar and simply reminds me to leave work to make it to my daughter’s recital on time.

(2) We will responsibly make the market for Windows Phone.

This and other Nadella statements led me to state several weeks ago that:

Prediction: Microsoft will focus its mobile hardware efforts not on Windows Phone but on Surface, on new mobile gaming devices, and new mobile “productivity” devices; anything and everything that might help them uncover that next great mobile computing inflection point. Smartphones are lost to them.

I now wish to amend that prediction. Microsoft lost the smartphone wars — that much is clear. But smartphones are lost to Microsoft only in how we define such devices at the present. An entirely new or repurposed mobile device which advances creative and productive collaboration as easily as iPhone advances personalized empowerment is still within Microsoft’s reach.

iPads At The Border

I believe (nearly) every child that comes to America seeking refuge should be welcome. I fully understand if you disagree. It is a complex issue after all. 

We are told tens of thousands of children are showing up at America’s southern border hoping to be allowed permanent entry. The President has requested many billions of dollars to help address this pressing entanglement. The opposition party has similarly offered up many billions, albeit far fewer than the President says are necessary.

What then?

Assuming some, most, or all of these children are allowed permanent entry into the United States, what then?

I have no answer for this. I do have a suggestion, however: I think we should give every single one of these children – every child in America, in fact – a tablet, preferably an iPad.

Readme

What would my proposal cost?

Estimates, which vary wildly, suggest 100,000 children will seek refuge in America this year, and another 100,000 next year. An iPad mini with Retina display retails for $400. Sold in bulk, and for goodwill, Apple may be ready to part with these for $200. Certainly, other tablet vendors would be so willing.

$200 x 200,000 children = $40 million

But let’s not give tablets only to new entrants, but to all children in America, at least those of school age. There are approximately 45 million children, ages 6-17, in the United States. Thus:

45,000,000 x $200 = $9 billion

Yes, that’s a staggering sum. Except, Americans already spend over $650 billion every single year on public K-12 education and another $350 billion every year on  higher education, at minimum. An iPad mini is reasonably future-proof, and likely to last at least three years, for example. Even if we factor my potential tablet spend against only one year of K-12 expenditures, that’s:

$9,000,000,000 / $650,000,000,000 = 0.014

That’s less than 1.5% of one year’s K-12 spend. With this, 45 million children have a tablet — a tablet that can come preloaded with literally thousands of free books; books which reveal America’s history, greatness and failures. Books that teach, warn, inspire.

That’s just the start. There are thousands of free apps that promote creativity and collaboration. We can preload twenty or so on every device. Already, Apple includes iMovie, GarageBand, Pages and Numbers, among others, with every iPad.

hero_2x

Should the child be fortunate enough to have access to WiFi, YouTube offers amazing resources for self-directed learning. All free. iTunes U similarly offers a wealth of free courses for those with access.

Perhaps Fox will donate the entire Cosmos series toward this effort, helping us to inspire a generation to embrace science, discovery and their innate smartness.

A front facing camera will enable every child to take a picture of themselves and their surroundings, offering a document of their life and their world unmatched in scale.

The Diamond Age

Why do this?

Two reasons:

This is very likely the first and only time in human history where a nation can afford to provide every single child with a fully accessible, easily manipulated tool that contains or can retrieve nearly the entirety of that nation’s history, culture, great works of fiction, film, television, lectures, puzzles and knowledge.

Let’s seize this amazing opportunity!

In his Hugo-winning work, The Diamond Age, author Neal Stephenson posited a future where a young girl, poor, living on the margins, came into possession of a interactive book — what we now call a tablet — that educates and empowers her, leading her to achieve what was once assumed unattainable.

There are only two such ‘books’ in Stephenson’s future world. What a much better world we have now. In fact, in our present day reality, there are already hundreds of millions of such tablets. Even better: almost every one of them can be used, misused, manipulated and managed by nearly any child of any background without any prompting or guidance.

This is profoundly revolutionary.

The System Of The World

The second reason is self-directed learning has many lasting benefits.

Google founders Sergey Brin and Larry Page have famously credited Montessori schooling for spurring their entrepreneurial success. Montessori adheres to a self-directed learning model. Children follow their interests and avail themselves to information and knowledge in their own way and on their own time. Per Larry Page:

“I think (founding Google) was part of that training of not following rules and orders, and being self motivated, questioning what’s going on in the world and doing things a little bit differently.”

 Will Wright, video game pioneer and creator of The Sims, stated this of his self-directed Montessori education:

“Montessori taught me the joy of discovery. It showed you can become interested in pretty complex theories, like Pythagorean theory, say, by playing with blocks. SimCity comes right out of Montessori.”

Amazon CEO Jeff Bezos also attended Montessori school as a child.

Correlation is not causation. What leads a child toward success is no doubt a multi-variant process. But tablets can expose children to untold learning resources, creative opportunities, collaborative play and work. This seems like an opportunity the country should not pass up.

Recently, two villages in Ethiopia were provided with (Motorola Xoom) tablets preloaded with various apps, ebooks, movies, drawing programs and alphabet games. The First Grade children who received the tablets were illiterate, had never used paper and pencil, yet within a few months had taught themselves to read.

“Within five days, they were using 47 apps per child, per day. Within two weeks, they were singing ABC songs in the village, and within five months, they had hacked Android.”

It almost seems unjust to not provide every child with a tablet.

I know there are questions. Who will pay for this? What about theft? What about illicit online activities? Who decides which books to embed? Will the children spend too much time with their tablet

These are all answerable. Yes, really.

The larger question: Will it work? Haven’t laptops, PCs and other technologies in the schools failed to incite a learning revolution?

Perhaps. But at no point before now has there existed reasonably affordable, highly interactive tools that are personal, mobile, configurable, pose almost no barriers to operation, and which can store truly stunning amounts of knowledge and learning resources — all of it accessible with the swipe of a finger.

The children are here. The opportunity exists. Let’s be willing to fail with this.

Microsoft Removed Chesterton’s Fence

On Saturday, I explained why The Smartphone Is Not Merging With the PC. Apple and Google are moving in almost opposite directions from one another. But Microsoft? Their personal computing design philosophy is taking them nowhere fast. And one of the reasons for this failure in design is Microsoft is guilty of removing Chesterton’s Fence.

Chesterton’s fence is the principle that you should never take a fence down until you know the reason why it was put up.

The paraphrased quotation, was ascribed to Gilbert Keith Chesterton by John F. Kennedy in a 1945 notebook. The correct quotation is from Chesterton’s 1929 book, The Thing, in the chapter entitled, “The Drift from Domesticity”

      In the matter of reforming things, as distinct from deforming them, there is one plain and simple principle; a principle which will probably be called a paradox. There exists in such a case a certain institution or law; let us say, for the sake of simplicity, a fence or gate erected across a road. The more modern type of reformer goes gaily up to it and says, “I don’t see the use of this; let us clear it away.” To which the more intelligent type of reformer will do well to answer: “If you don’t see the use of it, I certainly won’t let you clear it away. Go away and think. Then, when you can come back and tell me that you do see the use of it, I may allow you to destroy it. ~

Wikipedia

For a decade, Microsoft tried, and failed, to master the tablet form factor. In April 2010, Apple introduced the iPad. In less than six months, Apple had sold more tablets than Microsoft had sold in the previous ten years. How could this be?

field

Apple built a Chesterton’s fence between the desktop and the tablet. The desktop used a mouse to enter pixel specific input. The tablet used a finger to enter touch input. Each form of input was separate, one from the other.

Remember, the iPad — especially in comparison to the Windows’ tablets that had preceded it — was wildly successful. However, Microsoft treated that success with utter disdain. They gaily came upon Apple’s method of using separate inputs for separate form factors and said: “I don’t see the use of this; let us clear it away.” They did not “go away and think”, they simply took the fence down without knowing the reason why it was put up in the first place.

Bill Gates’ Interview

The truth is actually a little more ominous than this. Listen to what Bill Gates had to say in this 2007 AllThingsD interview conducted by Walt Mossberg:

      MOSSBERG: What’s your device in five years that you’ll rely on the most.

GATES: I don’t think you’ll have one device…

I think you’ll have a full-screen device that you can carry around and you’ll do dramatically more reading off of that – yeah, I believe in the tablet form factor…

…and then you’ll have the device that fits in your pocket…

…and then we’ll have the evolution of the portable machine. And the evolution of the phone will both be extremely high volume, complementary–that is, if you own one, you’re more likely to own the other.

Sounds a lot like the iPad and the iPhone, right? And it doesn’t sound at all like the 2-in-1 Frankenstein’s monster Microsoft is trying to foist upon its unsuspecting customers.

Conclusion

The truth is, Microsoft didn’t take down Chesterton’s fence because they didn’t know any better. They took it down DESPITE knowing better. They took it down because they had to — because Apple’s separation of desktop and tablet inputs conflicted with Microsoft’s Windows business model. And having now removed the fence, Microsoft is seeing why it was put there in the first place. And so, in closing, the principle of Chesterton’s fence remains:

Never take a fence down until you know the reason why it was put up.

Deconstructing Satya

Last week, Microsoft CEO Satya Nadella laid bare his vision for the tech giant. It is borderline revolutionary.

From its early days, Microsoft has focused on using software and computing to empower people and businesses around the world. Nadella still clings to this laudable vision. However, he has now fundamentally flipped the seat of power, even as he fears to let go of all Microsoft has amassed over the decades.

Just as America’s Constitution enumerated inalienable rights all its people are endowed with, forever empowering even a single individual against the full force of the government, in a similar manner Nadella has positioned the user above all else.

This is radical. For Microsoft, it’s nearly unthinkable.

Nadella does not simply place emphasis on users instead of PCs, on productivity instead of Windows. He changes the equation of the software behemoth going forward.  This could set Microsoft apart from all others.

The most user-friendly tech company in the world, Apple, emphasizes ecosystem over device, lock-in over empowerment. Google takes from its own users when they are not looking. Amazon confounds its customers with Prime service, making it nearly impossible to ever fully know the actual price — or value — of any single item.

Nadella is positioning Microsoft on the side of the user. Security, privacy, productivity, empowerment. I believe this will have a profound and lasting impact on the company and its customers forever. This call to great and permanent and never ending change is buried inside Nadella’s 3,500 word memo to Microsoft staff. I understand if you choose not to read (any/all of) it.

My analysis of his manifesto is below, in bold italic.

Nadella word cloud

Satya

From: Satya Nadella

To: All Employees

Date: July 10, 2014 at 6:00 a.m. PT

Subject: Starting FY15 – Bold Ambition & Our Core

Team,
As we start FY15, I want to thank you for all of your contributions this past year. I’m proud of what we collectively achieved even as we drove significant changes in our business and organization. It’s energizing to feel the momentum and enthusiasm building.

This is all wrong. Platitudes, corporate management speak and 3,500 words are absolutely the wrong way to begin a discussion about “significant changes” and “enthusiasm building.” That within the first paragraph we are twice reminded FY15 has commenced, all I can think is Nadella is too steeped in the pre-existing conditions of Microsoft to achieve anything great, let alone revolutionary. 

The day I took on my new role I said that our industry does not respect tradition – it only respects innovation. I also said that in order to accelerate our innovation, we must rediscover our soul – our unique core. We must all understand and embrace what only Microsoft can contribute to the world and how we can once again change the world. I consider the job before us to be bolder and more ambitious than anything we have ever done.

“What only Microsoft” can do should be plastered across every meeting room in Redmond. Nadella mimics Tim Cook’s penchant for “change the world” pablum but to be fair, very few companies really can. Microsoft is one. Kudos to Nadella for not shying away from this. 

We’ll use the month of July to have a dialogue about this bold ambition and our core focus.

The very corporate nonsense-speak that turned me into a freelancer.

Today I want to synthesize the strategic direction and massive opportunity I’ve been discussing for the past few months and the fundamental cultural changes required to deliver on it.

Means nothing.

On July 22, we’ll announce our earnings results for the past quarter and I’ll say more then on what we are doing in FY15 to focus on our core. Over the course of July, the Senior Leadership Team and I will share more on the engineering and organization changes we believe are needed. Then, at MGX and //oneweek, we’ll come together to build on all of this, learn from each other and put our ideas into action.

Rigid, bureaucratic and enslaved to artificial dates. 

We live in a mobile-first and cloud-first world. Computing is ubiquitous and experiences span devices and exhibit ambient intelligence. Billions of sensors, screens and devices – in conference rooms, living rooms, cities, cars, phones, PCs – are forming a vast network and streams of data that simply disappear into the background of our lives. This computing power will digitize nearly everything around us and will derive insights from all of the data being generated by interactions among people and between people and machines. We are moving from a world where computing power was scarce to a place where it now is almost limitless, and where the true scarce commodity is increasingly human attention.

This is brilliant. Better, it launches the long, painful slog of fully re-positioning Microsoft away from PCs, away from Windows, away from Office, away from its past, which now binds it, and onto a future of screens, data and insight.

The only company at present that can challenge a fully engaged Microsoft in this is Google. 

In this new world, there will soon be more than 3 billion people with Internet-connected devices – from a farmer in a remote part of the world with a smartphone, to a professional power user with multiple devices powered by cloud service-based apps spanning work and life.

Microsoft will be the anti-Apple, delivering services and value to all, not just the world’s 10%. 

The combination of many devices and cloud services used for generating and consuming data creates a unique opportunity for us. Our customers and society expect us to maximize the value of technology while also preserving the values that are timeless.

Means nothing. Wasting employee’s time.

We will create more natural human-computing interfaces that empower all individuals. We will develop and deploy secure platforms and infrastructure that enable all industries. And we will strike the right balance between using data to create intelligent, personal experiences, while maintaining security and privacy. By doing all of this, we will have the broadest impact. 

Preach! Only Google can challenge Microsoft in delivering services to all. But, only Microsoft can deliver these services and effectively protect individual privacy. 

Mobile First Cloud First

Microsoft was founded on the belief that technology creates opportunities for people and organizations to express and achieve their dreams by putting a PC on every desk and in every home.

Microsoft’s business practices rightly angered many of us. But their efforts also helped deliver us directly to this future. We should be thankful for that. 

More recently, we have described ourselves as a “devices and services” company. While the devices and services description was helpful in starting our transformation, we now need to hone in on our unique strategy.

I am not Steve Ballmer.

At our core, Microsoft is the productivity and platform company for the mobile-first and cloud-first world. We will reinvent productivity to empower every person and every organization on the planet to do more and achieve more.

Wow. This is a truly revolutionary message and within Microsoft’s skill set to make happen. I will be happy if Microsoft simply comes close to this vision, as it is glorious: “empower every person and every organization on the planet to do more and achieve more.” 

We think about productivity for people, teams and the business processes of entire organizations as one interconnected digital substrate. We also think about interconnected platforms for individuals, IT and developers. This comprehensive view enables us to solve the more complex, nuanced and real-world day-to-day challenges in an increasingly digital world. It also opens the door to massive growth opportunity – technology spend as a total percentage of GDP will grow with the digitization of nearly everything in life and work.

I think this is wrong. Backwards, in fact. It’s not about an “interconnected digital substrate,” a nonsense phrase, but about building a product that truly empowers that one person. If it empowers one, it will empower millions. Apple has taught us this. Microsoft has yet to learn this. 

We have a rich heritage and a unique capability around building productivity experiences and platforms. We help people get stuff done. Stuff like term papers, recipes and budgets. Stuff like chatting with friends and family across the world. Stuff like painting, writing poetry and expressing ideas. Stuff like running a Formula 1 racing team or keeping an entire city running. Stuff like building a game with a spark of your imagination and remixing it with the world. And stuff like helping build a vaccine for HIV, and giving a voice to the voiceless. This is an incredible foundation from which to grow. 

Nice reminder for the troops and the public. 

At our core, Microsoft is the productivity and platform company for the mobile-first and cloud-first world. We will reinvent productivity to empower every person and every organization on the planet to do more and achieve more.

Repeating this is not productive.

Microsoft has a unique ability to harmonize the world’s devices, apps, docs, data and social networks in digital work and life experiences so that people are at the center and are empowered to do more and achieve more with what is becoming an increasingly scarce commodity – time!

It took far too much time to get here, but Nadella has shrewdly set in motion not only Microsoft’s mission, but its marketing message as well, which is almost as important.

Microsoft will save us time. 

Productivity for us goes well beyond documents, spreadsheets and slides. We will reinvent productivity for people who are swimming in a growing sea of devices, apps, data and social networks. We will build the solutions that address the productivity needs of groups and entire organizations as well as individuals by putting them at the center of their computing experiences. We will shift the meaning of productivity beyond solely producing something to include empowering people with new insights. We will build tools to be more predictive, personal and helpful.

The deconstruction of Word, Excel et al shall commence starting now. 

We will enable organizations to move from automated business processes to intelligent business processes. Every experience Microsoft builds will understand the rich context of an individual at work and in life to help them organize and accomplish things with ease.

This will be tricky. Even in a data driven, always-on world, people vigilantly maintain different lives: work, home, and those known only between the person and her browser history. Nadella wants to create a whole where I believe people want to maintain separate, if porous, fiefdoms. 

Productive people and organizations are the primary drivers of individual fulfilment and economic growth and we need to do everything to make the experiences and platforms that enable this ubiquitous.

I love how Nadella and Microsoft are the anti-Apple. Steve Jobs was famous for talking about computers and creativity whereas Microsoft is now focused on computers and productivity. Both are worthy visions: Apple is more likely to garner passionate adherents, Microsoft is more likely to lift up all boats. 

Users Not Consumers

We will think of every user as a potential “dual user” – people who will use technology for their work or school and also deeply use it in their personal digital life. They strive to get stuff done with technology, demanding new cloud-powered applications, extensively using time and calendar management, advanced expression, collaboration, meeting, search and research services, all with better security and privacy control.

Privacy, privacy, security.

Wise of Microsoft to attack Google’s Achilles Heel. Obviously, we embrace the many benefits that accrue as our data, all of it, flows between many clouds and many screens.

We will want to know, however, that some data will remain forever cordoned off to all but exactly whom we wish and when. Only Microsoft can deliver this — Google’s business model is almost in direct opposition to it and Apple refuses to embrace Microsoft scale.

Warning, Mr. Nadella: do not abdicate user privacy. Do not screw this up. 

Microsoft will push into all corners of the globe to empower every individual as a dual user – starting with the soon to be 3 billion people with Internet-connected devices. And we will do so with a platform mindset. Developers and partners will thrive by creatively extending Microsoft experiences for every individual and business on the planet.

None of this sounds even remotely appealing. Platforms empower the maker, not the user. That’s why every company in tech talks platforms.

“Microsoft experiences” sounds no better than, say, a visit to the dentist. 

Across Microsoft, we will obsess over reinventing productivity and platforms. We will relentlessly focus on and build great digital work and life experiences with specific focus on dual use.

Nadella has hitched his future to a belief in “dual use.” That is, our work and home lives meld into one interconnected digital sphere. I think this is wrong and will be his undoing.

Microsoft Everywhere

Our cloud OS infrastructure, device OS and first-party hardware will all build around this core focus and enable broad ecosystems. Microsoft will light up digital work and life experiences in the most personal, intelligent, open and empowering ways.

Key words: “first-party hardware.” Surface, Lumia, Xbox — these are only the start of Nadella’s hardware ambitions. Ballmer must be pleased. 

Developers and partners will thrive by creatively extending Microsoft experiences for every individual and business on the planet.

Requisite acknowledgement of developers and partners now out of the way… 

We will deliver digital work and life experiences that are reinvented for the mobile-first and cloud-first world. First and foremost, these experiences will shine for productivity. As a result, people will meet and collaborate more easily and effectively. They will express ideas in new ways. They will experience the magic of ambient intelligence with Delve and Cortana.

This is the future we expect and I am looking forward to Microsoft’s implementation of “ambient intelligence.”

It’s easy to believe Microsoft will be unable to match Google Now and other iterations of Google’s ambient intelligence capabilities. It’s nearly as easy to believe Microsoft won’t be able to deliver a service as simple to use as Apple’s Siri. These are legitimate concerns. That said, Bing, Yammer, Office, Exchange, Skype, Lumia, and the reach of Microsoft’s cloud infrastructure are critical resources to be tapped, and will help guide users in all facets of their digital life. 

Moreover, for the shareholders, ambient intelligence will be a business revolution, and in this, Microsoft is far ahead of the pack. 

They will ask questions naturally and have them answered with insight from Power Q&A. They will conquer language barriers and change the world with Skype translator. Apps will be designed as dual use with the intelligence to partition data between work and life and with the respect for each person’s privacy choices. All of these apps will be explicitly engineered so anybody can find, try and then buy them in friction-free ways.  They will be built for other ecosystems so as people move from device to device, so will their content and the richness of their services – it’s one way we keep people, not devices, at the center.

I hope you succeed at this. Right now, these remain mere words.

This transformation is well underway as we moved Office from the desktop to a service with Office 365 and our solutions from individual productivity to group productivity tools – both to the delight of our customers.

Please ban the use of the word ‘delight’.

We’ll push forward and evolve the world-class productivity, collaboration and business process tools people know and love today, including Skype, OneDrive, OneNote, Outlook, Word, Excel, PowerPoint, Bing and Dynamics. 

The next revolution will be in the office, not in the home. In this, new Microsoft still acts like old Microsoft. 

Increasingly, all of these experiences will become more connected to each other, more contextual and more personal. For example, today the Cortana app on my Windows Phone merges data from highway sensors and my own calendar and simply reminds me to leave work to make it to my daughter’s recital on time. In the future, it will be even more intelligent as a personal assistant who takes notes, books meetings and understands if my question about the weather is to determine my clothes for the day or is intended to start a complex task like booking a family vacation. Microsoft experiences will be unique as they will reason over information from work and life and keep a user in control of their privacy.

Dear tech bloggers: the ‘Microsoft is doomed’ stories are just stupid. 

The Cloud Everywhere

Our cloud OS represents the largest opportunity given we are working from a position of strength. With Azure, we are one of very few cloud vendors that runs at hyper-scale. The combination of Azure and Windows Server makes us the only company with a public, private and hybrid cloud platform that can power modern business. We will transform the return on IT investment by enabling enterprises to combine their existing datacenters and our public cloud into one cohesive infrastructure backplane. We will enable our customers to use our Cloud OS to accelerate their businesses and power all of their data and application needs. 

The cloud will be where nearly all our data and all the intelligence connected to that data resides. But not all. We will use our mobile devices to store and share data and content which we dare not send via the cloud.

That said, the cloud will be paramount, and Mr. Nadella is wise to focus so much attention upon Microsoft’s capabilities here.

His statement also reminds us Nadella is a techie and he understands how to fully leverage the breadth of Microsoft’s infrastructure. I wish his statement, however, wasn’t so buried underneath enterprise-speak. How will this cloud benefit me — not me at work, not me doing work. Simply, me. 

Beyond back-end cloud infrastructure, our cloud will also enable richer employee experiences. For example, with our new Enterprise Mobility Suite, we now enable IT organizations to manage and secure the Windows, iOS and Android devices that their employees use, while keeping their companies secure. We are also making it easy for organizations to securely adopt SaaS applications (both our own and third-party apps) and seamlessly integrate them with their existing security and management infrastructure. We will continue to innovate with higher level services like identity and directory services, rich data storage and analytics services, machine learning services, media services, web and mobile backend services, developer productivity services, and many more.

Nadella may talk of “dual use” and of the merging of work and home. Microsoft remains, however, a work company.  

Our cloud OS will also run all of Microsoft’s digital work and life experiences, and we will continue to grow our datacenter footprint globally. Every Microsoft digital work and life experience will also provide third-party extensibility and enable a rich developer ecosystem around our cloud OS. This will enable customers and partners to further customize and extend our solutions, achieving even more value.


Cloud “APIs,” essentially, could revolutionize how we create, manipulate and benefit from data. Microsoft should be a leader in this, and it will propel tremendous business value. 

Hardware Everywhere

Our Windows device OS and first-party hardware will set the bar for productivity experiences.

Again, that phrase “first-party hardware.”

Microsoft is (now) a hardware company. But a good one? Can an applications, services and infrastructure company also do great hardware? I have my doubts. I welcome being proven wrong. 

Windows will deliver the most rich and consistent user experience for digital work and life scenarios on screens of all sizes – from phones, tablets and laptops to TVs and giant 82 inch PPI boards.

Does anyone believe this will ever be so?

We will invest so that Windows is the most secure, manageable and capable OS for the needs of a modern workforce and IT.

Nadella will not cede one organization to Google Docs and not allow a single corporation to let iPhone, iPad or BYOD to loosen its grip on the enterprise. This will be a bloody fight. I can’t wait.  

Windows will create a broad developer opportunity by enabling Universal Windows Applications to run across all device targets. Windows will evolve to include new input/output methods like speech, pen and gesture and ultimately power more personal computing experiences. 

Multi-mode inputs will absolutely create more personal computing experiences. The burden of proof that these should — or even can — be offered by Microsoft is quite high, however.

Very, very few humans use speech, pen or gestures to interact with Microsoft products or applications. Microsoft has repeatedly failed to lead the world in this. 

Our first-party devices will light up digital work and life. Surface Pro 3 is a great example – it is the world’s best productivity tablet.

No.

In addition, we will build first-party hardware to stimulate more demand for the entire Windows ecosystem. That means at times we’ll develop new categories like we did with Surface. It also means we will responsibly make the market for Windows Phone, which is our goal with the Nokia devices and services acquisition.

Being deliberately inexplicable is not productive, Mr. Nadella. What exactly is “responsibly make the market?” You intend to be a hardware company, in direct competition with many of your very best partners. Say so. 

I also want to share some additional thoughts on Xbox and its importance to Microsoft. As a large company, I think it’s critical to define the core, but it’s important to make smart choices on other businesses in which we can have fundamental impact and success. The single biggest digital life category, measured in both time and money spent, in a mobile-first world is gaming. We are fortunate to have Xbox in our family to go after this opportunity with unique and bold innovation. Microsoft will continue to vigorously innovate and delight gamers with Xbox. Xbox is one of the most-revered consumer brands, with a growing online community and service, and a raving fan base. We also benefit from many technologies flowing from our gaming efforts into our productivity efforts – core graphics and NUI in Windows, speech recognition in Skype, camera technology in Kinect for Windows, Azure cloud enhancements for GPU simulation and many more. Bottom line, we will continue to innovate and grow our fan base with Xbox while also creating additive business value for Microsoft.

Brilliant. Nadella has scuttled all rumors about Microsoft abandoning Xbox. He has reminded analysts gaming is a primary driver behind mobile and while Microsoft lags in mobile it is a leader in gaming. Nadella also reminds us in our new age of data, collaboration and ideas, “gaming” will become a crucial component of productivity.

While today many people define mobile by devices, Microsoft defines it by experiences. We’re really in the infant stages of the mobile-first world. In the next few years we will see many more new categories evolve and experiences emerge that span a variety of devices of all screen sizes. Microsoft will be on the forefront of this innovation with a particular focus on dual users and their needs across work and life.
 Microsoft will continue to vigorously innovate and delight gamers with Xbox.

My take: Microsoft to acquire Zynga. That’s just for starters. 

Our ambitions are bold and so must be our desire to change and evolve our culture.
I truly believe that we spend far too much time at work for it not to drive personal meaning and satisfaction. Together we have the opportunity to create technology that impacts the planet.

Good, lord, this memo is just ridiculously long. 

I’ve Seen All Good People

Nothing is off the table in how we think about shifting our culture to deliver on this core strategy. Organizations will change. Mergers and acquisitions will occur. Job responsibilities will evolve. New partnerships will be formed. Tired traditions will be questioned. Our priorities will be adjusted. New skills will be built. New ideas will be heard. New hires will be made. Processes will be simplified. And if you want to thrive at Microsoft and make a world impact, you and your team must add numerous more changes to this list that you will be enthusiastic about driving.

If you are not a star, I strongly advise you to get to work on your resume. 

I am committed to making Microsoft the best place for smart, curious, ambitious people to do their best work.

If you are a star, I strongly advise you to get to work on your resume. 

First, we will obsess over our customers. Obsessing over our customers is everybody’s job. I’m looking to the engineering teams to build the experiences our customers love. I’m looking to the sales and marketing organizations to showcase our unique value propositions and drive customer usage first and foremost.
 In order to deliver the experiences our customers need for the mobile-first and cloud-first world, we will modernize our engineering processes to be customer-obsessed, data-driven, speed-oriented and quality-focused. We will be more effective in predicting and understanding what our customers need and more nimble in adjusting to information we get from the market. We will streamline the engineering process and reduce the amount of time and energy it takes to get things done. You can expect to have fewer processes but more focused and measurable outcomes. You will see fewer people get involved in decisions and more emphasis on accountability. Further, you will see investments in two new or combined functions: Data and Applied Science and Software Engineering. Each engineering group will have Data and Applied Science resources that will focus on measurable outcomes for our products and predictive analysis of market trends, which will allow us to innovate more effectively. Software Engineering will evolve so that information can travel more quickly, with fewer breakpoints between the envisioning of a product or service and a quality delivery to customers. In making these changes we are getting closer to the customer and pushing more accountability throughout the organization.

We should not be surprised when thousands of Microsoft staff are shown the door.

Second, we know the changes above will bring on the need for new training, learning and experimentation.

That’s you, old, middle management gatekeepers.

Over the next six months you will see new investments in our workforce, such as enhanced training and development and more opportunities to test new ideas and incubate new projects.

Big layoffs by Christmas.

I have also heard from many of you that changing jobs is challenging. We will change the process and mindset so you can more seamlessly move around the company to roles where you can have the most impact and personal growth. All of this, too, comes with accountability and the need to deliver great work for customers, but it is clear that investing in future learning and growth has great benefit for everyone.  

I suspect Microsoft will soon become the GE of personal computing. Massive, always in flux, possessing an agile bureaucracy, driven less by product or business model and more by shrewdly financing initiatives which it can dominate.  

I am committed to making Microsoft the best place for smart, curious, ambitious people to do their best work.

Why hasn’t it been?

Finally

Yes!

every team across Microsoft must find ways to simplify and move faster, more efficiently. We will increase the fluidity of information and ideas by taking actions to flatten the organization and develop leaner business processes.

See note above re: resumes.

Culture change means we will do things differently. Often people think that means everyone other than them. In reality, it means all of us taking a new approach and working together to make Microsoft better. To this end, I’ve asked each member of the Senior Leadership Team to evaluate opportunities to advance their innovation processes and simplify their operations and how they work. We will share more on this throughout July.

Big layoffs by Thanksgiving.

A few months ago on a call with investors I quoted Nietzsche and said that we must have “courage in the face of reality.” Even more important, we must have courage in the face of opportunity.

+1 for quoting Nietzsche. -2 for quoting Nietzsche 3,000 words in. 

We have clarity in purpose to empower every individual and organization to do more and achieve more. We have the right capabilities to reinvent productivity and platforms for the mobile-first and cloud-first world. Now, we must build the right culture to take advantage of our huge opportunity. And culture change starts with one individual at a time.

Validate why you, ye lowly programmer, should continue to be employed by Microsoft. 

Rainer Maria Rilke’s words say it best: “The future enters into us, in order to transform itself in us, long before it happens.”

Want to get on Nadella’s good side? He obviously has a penchant for early 20th century German writers.

We must each have the courage to transform as individuals. We must ask ourselves, what idea can I bring to life? What insight can I illuminate? What individual life could I change? What customer can I delight? What new skill could I learn? What team could I help build? What orthodoxy should I question?

Big layoffs by Labor Day. 

With the courage to transform individually, we will collectively transform this company and seize the great opportunity ahead.

I wish you well, Mr. Nadella, and all of you (still) at Microsoft. 

Microsoft Is The Very Antithesis Of Strategy

Thus the highest form of generalship is to balk the enemy’s plans; the next best is to prevent the junction of the enemy’s forces; the next in order is to attack the enemy’s army in the field; and the worst policy of all is to besiege walled cities. ~ Sun Tzu, The Art Of War

Microsoft could learn much from Sun Tzu. Over the past fifteen to twenty years, Microsoft has engaged in the very worst kind of generalship. Microsoft has allowed their competitors to join forces and successfully scheme against them. Microsoft has responded to the successes of their competitors by forswearing their strongest weapons, abandoning their strongest defensive positions and rushing to attack their competitors wherever they may be, even if those battlefields were located where Microsoft was at its weakest and their competitors were are at their strongest. When these attacks inevitably failed, Microsoft resorted to wars of attrition. Yet in these wars of attrition, it was Microsoft, not their opponents, who suffered most, taking disproportionally greater losses than they inflicted.

There are some roads not to follow; some troops not to strike; some cities not to assault; and some ground which should not be contested. ~ Sun Tzu

Microsoft’s approach is the very antithesis of a strategy. Here are five principles of war. See how Microsoft violates them over and over again.

Principle #1: Concentration

The principles of war, not merely one principle, can be condensed into a single word – ‘concentration’. But for truth this needs to be amplified as the ‘concentration of strength against weakness’. ~ B. H. Liddell Hart

Microsoft’s strategy over the past two decades has been the very opposite of concentration. Instead of acting, they react — lashing out in multiple, uncoordinated directions. A good strategy forces the opponent to compete on a battlefield where they have no chance of winning. Microsoft does the opposite. They pick fights they don’t need to fight, and they fight those battles on their opponent’s home turf, where their opponent is at their very best and Microsoft is at its very weakest.

Principle #2: Avoid Frontal Assaults

From the beginning of organized warfare, frontal attacks against prepared defenses have usually failed, a fact written large in military history for all generals to see. ~ Bevin Alexander, How Great Generals Win

The essence of strategy is to play to your strengths while taking advantage on your opponent’s weaknesses. Microsoft routinely flips this on its head, going out of its way to fight on battlefields of its opponent’s choosing — battlefields that emphasize the strengths of Microsoft’s opponent’s and minimize Microsoft’s own strengths.

It is a military axiom not to advance uphill against the enemy, nor to oppose him when he comes downhill. ~ Sun Tzu, The Art of War

In military terms, Microsoft does not just seek out the enemy — they look for them on the highest, most fortified hill, bristling with weapons — then they march straight at ’em.

To refrain from intercepting an enemy whose banners are in perfect order, to refrain from attacking an army drawn up in calm and confident array:–this is the art of studying circumstances. ~ Sun Tzu, The Art of War

Contrary to the art of war, Microsoft just LOVES to make frontal assaults against the enemy while their banners are in perfect order.

The Spartans do not ask how many the enemies are but where they are. ~ Agis Ii, King Of Sparta

One may admire the bravado, the daring, and the courage of both the Spartans and Microsoft, but attacking the enemy where the enemy is strongest was not, is not and never will be sound strategy.

So in war, the way is to avoid what is strong and to strike at what is weak. ~ Sun Tzu, The Art of War

Example #1: iPod

In 2001, Apple introduced the iPod. By 2004, it was a smash success. Microsoft reacted, rather than acted. Instead of asking themselves WHY they needed to enter the MP3 market or even WHETHER they needed to enter the MP3 market, they attacked — first with their software licensed PlaysForSure, and later with their own Zune branded hardware.

From a strategic standpoint, Microsoft’s move to create the Zune was inane and bordering on the insane. Its strategy:

1) Obliged Microsoft to betray its existing allies (hardware manufacturing partners);
2) Required Microsoft to abandon its greatest and most powerful weapon (licensing software to hardware manufacturers);
3) Compelled Microsoft to fight with unfamiliar weapons (hardware);
4) Forced Microsoft to fight on the battlefield of its opponent’s choosing and where its opponent could could leverage its strongest assets (integrated software and hardware).

Therefore, those skilled in war bring the enemy to the field of battle and are not brought there by him. – Sun Tzu

It’s the equivalent of a lion — the king of his domain — abandoning the land in order to fight a shark at sea. What madness! It was a strategy that favored Apple and handicapped Microsoft in every meaningful way. It was, in fact, not a strategy at all but the abandonment of strategy. Instead of pitting their strength against their opponent’s weakness, Microsoft pitted their weakness against Apple’s strength. Microsoft’s defeat was virtually guaranteed.

Example #2: Bing

Google was founded in 1998 and soon became a very real threat to Microsoft. A response by Microsoft was appropriate and called for…but not the response Microsoft made. As usual, Microsoft went right at ’em by challenging Google where Google was strongest and where Microsoft was nonexistent — in search.

Let’s examine this from a strategic perspective:

  1. Attack opponent where opponent is strongest. Check.
  2. Attack opponent with a weapon with which you have little or no expertise (search engine/machine language). ((Of course, Microsoft has plenty of experience and expertise in search now, but at a tremendous price in both money and in time. Lost money, Microsoft can afford. Lost time, not so much.)) Check.
  3. Attack opponent where they live, thus guaranteeing that they will they will be inspired to fight with desperation in order to ensure their very survival. Check.
  4. Attack where even success gains you little or nothing. Check.

Do not throw your weight into a stroke whilst your opponent is on guard – whilst he is well placed to parry or evade it. The experience of history shows that, save against a much inferior opponent, no effective stroke is possible until his power of resistance or evasion is paralysed. ~ B. H. Liddell Hart, Strategy

Unsurprisingly, Microsoft’s search engine efforts haven’t significantly hurt Google. Worse still, they’ve actually HELPED Google. When Microsoft pitted Bing against Google Search, they created a legitimate, albeit ineffective, competitor. And that, in turn, meant Google was not a monopoly in search and not subject to government anti-trust and anti-monopoly oversight.

As when snow is squeezed into a snowball, direct pressure has always the tendency to harden and consolidate the resistance of an opponent, and the more compact it becomes the more difficult it is to melt. ~ B. H. Liddell Hart

I will readily concede that Bing has served, and continues to serve, Microsoft well on the back end. But on the back end is where it should have remained. By attacking Google directly where Google was strongest, Microsoft has lost billions upon billions of dollars and the result has been to make Google Search more, not less, secure.

Summary

Great generals know a direct attack, on the other hand, consolidates an enemy’s defenses and, even if he is defeated, merely forces him back on his reserves and his supplies. ~ Bevin Alexander, How Great Generals Win

Over the past 20 years, Microsoft’s only stratagem has been to directly assault their competitors where their competitors are strongest. This bull-headed non-strategy was formed in the late nineties when Microsoft truly did have overwhelming superiority. Back then, what Microsoft wanted, Microsoft took.

It is the rule in war, if our forces are ten to the enemy’s one, to surround him; if five to one, to attack him; if twice as numerous, to divide our army into two. If equally matched, we can offer battle; if slightly inferior in numbers, we can avoid the enemy; if quite unequal in every way, we can flee from him. ~ Sun Tzu, The Art of War

It’s not the late nineties anymore and Microsoft no longer outnumbers their competitors ten to one — or outnumbers them at all — but they still act as if they do. When one is outnumbered, one should flee, not fight. It may not sound like the noble thing to do, but it’s very sound strategy.

STRATEGY Definition on Blackboard (business marketing planning)

Principle #3: Never Reinforce Failure

A general must never reinforce failure. ~ Clausewitz ((Excerpt From: Charles River Editors. “The Top 5 Greatest Generals: Alexander the Great, Hannibal, Julius Caesar, Genghis Khan, and Napoleon Bonaparte.”))

One of the myths that surrounds Microsoft is they “get it right on the third try”. I heard a pundit say this just last week in regard to the Microsoft Surface.

Really?

When was the last time Microsoft “got it right” on the third iteration? Or any subsequent iteration? The last time I recall Microsoft out-iterating an opponent was with Netscape, which was some 15 years ago. Or perhaps one could be thinking of the Xbox ((I would argue Xbox is a tactical master stroke but a strategic blunder — but that is an argument for another day.)) where Microsoft went five billion dollars in the red before even starting to make a return. However, those long ago victories can provide Microsoft with little solace today. Microsoft is no longer the 900-pound guerrilla it was a decade ago. And I think it is fair to say Apple is no Netscape and Google is no Sony PlayStation 2.

Do not renew an attack along the same line (or in the same form) after it has once failed. ~ B. H. Liddell Hart, Strategy

With products like Windows Phone 7 (now 8), Surface, and Windows 8, Microsoft is not iterating faster and catching up to their opponents. Far from it. They’re falling farther and farther behind. And it doesn’t matter anyway because the race they’r running in is already over.

Once a problem is solved, you compete by rethinking the problem, not making a slightly better version of the current solution. ~ Benedict Evans (@BenedictEvans)

Windows Phone 8 is an attempt to solve a problem that has already been solved by Apple’s iOS and Google’s Android. Surface is an attempt to pretend Apple didn’t solve the tablet problem when they introduced the iPad. Windows 8 is an attempt to ignore their decade-long failure to transplant a desktop operating user interface onto a tablet form factor.

Great generals do not repeat what has failed before. ~ Bevin Alexander, How Great Generals Win

Microsoft is not re-thinking the problem. They are simply failing at the same thing, in the same way, over and over again.

Principle #4: Avoid Sieges

The rule is, not to besiege walled cities if it can possibly be avoided. ~ Sun Tzu, The Art Of War

Microsoft simply does not quit. When they fail to win in the open field, they settle in for a long, drawn out siege. Yet when has this strategy ever worked for Microsoft? When, in recent history, has Microsoft ever overcome simply by carrying on?

These sieges have only led to Microsoft growing progressively weaker while their competitors grow ever stronger. It’s the exact opposite effect that the strategy is supposed to accomplish.

You may admire Microsoft’s doggedness — I do — and you may admire their perseverance — I do — but you simply cannot admire their strategy. Persistence is one thing. Pigheaded stubbornness is another thing altogether.

Attrition is a two-edged weapon and, even when skillfully wielded, puts a strain on the users. ~ B.H. Liddel Hart, Strategy

Attrition is a long, slow, arduous and costly grind. It should only be used as a last resort. And its use makes no sense at all when it costs the aggressor more than it costs the besieged. That way lies only exhaustion, collapse and defeat.

To adopt the method of attrition is not only a confession of stupidity, but a waste of strength, endangering both the chances during the combat and the profit of victory. ~ B. H. Liddell Hart

Principle #5: Keep Your Object Always In Mind

Keep your object always in mind, while adapting your plan to circumstances. Realize that there are more ways than one of gaining an object, but take heed that every objective should bear on the object. And in considering possible objectives weigh their possibility of attainment with their service to the object if attained – to wander down a sidetrack is bad, but to reach a dead end is worse. ~ B. H. Liddell Hart, Strategy

Microsoft should take the above paragraph and pin it to every door, in every office in Redmond…

…except first, of course, they should identify what their object is.

Microsoft Has No Vision, No Mission, No Object To Guide Them

Everything wrong with Microsoft’s strategy comes down to this:

[pullquote]A person who aims at nothing is sure to hit it.[/pullquote]

Microsoft doesn’t know what their objective is.

Without that compass, without that “north star” to guide them, Microsoft is like a rudderless ship, subject to the pull and sway of every wind and every current.

Manage The Top Line

Somebody once told me, “Manage the top line, and the bottom line will follow.” What’s the top line? It’s things like, why are we doing this in the first place? What’s our strategy? What are customers saying? How responsive are we? Do we have the best products and the best people? Those are the kind of questions you have to focus on. ~ Steve Jobs

Does Microsoft ask itself such questions? If so, their actions certainly don’t reflect it.

In fact, I double-dog dare you to articulate Microsoft’s vision or its mission. The following is the best I could discover. I like the passion expressed, but I assure you, it’s not nearly specific enough to act as the guidance Microsoft so desperately needs:

We are obsessed with empowering people to do more and be more. ~ @Satyanadella (5/20/14)

Microsoft Needs To Re-Define Itself

— Microsoft has forgotten what they are good at.
— Microsoft has forgotten what business they are in.
— Microsoft has forgotten who they are.

In Nadella, Microsoft has a new CEO whom I admire. However, if he has a new vision for Microsoft, he has not yet clearly articulated it — and he needs to do just that.

Whenever anything is being accomplished, it is being done, I have learned, by a monomaniac with a mission. ~ Peter Drucker

Microsoft must redefine itself — must reset their vision. And then then need to shout that vision from the rooftops.

The very essence of leadership is you have to have a vision. It’s got to be a vision you articulate clearly and forcefully on every occasion.  You can’t blow an uncertain trumpet. ~ Theodore Hesburgh

Conclusion

Dead battles, like dead generals, hold the military mind in their dead grip…. ~ Barbara Tuchman, The Guns of August

Past triumphs and past glories seem to hold Microsoft in their dead grip too. Microsoft is still fighting yesterday’s wars with yesterday’s no-longer-existing weapons. They need to acknowledge reality as it is and change their strategy accordingly.

The only thing harder than getting a new idea into the military mind is to get an old one out. ~ B. H. Liddell Hart

In my Insider’s article (subscription required) , I’ll talk about the strategy that Microsoft could — but almost certainly will not — follow.

Career Decision

The One Where Brian Is Wrong About Everything

Please allow me to introduce myself…

You likely don’t care and would not believe the volume of blog posts, research reports, technical writings and analyst studies I sift through on a daily basis.

This is necessary both to stay informed and to re-evaluate my opinions as new facts emerge. I refuse to let my initial reactions to the latest rumors cement my long term perspective. Though I consider my views well-informed, reasoned and likely to be proven true in the due course of time, my peers disagree.

For your reading pleasure, below are opinions I hold that currently run counter to conventional wisdom.

Who’s side are you on?

Sympathy For The Devil

Unlike all of Silicon Valley, it seems, I applaud the EU’s ruling that affirms an individual’s “right to be forgotten.” I expect this ruling to become the global norm by the end of the decade. Technology should be empowering and liberating. Of course, I should be able to require Google, Facebook et al to obliterate any digital data on me they possess. Everyone should.

I consider Apple’s iMessage – SMS “bug” to be a sure sign of corporate hubris. The absolute worst trait any large company can have is hubris.

I love that Microsoft is sticking to its vision despite the doomsayers. Surface Pro 3 is meant to be both iPad and MacBook. Comparing it to just one device is skating to where the puck never was.

Yet, industry analysts seem universally opposed to the very idea of the Surface. They are wrong. The market for paid software licenses is, to quote Bob Dylan, rapidly fading. Microsoft should not even consider reigniting the licensing ecosystem of its glory days. Such a strategy will fail, miserably. iOS, OS X, Android, Chrome and Linux are now good enough and are cheaper and readily available. Microsoft must create its own devices for a bold new world even as its OEMs fall to pieces. The Surface Pro 3 has the potential to become the device we all really crave: both a tablet and a laptop.

Someone — anyone — says the word ‘grok’ and my brain instantly screams: poseur! I cannot turn this off. I refuse to believe this is wrong.

This recent New York Times piece that glowingly praises a smartphone app, backed by VCs, that sends under-employed Americans on a mad scurry to fetch groceries for harried tech warriors is, I suspect, that singular article we will all point to ten years from now as the glaring, obvious symbol of the last bubble.

Think about an iPhone 6. Go on. If it’s not a larger form factor, why do you even care? Odds are very high you don’t. I have to assume Apple knows this. No iPhone phablet this year and iPhone’s market share will plummet.

I can’t fault a Samsung lawyer for calling Apple “jihadists” considering the Steve Jobs “holy war” email.

But Then My Homework Was Never Quite Like This

Your assignment, dear reader, is to map the decision-making tree that led the Microsoft Corporation to offer the Surface keyboard as a separate item. I bet you fail. It is inexplicable.

Fitbit hires design icon Tory Burch. Intel partners with Barneys. Apple hires Burberry’s Angela Ahrendts. Rumors say Apple is dangling billions in front of cultural trendsetters Jimmy Iovine and Dr Dre. I think this is wise. Fashion boasts, fashion beguiles, fashion demands. Value and quality speak softly. It’s a big, noisy world out there.

Get a drone with a camera. Link it to your Oculus Rift glasses. Experience the world about you in profoundly new and different ways. Now, stream and share all you see and hear — on Facebook, of course. That’s Zuckerberg’s strategy.

One app, one task, one screen is a core value of iOS. If the new iPad allows two apps running on a screen, as rumors suggest, then we immediately know two things: 1) Apple is legitimately nervous about both Samsung and Surface, and 2) Apple intends to launch an assault on the enterprise. Smart and smarter. 

I have serious doubts Tesla can ever build a car the 95% can afford.

We are all rock stars with our cool mobile phones.

kurt

Still Crazy After All These Years

The Samsung Galaxy Gear 2 is pretty. It’s also quite functional — provided you own a Samsung Galaxy. I think the bad reviews are all wrong.

I think a co-branded Mickey Mouse “iWatch” would be awesome.

Within ten years, schools and HR departments will have us wear Oculus Rift or a similar device to experience how others feel, think, and react differently to the very same people, words and actions.

The GoPro IPO, the rise of wearables, the Internet of Things, the budding Maker ecosystem. Hardware is eating the world, not software. 

The best part of an iPhone phablet is it will create radically new experiences and app types. This Opera graphic reveals that phablet use is starkly different from smartphone and tablet use. No, I do not believe this is primarily driven by current phablet demographics. Rather, form factor.

phablet usage

I predict by 2017, apps will be made first for China for iPhone. Then for iPhone for America. Then Android. Then iPad. Then AOSP. Then Windows Phone. Then X or other.

Rhymin and Stealin

Dollar for dollar, there may be no better value in smartphones than the Lumia 630. And if I’m wrong, it’s because the Lumia 520, available for about $70, may be an even better value still. The Moto X and Moto E may prove me wrong yet again. Amazing, amazing technological evolution.

In 1997, Microsoft loaned Apple $150 million. Apple now has 1000X that just in cash. Also, one of these men is on the cusp of being a billionaire. No one saw either of those coming. We were all wrong.

dre

Apple hardware is beautiful, understated, austere. Beats hardware is big, bold, gaudy. I have to believe an Apple – Beats acquisition horrifies Jony Ive.

It’s hard to overstate how much Google must fear Facebook. Facebook has over 1 billion users, mostly on mobile. Hundreds of millions voluntarily give Facebook highly personal information about themselves every single day, sometimes multiple times per day. This is not the same as unknowingly handing over select personal information to Google bots. By the decade’s end, search will be nothing more than a ‘signal’ for Facebook’s massive knowledge engine.

The other day, Yahoo flashed a pop-up on my screen asking me if I wanted to make Yahoo my default search engine. This made me laugh.

I believe Yahoo is on the cusp of what could be its worst-run, costliest period ever — and that, dear reader, is saying something. In her tenure as Yahoo CEO, Marissa Mayer has proven without a doubt her greatest strength is spending money. Sadly, her signal weakness is getting a return on said spending. If you are an investor, it’s time to storm the gates, else those Alibaba lotto winnings will be gone — fast.  

Am I wrong? Share your thoughts.

Microsoft Is At War With Itself

On Tuesday, May 20, Microsoft held an event to unveil the Surface Pro 3 Tablet. You can view the webcast here. ((Ironically, the video stream provided by Microsoft is in Adobe Flash, so if you’re on a mobile device, you’re out of luck.)) NOTE: The quotes, below, are time stamped so you can locate them on the video.

I am breaking my coverage of the Microsoft Surface Tablet Event into two separate articles. Today, I will review the six minute introduction given by Microsoft CEO, Satya Nadella. In my opinion, Nadella’s statements were very revealing but not in the way he might have wished. Once we look “beneath the Surface” or “behind the curtain,” we can see that the contradictions inherent within Microsoft’s overall strategy force it to war with its customers, its partners and itself.

Tomorrow, in my Insider Article (subscription required), (now available, here) I will turn my attention to the specifics of why Microsoft’s grand strategy is self-contradictory and self-defeating. In essence, Microsoft is playing a game of Roshambo (rock, paper, scissors) and wants to simultaneously throw the rock, the paper and the scissors — with wholly predictable results.

Microsoft’s Mission?

    01:53: “It starts for us with this obsession of empowering every individual and organization to do more and be more. That is what we at Microsoft are all about. This is what is the unifying theme for the company across everything that we do. We want products and technologies that enable people to dream and get stuff done, we want products and technologies that enable people to be able to get more out of every moment of their life. that’s the mission we are on.”

BoFnGquIcAAqWLi

The good news is Satya Nadella seems to be able to articulate Microsoft’s vision better than Steve Ballmer ever did.

The bad news is the vision Nadella articulated wasn’t very compelling. I’m willing to give Nadella and Microsoft a pass on this because, if we are grading on a curve, very few companies have compelling visions. Not everyone, however, graded on a curve:

Ugh. Can someone please get Microsoft a new mission statement? Classic best-to-worst. ~ Ben Thompson (@monkbent)

It will be awfully hard for Microsoft to ever again create a mission statement as great as “A computer on every desk and in every home.” ((Bill Gates, Microsoft chairman and chief executive officer, 1980)) but merely saying Microsoft’s Mission is to create products and technologies that enable people to dream and get stuff done won’t cut it in the long run.

Competing Against Customers?

      00:45: “Our cloud enables everyone on every device.”

03:09: “(T)hat’s what has led us to build the ubiquitous software products that we’ve built today.”

These statements raise more questions than they answer. If Microsoft wants to be on every device, if they want to have ubiquitous software, then does it make sense for them to build hardware too? Isn’t it an inherent conflict of interest to ask other companies to use your cloud services on their devices while simultaneously trying to replace their devices with your own?

Gemini sisters fighting on a white background

Competing Against Partners?

    04:55 “We’re not interested in competing with our OEMs ((OEM = Original Equipment Manufacturers))when it comes to hardware.”

Really? You sure have a funny way of showing it.

Nadella says that Microsoft isn’t interested in competing with its OEMs when it comes to hardware, a stance I don’t really understand. ~ Harry McCracken (@harrymccracken)

If Microsoft is not interested in competing with their OEMs — then why are they doing it? The Surface Tablet competes directly with Microsoft’s own (so-called) hardware partners. And what hardware company in their right mind wants to license software from Microsoft in order to build hardware that then has to compete against Microsoft-branded, and Microsoft software-integrated, hardware?

The hardest thing to explain is the glaringly evident which everybody had decided not to see. ~ Ayn Rand

streiten

Why Hardware?

    04:05 “The question that needs to be asked and answered is why hardware?

I give Nadella full credit for asking the exact right question. I can’t, however, give him full marks for actually answering the question.

    …We are not building hardware for hardware’s sake. We want to build experiences that bring together all the capabilities of our company…to build these mobile first productivity experiences. That’s the mission.”

Hmm. Not really answering the question of “why hardware” just yet.

    …In fact our goal is to create new categories and spark new demand for our entire ecosystem. That’s what inspires us and motivates us with what we’re doing in our devices and hardware.

Hmm. Microsoft wants to create new categories and spark new demand. Sounds good, as far as it goes. But honestly, what company doesn’t want to create new categories and spark new demand? The real question then is: “What category is the Surface Tablet creating and does that category deserve to exist?”

    05:30 Can we design and build a device that takes the best of the tablet and the laptop and enables any individual to be able to read and to be able to create and write; allows you to watch a movie and make a movie; enjoy art and create art — that’s the device we want to create.

PcTabletPhone
CAPTION: The Surface Hybrid seeks to create a new category between the PC and the Tablet

Now the picture is coming into focus. Microsoft doesn’t believe tablets are always good enough. Microsoft doesn’t believe notebooks are always good enough. What people really want, what people really need, according to Satya Nadella, is a hybrid computer — like the Surface Tablet — that’s the best of both worlds. A device both a tablet AND a PC — one device that can do it all.

It is not the writer’s task to answer questions but to question answers. ~ Edward Abbey

However, if Microsoft’s answer to the question: “Why Hardware?” is “New Category Creation”, that begets a whole new set of questions:

  1. If the hybrid category is so compelling, so wanted, so needed, then why couldn’t Microsoft’s hardware partners have taken the Windows 8 operating system, applied their hardware designs to it, and created the hybrid category on their own?
  2. Not every category deserves to exist. What makes Microsoft think the hybrid is deserving of being a category of its own?
  3. Creating a category is hard. Creating a category in hardware, which is outside of Microsoft’s core skill set, is harder still. Aside from “sparking new demand”, is there another, more obvious reason why Microsoft feels the need to create this new category?

Tomorrow?

The only interesting answers are those which destroy the questions. ~ Susan Sontag

Tomorrow, I take a deep dive into those questions and many more as well. Here’s a hint as to what we’ll be finding:

In business, as in Roshambo, you can never beat your competitors if you’re always beating yourself first.

playing

Microsoft Needs To Burn More Bridges, Faster

I have been one of Microsoft’s most vocal critics (although, to be fair, just one of many). With profits as their north star, Microsoft has spent the past 15 years adrift. lost at sea, subject to the mercy of the winds and tides, with no harbor to shelter them, with no port as their destination.

Thankfully Microsoft has recently changed captains, naming Satya Nadella their new CEO on February, 4, 2014. The change has been transformative to the good ship Microsoft. They seem rejuvenated, like a whole new company ready, once again, to challenge the winds and the waves of commerce, to set their sails and head in a new direction rather than to merely allow themselves to be swept along by events.

Having said all that, Microsoft is making several announcements tomorrow, Tuesday, May 20th, 2014. According to all reports, chief among those announcements will be one or more brand new Surface Tablets. And I have to ask this question:

    “Why?”

I’ll start by conceding, sight unseen, the new Surface tablets will be much better than their predecessors, a technological wonder to behold. But that’s the answer to the wrong question. The question we should be asking is: What purpose do new Surface Tablets serve? How do they align with Microsoft’s goals and how do they help propel Microsoft toward those goals?

  1. Does a Surface Tablet help Microsoft’s hardware partners to compete? No, it does not.
  2. Is a Surface Tablet going to be part of a sea change that will transform tablet/notebook hybrids from niche to mainstream computing devices? No, it is not.
  3. Is a Surface Tablet going to justify Microsoft hybrid – neither fish nor fowl – Windows 8 operating system? No, it is not.

The Surface was one of the mistakes of Nadella’s predecessor. It is the hardware prosthetic used to support the Frankenstein’s monster that is Windows 8. It should not be embraced nor given new life.

Like an anchor holding back the ship, the Surface Tablets should be cut loose and allowed to sink beneath the inky waves of history.

The hardest thing to learn in life is which bridge to cross and which to burn. ~ David Russell

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But apparently that’s not going to happen. It makes me wonder whether Nadella will be able to cut his anchors fast enough — to burn the bridges he needs to burn soon enough — to allow Microsoft to leave their past behind and move, unencumbered, toward their future.

Say Goodbye To Microsoft

In the beginning, Microsoft’s business model was simple. They made the Windows operating system and licensed it to manufacturers, who then put it on their various computing machines. In the mid-nineties, Windows gained critical mass with businesses which, in turn, led to the adoption of the Windows operating system by consumers. The PC OS Wars were not just won by Microsoft, they were decisively won by Microsoft. Every other company that made competing PC operating systems was annihilated, save Apple, which only held on by the skin of their teeth.

Microsoft’s original audacious vision was a computer on every desk. (Importantly, that vision later became corrupted and transformed into “Windows” on every desk.) By the turn of the century, Microsoft had, for all intents and purposes, accomplished their mission. Now what?

A company that feels it has reached its goal will quickly stagnate and lose its vitality. ~ Ingvar Kamprad

When Money Is Your Guide, You Are Lost

Steve Ballmer has often said his goal was to make money. And he did. But making money is the means, not the ends.

Money is only a tool. It will take you wherever you wish, but it will not replace you as the driver. ~ Ayn Rand

I’m a HUGE fan of companies making money. Money is the way one keeps score. But money is not the game. And the game’s the thing.

To fulfill a dream, to be allowed to sweat over lonely labor, to be given a chance to create, is the meat and potatoes of life. The money is the gravy. ~ Bette Davis

A business that makes nothing but money is a poor kind of business. ~ Henry Ford

There are people around here who start companies just to make money, but the great companies, well, that’s not what they’re about. ~ Steve Jobs

Money is a great incentive, but when it becomes your main incentive, it attracts the wrong kind of people.

You cannot motivate the best people with money. Money is just a way to keep score. The best people in any field are motivated by passion. ~ Eric S. Raymond

If a company values profits more than its vision, it will first lose its vision and then, ironically, it will lose its profits too. Money is an excellent servant but it is a terrible master.

Microsoft’s Lost Decade

Microsoft desperately tried to get into phones, tablets, watches and TVs but they missed and they missed badly. This is where their subtle shift from “a computer running a Microsoft operating system on every desk” to “a computer running Windows on every desk” came back to haunt them.

Where it is a duty to worship the sun it is pretty sure to be a crime to examine the laws of heat. ~ John Viscount Morley

At Microsoft, Windows was the Sun and anyone who espoused anything else was a heretic that had to be hunted down and eliminated.

Rather than try to create an operating system right for the various emerging form factors, Microsoft insisted — over and over and over again — on trying to shoehorn Windows onto every form factor. The results were disastrous.

The Mobile Wars Were Over Before Microsoft Even Entered The Fray

iOS and Android won the mobile OS wars as decisively as Microsoft had won the PC OS wars.

First, iOS and Android got out to a huge lead long before Microsoft was able to respond with Windows Phone 7 (then 8) and Windows RT and Windows 8.

Second, Google undercut Microsoft’s licensing model by giving their Android OS away for free.

MicroChartMicrosoft – like World War II Japanese soldiers stranded on deserted islands – continued to pretend the war was ongoing while everyone else went about the business of post-war reconstruction. Not only had Microsoft lost the post-PC wars, but their insistence the world was still fighting the PC wars jeopardized their possibilities in the post-post-PC world, as well.

Microsoft’s Anti-Strategy

Strategy is about choices, about making the hard decisions and about focus. Microsoft’s response to iOS and Android might be described as an anti-strategy. They chose not to choose, they decided not to decide, they focused on everything (which is to say that they focused on nothing).

  1. Microsoft wanted to be Google so they created Bing
  2. Microsoft wanted to be Microsoft so they licensed their OS software
  3. Microsoft wanted to be a monopoly so they ported their desktop OS to tablets
  4. Microsoft wanted to be iOS so they created Windows Phone 7, then 8
  5. Microsoft wanted to be in tablets so the created Windows RT
  6. Microsoft wanted to be the iPad so they created the Surface
  7. Microsoft wanted to be Apple so they restructured their company along functional lines
  8. Microsoft wanted to be the iPhone so they bought Nokia

Be yourself. The world worships the original. ~ Ingrid Bergman

The secret of change is to focus all of your energy, not on fighting the old, but on building the new.

The key to success is to focus our conscious mind on things we desire, not things we fear. ~ Brian Tracy

We believe in saying no to thousands of projects so that we can really focus on the few that are truly important and meaningful to us. ~ Tim Cook, Acting Apple CEO, January 2009 FQ1 2009 Earnings Call

Microsoft didn’t play to their strengths. Instead, they entered every game and tried to compete everywhere.

If you don’t have a competitive advantage, don’t compete. ~ Jack Welch

Microsoft didn’t want to narrow its options. Instead, they wanted to be everything to everybody. They didn’t want to be anything in particular so they produced nothing anybody particularly wanted.

VegiHam

CAPTION: The very epitome of a Microsoft product — chicken-flavored vegetable ham.

Conclusion

Honest criticism is hard to take, particularly from a relative, a friend, an acquaintance, or a stranger. ~ Franklin P. Jones

The recipe that made Microsoft dominant is not the recipe that will make them relevant again. Say goodbye to Microsoft…

Bye

…the new Microsoft has arrived.

Next week, I’ll look at Microsoft’s new strategy and analyze its potential and its potential pitfalls. (SPOILER ALERT: So far, I like what I’m seeing.)

Do not go where the path may lead, go instead where there is no path and leave a trail. ~ Ralph Waldo Emerson

Office for iPad: A Sheep in Wolf’s Clothing

Microsoft finally appears ready to launch a version of Office for iPad. A wolf among the sheep? Or a sheep in wolf’s clothing?

Plan A: Ignore The iPad

REALITY

  1. The iPad goes on sale, April 2010.

MICROSOFT’S REASONING

  1. There is nothing to fear from the iPad.

It’s not like I sit there and feel the same way I did with iPhone, where I say, ‘Oh my God, Microsoft didn’t aim high enough.’ It’s a nice reader, but there’s nothing on the iPad I look at and say, ‘Oh, I wish Microsoft had done it. ~ Bill Gates

  1. The iPad doesn’t even run Office.

Without Office, there would be darkness and chaos.

  1. Stay calm and carry on.

Never underestimate our ability to ignore the obvious. ~ Po Bronson

  1. All will be well.

Cheer up, the worst is yet to come. ~ Philander Johnson

Plan B: The Surface

REALITY

  1. Okay, okay, that iPad thingie is selling pretty well.

Nothing is more humiliating than to see idiots succeed in enterprises we have failed in. ~ Gustave Flaubert

MICROSOFT’S REASONING

  1. We need our own tablet alternative.

Change is not made without inconvenience, even from worse to better. ~ Richard Hooker

  1. The iPad is just a toy.

Microsoft is very clever but sometimes they let their brains go to their head.

  1. Apple has sold millions upon millions of iPads, but clearly they’re doing it all wrong. What people REALLY want is a tablet that runs like a desktop and a desktop that runs like a tablet. The two operating systems shouldn’t be separate, they should run side-by-side!

Don’t ever take a fence down until you know why it was put up. ~ Robert Frost

  1. What people REALLY want is a 2-in-1 computer that can run Windows and do “real work.”

A patient was at her doctor’s office after undergoing a complete physical exam. The doctor said, “I have some very grave news for you. You only have six months to live.” The patient asked, “Oh doctor, what should I do?” The doctor replied, “Buy a Microsoft Surface Computer with Office.” “Will that make me live longer?” asked the patient. “No,” said the doctor, “but it will SEEM longer.”

  1. We’ll throw in Microsoft Office too. That will make up for the one million missing applications.

It is what we think we know already that often prevents us from learning. ~ Claude Bernard

Plan C: Office For iPhone

REALITY

  1. Surface sales seriously suck.

MICROSOFT’S REASONING

  1. I don’t get it. If customer’s can’t live without Office, then why aren’t they dead?

If brains were gas, you wouldn’t have enough to power a scooter around the inside of a Froot Loop.

  1. I know! Customer’s DO want Office but they also want iPads.

Face reality as it is, not as it was or as you wish it to be. ~ Jack Welch

  1. The Surface is the problem. No, BALLMER is the problem! Cut Windows loose from Surface. Cut Ballmer loose from Microsoft!

If you can talk brilliantly about a problem, it can create the consoling illusion that it has been mastered. ~ Stanley Kubrick

  1. Let’s start by selling Office for iPhone!

I spent a month using Office for iPhone — I think it was on a Sunday. ((Inspired by W. C. Fields))

  1. Great, now everything will be okeedokee.

Apparently, if you stay in Redmond, you lose two points of IQ every year. ((Inspired by Truman Capote))

Plan D: Office For iPad

Cartoon sheep
REALITY

  1. No one gave a damn about Office on the iPhone. Or even noticed it.

Most people wanted to ignore Office for iPhone because Office for iPhone ignored what most people wanted.

MICROSOFT’S REASONING

  1. OK, we’ve wasted four long years not selling Office for iPad.

A lion walks into a bar and says, “I’d like a whisky and . . . a packet of peanuts, please.” The bartender replies, “Why the big pause?”

  1. The Office for iPhone thing didn’t work out quite the way we planned, but what people REALLY, REALLY, REALLY want is Office, but they want it on the iPad.

Dope springs eternal.

  1. Some analysts estimate that since 30% of Mac users own office, as many as 30% of iPad users will buy Office too.

I don’t know what you’re on but it can’t be legal.

  1. It won’t help sell Surface tablets, but it will make a lot of money. How much money?

“The day they introduce Office for iOS and Android, they’ll start printing money.” ~ Bob O’Donnell, then an analyst with IDC

Plan E: Everything Could Go Wrong

Normally, I like to make my predictions after the fact. I find it improves my accuracy. But I’m going to go out on a limb and predict Office for iPad will be a great big nothing. It has too many things working against it.

There is no question Office is good at what it’s good at. But is that good enough?

The main reason Office sold as well as it did was because it held a monopoly on Windows PCs. This has caused Microsoft to vastly overestimate its popularity. Here’s how Microsoft pictures its Office Suite:

Beautiful showgirls dancing cancan

Here’s how business users picture Microsoft’s Office Suite:

Old men dancing

Here’s how consumers picture Microsoft’s Office Suite:

Sub

  1. There are plenty of free Office Suites available.
  2. There are over 100,000 apps that have unbundled the various functions that Office performs.
  3. Tablet software has been commoditized. Who wants to pay for Office when there’s plenty of cheaper, “good enough” alternatives available?
  4. The wildly successful adoption of the iPad strongly suggests that iPad users don’t need Office.
  5. iPad is doing well in the Enterprise without Office.
  6. Tablets are all about simplicity. Office is all about complexity. How’s that gonna work?
  7. A touch input interface is a whole different animal than a mouse input interface. John Gruber says that he’s heard that Office for iPad is the real deal. I’ll remain skeptical until I see it. Why? Because I believe that the better the touch interface will be, the less Office-like the product will be and the more Office-like the product will be, the less touch enabled it will be. We’ll see soon enough.
  8. The real threats come from use cases where one doesn’t need to be using Office at all.

It’s far too late. The Windows for iPad ship has sailed.

“If only.” They must be the two saddest words in the world. ~ Mercedes Lackey

Plan F: The Future

Life is like an onion; you peel it off one layer at a time, and sometimes you weep. ~ Carl Sandburg

Even if Office for iPad utterly fails, it is still a pivotal event for Microsoft.

There is always a comforting thought in time of trouble when it is not our trouble ~ Marquis

The fact that Microsoft is moving Office to the iPad, combined with the fact Microsoft is moving Office to the iPad even before it brings out a touch-optimized version of Office for the Surface, is a very strong signal that things are changing at Microsoft.

By trying we can easily learn to endure adversity. Another man’s, I mean. ~ Mark Twain

It’s too soon to know in which direction Microsoft is headed, but it’s not too soon to know they are changing direction.

Life isn’t about finding yourself. Life is about creating yourself. ~ George Bernard Shaw

And since Microsoft was definitely headed in the wrong direction before, this change gives one hope.

The future will be better tomorrow. ~ Dan Quayle

Unified OS Advocates Are Out Of “Touch” With Reality

Last week, Phil Schiller, Craig Federighi and Bud Tribble were interviewed as part of the Mac’s 30th anniversary. They — in no uncertain terms — slammed the door shut on the idea that Apple was planning on merging iOS (the operating system for their phones and tablets) with OS X (the operating system for their notebooks and desktops).

“We don’t waste time thinking, ‘But it should be one [interface]!’ How do you make these [operating systems] merge together?’ What a waste of energy that would be,” Schiller said.

“To say [OS X and iOS] should be the same, independent of their purpose? Let’s just converge, for the sake of convergence? [It’s] absolutely a nongoal,” Federighi said.

“And that”, I thought to myself, “finally puts an end to that discussion.”

Boy, was I wrong.

The Loyal Opposition

Brian S. Hall makes an impassioned case for operating system unification, right here at Tech.Pinions:

I want my various “computers”…to essentially operate as similarly as possible, preferably with a unified user interface and application set across all.

It’s troubling to me that the world’s biggest computer company (Apple) can’t seem to make this work. When I hear Apple execs mocking Microsoft’s UI strategy I think it’s an opportunity lost.

(I)t bothers me that it is Apple which seems so determined to accept multiple OSes across multiple form factors. Here’s a case, frankly, where I hope Microsoft wins.

Kyle Russell, of Business Insider, reviews the various operating system comments made by the Apple executives and comes to a similar conclusion, here:

As much as a well-executed touchscreen MacBook could make for an amazing device — maybe even “redefine laptop computing” — it seems that Apple doesn’t want people to get caught up on the idea, even if it is true.

(Emphasis added)

Do you fully grasp what both of these commentators are implying? It’s not, they contend, that Apple CANNOT create a unified operating system, it’s simply that Apple REFUSES to do so. If only Apple would not be so gol’ darn stubborn and get on the unified operating system bandwagon, Apple could not only make a device that would run on a unified operating system but they could make a unified device that would be totally AWESOME!

Bull hockey

[pullquote]A word to the wise is infuriating. ~ Unknown Source[/pullquote]

I VEHEMENTLY disagree. Operating system unification is not a “lost opportunity.” It’s not an “opportunity” at all. It’s a disaster because A TOUCH OPERATING SYSTEM IS WHOLLY INCOMPATIBLE WITH A DESKTOP OPERATING SYSTEM.

We have at least the courage of our convictions to say we don’t think this is part of what makes a great product; we’re going to leave it out. Some people are going to not like that… ~ Steve Jobs

The Interview

Metaphors Matter

“An incredible amount of thought and creativity went into the original Mac metaphor,” Tribble said.

A Tool Should Work The Way We Think, Not Make Us Think About The Way It Works

(T)he underlying principles behind them—that the Mac should be easily approachable and learnable by just looking at it, that it should bend to the will of the person and not bend the person’s will to the technology—those underlying threads also apply to our other products.

One Size Does Not Fit All

And I think what we are focused on is delivering the tailored, optimal experience for those kinds of ways that you work, without trying to take a one-size-fits-all solution to it.

No Touch Screens on Notebooks or Desktops

“It’s obvious and easy enough to slap a touchscreen on a piece of hardware, but is that a good experience?” Federighi said. “We believe, no.” ((Dr. Drang (@drdrang) has a thoughtful essay, here, on why touch screens WOULD work on notebooks and desktops. MY TAKE: This issue confused me for a while. It was clear to me that the input methods for notebooks and desktops were, and should remain, distinct from those of phones and tablets. On the other hand, it was also clear that phones and tablets were training us all to touch our computing screens. Ultimately, I concluded that metaphor mattered most. Using touch on a machine designed for a desktop metaphor only works SOME of the time and would ultimately cause confusion in the user’s mind. Better to make a clean break and have users to gestures on a touchpad, instead.))

The Personal Computer Has Been Honed To Work With A Keyboard And Mice; The Tablet Has Been Honed To Work With Your Finger

“This device,” Federighi said, pointing at a MacBook Air screen, “has been honed over 30 years to be optimal” for keyboards and mice. Schiller and Federighi both made clear that Apple believes that competitors who try to attach a touchscreen to a PC or a clamshell keyboard onto a tablet are barking up the wrong tree.

“The reason OS X has a different interface than iOS isn’t because one came after the other or because this one’s old and this one’s new,” Federighi said. Instead, it’s because using a mouse and keyboard just isn’t the same as tapping with your finger.”

The Metaphysics

Aristotle drew a distinction between essential and accidental properties. The way he put it is that essential properties are those without which a thing wouldn’t be what it is, and accidental properties are those that determine how a thing is, but not what it is.

Touch is ACCIDENTAL to a Personal Computer. It may enhance its usefulness but it doesn’t change the essence of what it is. Touch is ESSENTIAL to a Tablet. It’s the essence of what it is.

Pixel specific input is ANATHEMA to a Tablet. It destroys its very essence. A Touch device can literally not work with pixel sized input targets. But pixel specific input is ESSENTIAL to a Personal Computer. A Personal Computer can literally not operate without it.

A touch input metaphor and a pixel input metaphor not only should be, but MUST be, wholly different and wholly incompatible with one another. It’s not just that they do not comfortably co-exist within one form factor, it’s also that they do not comfortably co-exist within our minds eye.

In plain words, it’s no accident that the operating systems for tablets and notebooks are distinctly different from one another. On the contrary, their differences — their incompatibilities — are the essence of what makes them what they are.

Motorcycle-Motorcar ((Why Motorcar instead of car or automobile? Because I like alliteration, that’s why.)) Metaphor

A car and a motorcycle are both motor vehicles but they employ two very different user interfaces.

On a car:
— You use your left hand to steer;
— You use your right hand to shift gears; ((At least, you did before automatic transmissions came into vogue.))
— You use your right foot to accelerate and brake; and
— You use your left foot to keep time with the radio.

On a motorcycle:
— You use your left hand to work the clutch;
— You use your left foot to shift the gears;
— You use your right hand to work the front wheel brake; and
— You use your right foot to work the back wheel brake.

[pullquote]The mythical unified operating system is an insoluble problem, masquerading as a great good.[/pullquote]

You could put a hand brake on a car or a steering wheel on a motorcycle or a foot clutch on a car or a stick shift on a motorcycle — but none of those additions would make much sense. All would be confusing and most would be dangerous as all get out.

Unifying the features of a motorcycle and a car or a tablet and a desktop is not the goal. User understanding and usability IS the goal.

The Theory In Practice

That’s the theory. So what’s the reality?

Experience without theory is blind, but theory without experience is mere intellectual play. ~ Kant

The Tablet — Sans Desktop Interface — Is A Runaway Success

The iPad — and all the derivative tablets within the Android operating system — have only one operating system and only one input (touch) and they are fantastically successful.

By the end of 2014 the install base of tablets will be just over half that of PCs. ~ Ben Bajarin (@BenBajarin)

Take a deep breath and re-read that again. It only took FOUR YEARS for install base of tablets to reach half of that of Personal Computers!

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If the tablet is only half-a loaf — if the unified operating system is the Holy Grail of computing — then why has the tablet been SO successful and why has Microsoft’s 2-in-1 effort been such an abject failure?

The failure of Apple critics is not that they don’t understand that Apple’s iPad/iPhone are selling. It is that they don’t understand why. ~ Ben Bajarin (@BenBajarin)

Today

The Surface 2-In-1 Approach Is A Train Wreck

Design makes what is complex feel simpler, and makes what is simpler feel richer.

[pullquote]Microsoft’s Windows 8 operating system is as pure as the driven slush.[/pullquote]

Ask yourself this question: “Is Windows 8’s 2-in-1 user interface simpler?” Heck no, Why, Microsoft can’t even get their own flagship apps to work well on Windows 8.

I’m really not sure that there’s a worse app to use with Windows 8 tablets than Outlook. The idea that MS thinks this is acceptable is crazy. ~ Ian Betteridge (@ianbetteridge)

When Steve Jobs introduced the iPad in 2010, he asked “Is there room for a third category of device (between the phone and the notebook)?” Now Microsoft is trying to introduce yet another category between the tablet and the notebook. If it is to succeed, then it must pass the same litmus test that Steve Jobs proposed for the iPad:

The bar’s pretty high. In order to really create a new category of devices, those devices are going to have to be far better at doing some key tasks. Better than a laptop. Better than a smartphone. (Author’s note: And better than a tablet.)

[pullquote]You can’t sit on two horses with one behind. ~ Yiddish proverb[/pullquote]

Now let me ask you this: What tasks is the Surface FAR better at?

The Surface, which is the embodiment of combining two operating systems into one, has failed and failed miserably.

Conclusion

It turns out that Apple had long-ago asked — and long-ago definitively answered — the question of whether they would be combining a tablet with a notebook. And that answer was “Yes”:

QUESTION: “What would happen if a MacBook met an iPad?”

ANSWER: The MacBook Air. ((New MacBook Air announcement))

[pullquote]Microsofts strategy and products will appeal to millions while Google and Apple’s will appeal to billions. ~ Ben Bajarin (@BenBajarin)[/pullquote]

Tablet and notebook interfaces are not combining because it simply won’t work. Great products are not defined by the absence of weakness, but rather, by the presence of clear strengths.

In 2007, when the iPhone was introduced, Steve Jobs famously said:

(A)re you getting it? These are not three separate devices, this is one device, and we are calling it iPhone.

When it comes to phones, tablets and notebook/desktops, we can reverse that and paraphrase Steve Jobs by saying:

Are you getting it? This is not one device. These are three separate devices, and we’re calling them the smartphone, tablet and notebook/desktop.

Phil Schiller put it this way:

“It’s not an either/or,” Schiller said. “It’s a world where you’re going to have a phone, a tablet, a computer, you don’t have to choose. And so what’s more important is how you seamlessly move between them all…. It’s not like this is a laptop person and that’s a tablet person. It doesn’t have to be that way.”

Postmortem

Wise men profit more from fools than fools from wise men; for the wise men shun the mistakes of fools, but fools do not imitate the successes of the wise. ~ Cato the Elder

[pullquote]It is hard to get to the summit, harder to stay on it, but hardest to come down. ~ Aleksander Fredro[/pullquote]

Apple showed Microsoft the way to do tablets right, but Microsoft refused to follow Apple’s example because they knew that it would mean the end of their existing Window’s monopoly.

Many are stubborn in pursuit of the path they have chosen, few in pursuit of the goal. ~ Friedrich Nietzsche

Microsoft thinks they’re in the Windows business. They’ve forgotten their mission, their purpose. They’ve forgotten that they’re in the computing business.

ctrl-alt-delMicrosoft should Control-Alt-Delete their attempts at a unified operating system, but I don’t think there’s any chance that that will happen. Based on the statements coming out of Redmond, Microsoft is doubling-down on their current strategy which, in my opinion, is a tragic mistake. Besides, asking Microsoft to fix what’s wrong with Windows 8 is like making them the detective in a crime movie where they’re also the murderer.

Yogi Berra once famously said:

It’s not over until it’s over.

It’s over.

Tech Toy Story

Microsoft’s newest ad campaign is breath taking but not, I think, in the way that Microsoft imagines.

microsoft-tools-note-toys

Just a toy“, my ass. ~ Steven Aquino (@steven_aquino)

This is why Microsoft will lose. This shows they don’t get it…“ ~ Ben Bajarin (@BenBajarin)

Is there some sort of Redmond Triangle — a mysterious zone where ad executives of talent disappear without a trace? The Microsoft ad is ignorant, insulting, and shockingly naive. How could a company as successful as Microsoft get it so very, very wrong?

History Repeats

[pullquote]The only new thing is history we don’t know. ~ Harry S. Truman[/pullquote]

Of course, Microsoft is not the first — nor will they be the last — to dismiss their competitor’s products as mere “toys.” There is a long and storied history of such foolish behavior.

Most recently, Blackberry, a.k.a, RIM, proudly boasted that their phones were “not a toy“.

Bad omen for Microsoft: It’s using BlackBerry’s ‘tools not toys’ line. ~ BGR (@BGR)

I remember the last company to push the “tools not toys” line: BlackBerry. Worked out awesome for them. ~ Brad Reed (@bwreedbgr)

[pullquote]History is a very good teacher, but he has very few students. ~ Wael El-Manzalawy[/pullquote]

But the story of dismissing the new as mere toys, goes back over a hundred years and surely extends throughout all of history.

While theoretically and technically television may be feasible, commercially and financially, I consider it an impossibility, a development of which we need waste little time dreaming. ~ Lee De Forest, inventor, 1926

I have determined that there is no market for talking pictures. ~ Thomas A. Edison, 1926

Airplanes are interesting toys but of no military value. ~ Marechal Ferdinand Foch, Professor of Strategy, Ecole Superieure de Guerre , France

X-rays will prove to be a hoax. ~ Lord Kelvin, British mathematician and physicist, 1896

When the Paris Exhibition closes, the electric light will close with it, and very little more will be heard about it. ~ Professor Erasmus Wilson, 1878

It’s only a toy. ~ Gardiner Greene Hubbard, future father-in-law of Alexander Graham Bell, on seeing Bell’s telephone, 1876

Although it is…an interesting novelty, the telephone has no commercial application. ~ J. P. Morgan, to Alexander Graham Bell

Well-informed people know it is impossible to transmit the voice over wires as may be done with dots and dashes and signals of the Morse code, and that were it possible to do so, the thing would be of no practical value. ~ Editorial in the Boston Post, 1865

Disruption Repeats

Disruption seems to follow a fairly steady pattern:

Stage 1: The incumbent over-serves the vast majority of their customers.

Stage 2: A challenger appears with a cheaper and/or simpler product or service that only performs a subset of the incumbent’s services. However, that subset served is the set of tasks that the vast majority of users wish to enjoy or perform.

Stage 3: The incumbent dismisses the challenger’s product or services as “beneath contempt”. Calling a new and inferior product a “toy” is a subset of such disdain ((Inspired by Horace Dediu)).

Who says you can’t do “real work” on a non-Microsoft tablet?

Just because Microsoft SAYS non-Microsoft tablet don’t do real work, doesn’t make it so.

In sales environments, a tablet is a better and more useful tool [than a PC]… ~ Nicholas Paredes

James Kendrick, of ZDnet, certainly seems to think that he gets “real work” done on his tablet.

And the way that Enterprises are snapping up non-Microsoft tablets suggests that SOMEBODY — and a whole lot of somebody’s — thinks that tablets are eminently capable of doing “real work.”

How many people use PC’s for “real work” anyway?

BeLifydCUAAMKDjBenedict Evans poses — and then answers — the question: “How many people use PCs for ‘real work’?

One problem with saying that you need a PC to do ‘real work’ is that a large % of people don’t actually use their PC for ‘real work’ ~ Benedict Evans (@BenedictEvans)

[pullquote]The easiest software incumbent to disrupt is the one prioritizing the needs of its strategy over the needs of its customer. ~ Aaron Levie (@levie)[/pullquote]

Microsoft has the question backwards. They’re asking: “How many tablets can run programs like Excel, Word and Powerpoint?” What they should be asking is: “How many people who use tablets need to use programs like Excel, Word and Powerpoint?”

Efficiency is doing things right. Effectiveness is doing the right things. Microsoft’s tablets may or may not be efficient, but they’re not effective because they’re not doing the right things.

What’s So Wrong With Being A Toy?

Quite often, when incumbents think a new entrant product is a toy, they’re right. ~ Benedict Evans (@BenedictEvans)

[pullquote]The supreme accomplishment is to blur the line between work and play. ~ Arnold J. Toynbee[/pullquote]

Being called a “toy” is not the insult Microsoft thinks it is. It may, in fact, be the ultimate compliment.

In the war between platforms you can use for real work and platforms that are just toys, the toys always win. ~ Benedict Evans (@BenedictEvans)

Creating a computer that does real work is the act of an engineer. Creating a computer that makes work feel like play is an act of genius.

I LIKE the tools that help me get work done. I LOVE the tools that make my work fun to do.

When the craftsman made the first wheel, industry veterans pointed out you couldn’t use it for real work. ~ Benedict Evans (@BenedictEvans)

It made for a fun toy though. ~ John Gruber (@gruber)

Microsoft Just Doesn’t Get It

[pullquote]Wisdom doesn’t necessarily come with age. Sometimes age just shows up all by itself. ~ Tom Wilson[/pullquote]

Microsoft seems to make the same mistake over and over and over again. The phrase “less is more” is literally untrue; it’s a logical impossibility. But when people use this expression, they’re not speaking logically, they’re using self-contradictory phrasing to describe an important principle — that keeping things simple; that avoiding unnecessary detail; often improves things.

Microsoft just can’t seem to learn this lesson. And, ironically, the longer they think of their competitor’s products as toys, the less likely it will be that their prospective customers take them seriously.

An Open Letter To App Developers

The smartphone has quickly become our primary interface to the world. The app has become our primary interface to the smartphone. Apps matter. Therefore, app developers matter. Unfortunately, too many apps, too many app developers, likely in pursuit of riches that shall never come, continue to offer copycat apps, apps poorly designed, apps that value ads over users.

I want to help. I know apps, good and bad. I was analyzing the “smartphone wars” back when most tech blogs were still talking Mac vs PC. I have used most major smartphone platforms, at length. This includes Palm and BlackBerry, Windows Phone, iOS and Android, Symbian, Asha and, yes, Meego.

I offer the following rules and declarations in the interest of creating more and better apps for everyone.

  1. The world does not need another weather app.
  2. By 2015, at the latest, I expect Windows Phone will garner at least a 20% share of all new smartphone sales. Create apps for this platform.
  3. It’s absolutely appropriate to ask me to rate your app. Once. If I choose not to, accept this — and never ask me again.
  4. Life is much easier when I can sign in to an app using my Facebook credentials.
  5. Never — not ever — should you request anything beyond my Facebook credentials, however. Do not ask to post my purchase of your app to my Facebook page, do not ask for my location unless there is a clear and present and ongoing user benefit. Do not ever ask me, and especially never require me, to tell you my Facebook friends.
  6. You have 3 seconds, tops. If I cannot fully immerse myself within the wonder and scope of your app in 3 seconds or less, then your app gets abandoned.
  7. Care about your app icon. It really does matter.
  8. Apple does not care about you. Apple provides you, for now, with the single greatest platform for monetizing your app. But do not believe they are your partner. They are the world’s largest (tech) company and do not like to share. iWork, iPhoto, Garage Band, Weather, Maps and more are just the start. Should a new app opportunity arise, possibly one you helped create, Apple will not hesitate to move in. Be ready to out-innovate, pivot, or die.
  9. We take our smartphones with us everywhere. For many, they are the first thing we see at the start of a new day, the last thing we see before going to sleep. This is a tremendous opportunity. At perhaps no time in human history has a single tool been used so fully throughout the day, everyday, for work and play, by child, teen, adult and senior, all over the world. Take pride in your work.
  10. You deserve to be paid. Of the hundreds of apps I have purchased, minimum, I have never once thought that I would rather choose the app with ads over paying $1, sometimes more, for an ad-free app. Even large display smartphones have relatively small screens. Cluttering it up with an ad, ever, is annoying. Worse, it’s a clear intrusion upon my privacy and a waste of time. I never click on a mobile/in-app ad. I can assure you that my time and my privacy are worth far more to me than my ad view is to you.
  11. Users deserve a second chance. Apple, especially, should offer an app trial period. Yes, even for a 99 cent app. Should they ever agree, these rules become even more important.
  12. Apps must be optimized for the platform and device. Always. Smartphone, tablet, laptop, desktop. I subscribe to several web services (e.g. MyNetDiary, New York Times). The smartphone app version may look similar to the website, but must be optimized for the device itself (e.g. iPhone). There are no excuses for failing this.
  13. Touch, pinch, swipe. The touch interface is a beautiful thing. Yet, I have absolutely no use for apps, Clear, for example, or Tweetbot, that insist upon a needlessly expansive variety of gestures to access its data and features. This is nothing more than too many fonts on a Word doc.
  14. Almost every single app I have purchased over the past 18 months I discovered from a Twitter follower or a Facebook ad. Nowhere else. Not Apple genius. Not Google search. Not any app-focused website. You should know this.
  15. Specials are viral. I find out about your app on Twitter, for example, and learn it’s half-priced for today only, I am both extremely likely to buy and to tweet my purchase to others.
  16. Apps are like sperm. Only the first survive. If I have a decent grocery list app, say, there is an extremely good chance your far better, newer grocer list app will be irrelevant to me. Similarly, an app not on the ‘home’ screen is likely not long for this world. No advice, merely an acknowledgement. Your work is hard.
  17. Hold the line. Google has taught us that other’s information should be accessible, for free. Apple has taught us that hardware, not software, should be paid for. I don’t really know how you can succeed in this environment. But I hope you do. Most of you do great work.
  18. You get one chance only to ask if I want to connect with my friends. I should not have to repeat this. Ask once, then accept my ‘no’.
  19. I have a lot of friends. I know a lot of people. When you show me people I know or may know or should know and ask me to connect with them via your app, you make me feel nearly as dirty as you are.
  20. Never scan my contacts. Never ask to scan my contacts. It is a betrayal. This is why I can’t have LinkedIn on my phone.

As the world goes mobile, connecting everyone and everything, focused, functional and highly usable apps will serve as the entry point to all the world’s data, resources, people and content. The humble app, then, is a rather noble device. Treat it and its users with all due respect.

Godspeed.

Disruption: What Microsoft Got Wrong

Surface screenshot (Microsoft)Ben Thompson of Stratechery has deservedly been the talk of the tech world this week for his analysis of disruption theory, What Clayton Christensen Got Wrong. Thompson argues (and if you haven;t read his piece you should) that Christensen actually has two theories of disruption: new market disruption, in which incumbent fail to respond to basic technological change and low-end disruption, in which companies’ business models are undermined by commoditization and their inability to compete with cheaper, “good enough” offerings.

There has been a tendency to look at the struggles of Microsoft as a case of low-cost disruption. Sales of Windows PCs are suffering because customers are settling for cheaper tablets and smartphones that are good enough for their needs.  Certainly, Microsoft itself seems to look at the market that way: Its ads for the Surface focus on features the iPad lacks (“I’m sorry, I don’t have a USB port,” the tablet says in a wistful Siri voice) and Surface’s lower price.

Unfortunately for Microsoft, this misses the point. Windows has been hit by new market disruption, not its low-cost cousin. Many people–certainly myself–use an iPad not because we are willing to settle for it but because we find it meets our needs better than a laptop. I have a laptop, several of them to be precise, both Mac and Windows, but whenever I am not at my desk (where I use desktops) I will almost always go for my iPad or, if the spirit moves me, a Samsung Android tablet.

The problem from Microsoft’s point of view is that I use the tablet not because it is good enough but, for most of the jobs at hand, better. It’s always there, always on, and easily kept on my lap. Dedicated apps generally perform their chores with less fuss than their desktop equivalents.

Most studies show that tablet owners also tend to own conventional PCs. They just use them less. And because they use them less. they replacement less often, which is very bad for sales. I’m ready to replace my iMac, which I use for media production, with a newer and much faster version. Waiting 20 minutes to render six minutes of video was the last straw. But my nearly four-year-old Windows desktop is likely to go on chugging along for another year or two (on Windows 7, most likely.)

Microsoft’s response to this has been to offer a tablet that is as PC-like as possible. It is telling that the Surface (or Surface Pro) is rarely shown in ads without a keyboard. It runs a PC operating system. This Twitter dialog between Ben Bajarin and Ian Betteridge gets to the point:

tweets-surface

Surface’s  greatest point of differentiation is that in can run Microsoft Office, applications that are all but useless without a keyboard and mouse. But from Microsoft’s viewpoint, it’s better, it’s cheaper–what’s not to like?

Except that customers didn’t like the Surface, to the tune of a $900 million inventory writedown on the original version. And I don’t think they’ll be much fonder of its replacement, which offers better performance but an updated version of Windows RT, rather confusingly called Windows RT 8.1, that is only a modest improvement (at least it does limit the frequency with which the mouse-dependent Windows Desktop pops up.) It is still too PC-like and too bereft of apps to appeal.

Some companies caught by new market disruption really don’t have a chance. Kodak, for example; even if it had dominated the market for digital cameras, there just wasn’t enough money in that business to to make good the losses from film, paper, chemicals, and photofinishing services. Microsoft has the money and the opportunity to get out ahead of new markets. But like so many other incumbents, it could not loosen its grip on its lucrative legacy to seize the future. And for this it will pay dearly.

 

 

 

The Microsoft Surface is (French) Toast

The Apology

Please allow me to begin by apologizing for the saucy language you are about to encounter. There is simply no way for me to tell the following joke without cursing. I really don’t like cursing (although, I do so love using it for effect), so I’m going to employ a substitute for the curse word. I trust that the savvy and discerning Techpinions reader will be able to pierce the veil and see through my little euphemism. Enjoy!

The Joke

On a Saturday morning, three boys come down to the kitchen and sit around the breakfast table.

Their mother asks the oldest boy what he’d like to eat.

“I’ll have some firetruckin’ French toast,” he says. The mother is outraged at his crude language. She hits him and sends him upstairs.

When she calms down, she asks the middle child what he wants. “Well, I guess that leaves more firetruckin’ French toast for me,” he says. The mom is livid. She smacks him and sends him away.

Finally, she looks at the youngest son and asks him what he wants for breakfast.

“I don’t know,” he says meekly, “but I definitely don’t want the firetruckin’ French toast!”

Excerpt from: “Jokes Every Man Should Know

The Analogy

• The mother in the Joke represents the computer buying public.

• The first two boys represent any one of the several PC hardware manufacturers who made tablets running the Windows 8 software but who have since been booted from the market.

• The youngest boy represents Microsoft.

Microsoft – like the youngest boy in the Joke – has gotten the reaction of the public (the mother) all mixed up. The boy thinks that the mother is upset about the French Toast, not the cursing. Microsoft thinks that the public is upset about Windows 8. So Microsoft has been quick to swear off (see what I did there?) Windows 8 and move on to the brand, spanking, new Windows 8.1. That’s going to fix EVERYTHING!

Or not.

‘Cause the real problem – the problem that Microsoft doesn’t see or get – is with Microsoft’s accursed tablet philosophy. Microsoft thinks that what people REALLY want in a tablet is a PC. And Microsoft thinks that what people REALLY want in a PC is Windows. Thus and therefore, Microsoft thinks that what people REALLY want in a tablet is a PC that runs Windows – a hybrid, that does it all and is all things to all people.

Until Microsoft’s outlook (oh my, yet another obscure reference) changes – and I think it’s unlikely to change anytime too soon – Microsoft, like the youngest boy in the Joke, is going to keep on getting slapped around without a clue as to why it’s happening.

Paul Thurrott’s Analysis

Paul Thurrott, in his article entitled, “Can Surface be Saved?“, is seemingly critical of Microsoft’s tablet efforts but, in the end, he erroneously sides with Microsoft’s take on why Windows 8 tablets are failing in the marketplace.

The Surface Is The New Zune

The parallels with (Surface and) Zune are interesting. In both cases, Microsoft established a new (well, recycled in the case of Surface) brand for a new family of hardware products. In both cases, Microsoft adopted a coopetition model in which it sought to have it both ways by both supporting partner devices and then competing with them head-on with their own.

The fear at the time of the reveal event was that Microsoft would alienate these partners by making its own hardware. ~ Paul Thurrott

Microsoft’s move to “co-opetition” is quite interesting. When Microsoft announced the Surface, the pundits seemed to fall into one of two groups. The theorists suggested that by making their own hardware, Microsoft would harm their relationship with their hardware partners. On the other hand, realists looked at the market and concluded: “Harm their relationship? Nonsense. Where are the hardware manufacturer’s going to go?”

In a way, the theorists and the realists were both right. If the Microsoft Windows 8 Tablet program is the sinking Titanic, Microsoft’s PC manufacturers are the lifeboats and those lifeboats aren’t so much paddling toward anything as they are simply madly paddling to get AWAY from the sinking ship that is the Surface. ((Paul Thurrott: First, of the few PC and hardware makers that voiced support for Windows RT last year and the subset of those that actually shipped devices, virtually all have completely and publicly backed away from the platform. Indeed, the most successful Windows RT device, by all measures, is Surface RT. And that device required a nearly $1 billion write-off because of poor sales.
Second, more and more PC makers are turning to free Google platforms. Not just Chrome OS, which is a super-cheap/low-risk bet, but also now Android.))

Redefining “Superior”

Killing off Surface would just deprive customers of some of the only truly superior PC hardware out there.

And these devices really are superior. We can debate specifics around battery life, the keyboard choices, the number of ports, the non-adjustable kickstand, or whatever. But these are beautiful and well made products. ~ Paul Thurrott

Okey dokey then. Let’s take a step back for a second and examine that bit of analysis. I have no argument at all with the hardware quality of the Surface. Beautiful and well-made? Yes. But nothing is truly “superior”unless it serves its intended purpose.

There is nothing so useless as doing efficiently that which should not be done at all. ~ Peter Drucker

The “Pro” Tablet

I previously described (the Surface) as what a “Pro” line of iPads might look like if Apple were to make such a thing. ~ Paul Thurrott

This is where Paul’s analysis and Microsoft’s tablet philosophy go right off the rails. They both think that what the world wants – that what the world needs – is a “Pro” line of tablets.

…I still believe that this kind of hybrid device—one that combines work and play thematically and tablet and laptop physically—is the future of the PC. Not just the Ultrabook, but the PC. The ability to use and travel with just a single device that does it all is still a dream today. ~ Paul Thurrott

Yeah, not so very much.

I can see the appeal of Paul and Microsoft’s “dream”. But – as Microsoft has demonstrated – merging a tablet with a PC is not a “dream”, it’s a nightmare.

Not One Hybrid, But Multiple Screens

Ironically, Bill Gates predicted the future of computing back in 2007:

I don’t think you’ll have one device.

I think you’ll have a full-screen device that you can carry around and you’ll do dramatically more reading off of that – yeah, I believe in the tablet form factor…

…and then you’ll have the device that fits in your pocket…

…and then we’ll have the evolution of the portable machine. And the evolution of the phone will both be extremely high volume, complementary–that is, if you own one, you’re more likely to own the other.

[pullquote]The one, unifying computer is not the hybrid, it’s the Cloud.[/pullquote]

What’s actually happening is that we’re moving toward owning multiple windows (Ironic, eh?) to view and interact with our centralized data in the Cloud. One screen for our pocket (smart phone), one screen for the desk (PC), one screen for the wall (TV) and one screen for walking and lounging about (tablet). The one, unifying computer is not the hybrid, it’s the Cloud.

So if Bill Gates predicted this so very long ago, why doesn’t Microsoft get it? Well, as Upton Sinclair so rightly put it:

“It is difficult to get a man to understand something when his salary depends upon his not understanding it.”

A hybrid computer that runs Windows is not the consumer’s dream, it’s Microsoft’s dream. And the bulk of the computer buying public is having none of it.

Black or White Thinking

Am I saying the the Surface isn’t good for anyone? Absolutely not. There are literally millions upon millions of users who will need it, love it, absolutely adore it.

But that’s not enough.

In today’s marketplace, millions of computers is a niche. The goal is to sell in the BILLIONS. And I’m not being hyperbolic. Android is closing in on a billion activations fast. And iOS isn’t that far behind.

The pertinent question isn’t whether Windows 8 tablets are good or bad. Like all products, they’re good for some people and bad for others. The pertinent question is one of proportion. Will enough people want enough Windows 8 tablets to make them a majority or even a plurality? All the evidence to date says that they will not.

The Surface Is Firetrucked

So let’s tie this into one nice, neat package and put a ribbon on it.

In the Joke, the mom’s problem isn’t with the French Toast. It’s with the kids’ cursing.

In reality, the public’s problem isn’t with the quality of the Surface hardware or about tweaking the Windows 8 software. It’s with Microsoft’s cursed belief that tablets really want to be PCs.

As long as the kid in the Joke doesn’t understand the problem, he’s going to keep getting smacked around by his mother.

As long as Microsoft doesn’t understand the problem, they’re going to keep getting smacked around by the marketplace.

If Microsoft doesn’t start getting the joke, instead of being the joke, their tablet ambitions are going to end up as (French) toast. ((Urban Dictionary: Toast – Destroyed, terminated, ceased functioning, ended abruptly by external forces.))

Beating The Dead Horse That Is Microsoft Windows (Part 1)

Few people enjoy beating a dead horse more than I do, but man, beating up on Microsoft Windows is simply no fun anymore…because everybody’s doing it.

The defining company of the PC era — which for the purposes of this discussion we’ll consider the 25 years from 1981 to 2006 — has not articulated a unique and compelling vision for the future of computing since the iPhone rocked it to its core in 2007. ~ Tom Krazit, Gigaom

Yup, that about sums it up.

The first part of this two-part series will focus on what’s gone wrong with Microsoft Windows. Next week, I’ll conclude the series by focusing on why Microsoft is in this position and what, if anything, they can do to resuscitate the dead horse that is Windows.

Let Me Count The Ways

So, exactly how badly is Microsoft losing in the personal computing space? Let me count the ways:

1) PCs are in decline;
2) Mobile is ascendant;
3) Windows Phone 8 sales have been disappointing;
4) Windows RT sales have been disappointing;
5) Microsoft Surface sales have been disappointing;
6) Third-party Windows 8 tablet sales have been disappointing;
7) Ultrabook sales have been disappointing;
8) Windows 8 adoption has been disappointing;
9) Microsoft App Store growth has been disappointing;
10) Business and Enterprise is moving on without Microsoft’s products or services;
11) Microsoft has lost its monopoly and its monopoly powers; and
12) Microsoft is dependent upon legacy products – Windows and Office – for the bulk of its profits.

No reasonable person is arguing that Microsoft is going away. What rational people ARE contending is that Microsoft is becoming irrelevant in the front end – the consumer facing portion – of the personal computing space.

How did it come to this?

1) PCs Are In Decline

If you don’t cannibalize yourself, someone else will. ~ Steve Jobs

Evidence of the PCs decline is indisputable and, frankly, no one is trying to dispute it.

screen shot 2013-07-17 at 6.13.59 am

Dropoff in PC Sales Is Accelerating and Tablets Are the Culprit, Says IDC

slide-46-638-1

In mature markets, the PC is saturated. And that’s where tablets are secondary devices. Shim says in emerging markets tablets are going to be primary devices. If the tablet takes off there, that kills the traditional PC’s chances of ever growing again.

slide-45-638

…for the 4th quarter PC sales declined by almost 5% according to Gartner research, and by almost 6.5% according to IDC. Both groups no longer expect a rebound in PC shipments, as they believe homes will no longer have more than 1 PC due to mobile device penetration, a market where Surface and Win8 phones have failed to make a significant impact or move beyond a tiny market share.

In the model IDC used to forecast the 7.8% decline, the second quarter — which ended June 30 — was to be down 11.7%, a smaller drop than the first quarter’s historic 13.9% plunge. Shipments in the third and fourth quarters, meanwhile, would decline 4.7% and 1.6%, respectively, from the same periods in 2012.

2) Mobile is ascendant

“The best way to predict the future is to invent it.” ~ Alan Kay

slide-5-638-1

Half of U.S. adults now own a tablet or smartphone, Pew study finds

…mobile devices — in particular iOS and Android — will continue to cannibalize PC sales throughout the year. Put simply, consumers and enterprise buyers prefer to spend their money on post-PC devices rather than on PCs.

Next year, tablet sales will beat notebook sales for the first time ever, says NPD’s DisplaySearch. It is projecting tablet shipments of 240 million units versus notebook shipments of 203 million units. That’s 64 percent growth for tablet versus a 5 percent decline for notebooks.

IDC: Tablets to outsell notebooks in 2013, all PCs in 2015

The latest prediction from NPD DisplaySearch shows just how quickly the market has changed. It was six months ago, in July 2012, that the same organization predicted that it would take until 2016 for tablets to surpass notebook shipments.

3) Windows Phone 8 sales have been disappointing

I wish developing great products was as easy as writing a check. If that was the case, Microsoft would have great products. ~ Steve Jobs

Screen-Shot-2013-05-23-at-11.38.35-PM
Source: Ben Evans

iOS and Android comprised 92.3% of Q1 2013 smartphone shipments

According to Murtazin, Microsoft’s royalty fees from licensing the Windows Phone OS to manufacturers like Nokia, HTC (2498) and Samsung (005930) are being given back to these companies in the form of marketing dollars. In Nokia’s case, an arrangement similar to the one Murtazin describes is a matter of public record, as per the company’s 2011 annual report

Windows Phone gets no traction despite the Nokia deal and RIM’s collapse

Manufacturers reportedly ignoring Windows Phone due to OS fees… and Nokia

Rumor: Microsoft paying $100,000 to some Windows Phone app makers?

You won’t help shoots grow by pulling them up higher. ~ Chinese proverb

screen-shot-2013-05-16-at-07-37-26-615x266

4) Windows RT sales have been disappointing

It is perfectly monstrous the way people go about nowadays saying things against one behind one’s back that are absolutely and entirely true. ~ Oscar Wilde

…Gottheil dubbed the RT tablets a “meta-tweener,” a “tweener between a tweener (Windows 8 x86) and a pure tablet like iPad,” he said. … “I don’t think Windows 8 RT can be successful unless and until its price is much lower.”

Microsoft slashes Surface RT prices by $150 as it flounders against Apple’s iPad

Lenovo released one of the few PCs that ran Microsoft’s ARM-based Windows RT operating system last fall with the 11 inch Yoga 11 notebook-tablet hybrid. Now it looks like Lenovo is phasing out its lone Windows RT product, as it no longer sells the Yoga 11 on its own website.

5) Microsoft Surface sales have been disappointing

To change and to improve are two different things. – German proverb

Microsoft’s Surface Experiment Has Fallen Flat

“Perfection is the goal we’re going for, and that perfection comes with trade-offs,” said Panos Panay, general manager of Surface.

The above statement is “perfectly” ridiculous.

Someone at Microsoft needs to invest in a dictionary.

6) Third-party Windows 8 tablet sales have been disappointing

Bad engineering is solving a problem that you didn’t have in a way that you don’t understand.

…(A)t a time when buyers seems price-sensitive, Wu finds the $500 to $1200 price tags slapped on Windows 8 hardware to be “uncompetitive” when compared to Android with prices as low as $99, and the iPad mini which starts at $329.

Windows 8 tablet sales have been almost non-existent, with unit sales representing less than 1% of all Windows 8 device sales to date, NPD said, excluding sales of the Windows Surface tablet.

Windows 8 device sales have not met Redmond’s internal projections, and the company is blaming it on lackluster hardware from OEMs.

7) Ultrabook sales have been disappointing

Imitation is a good servant, but a bad master.

In October, IHS iSuppli downgraded its estimate of 2012’s ultrabook sales, cutting its projections by more than half from 22 million to 10.3 million, citing too-high prices. iSuppli argued that sales won’t take off until prices fall toward the $600 bar, perhaps in 2013. … The problem for Microsoft is that the outlook for ultrabooks, which the Surface Pro emulates, is dim. Windows ultrabook sales have been disappointing this year, and show little sign of improving sans dramatic price cuts.

NPD: Apple’s MacBook Air dominates with 56% of U.S. thin-and-light notebook market

8) Windows 8 adoption has been disappointing

I heard that if you play a Windows 8 CD backwards, you’ll get a satanic message. But the most frightening thing is that if you play it forward, it installs Windows 8.

The Windows 8 Sales Data Is In, And It’s Bad News For Microsoft

Windows 8 continues to fail

Windows 8 Is Failing to Beat Windows 7… And XP… And Even Vista!

Worse still, Windows 8’s month-over-month growth rate is lagging further and further behind Vista’s dreadful 2007 adoption numbers. When comparing the operating systems when they were first launched, Windows 8’s adoption rate in its first month trailed Vista by just over half-a-percent among PC buyers. Now, in their 8th month out, Vista’s market-share numbers now lead Windows 8 by 3.64 percent. Needless to say, both lag far behind XP and Windows 7’s numbers at similar points in their product life-cycle.

How bad are Windows 8 sales? In April 2013’s Net Applications numbers, Windows 8 barely crept up to 3.82-percent. That still leaves Windows 8 behind Microsoft’s last operating system flop, Vista, after seven months in the market. Windows on tablets fared even worse with touch-screen-based Windows 8 devices and Windows RT devices coming in at 0.02-percent and 0.00-percent each. The last was not a typo. The Surface RT is now in the running for worst Microsoft launch ever.

StatCounter’s findings follow a similarly worrying report from NPD this week, which found that Windows 8 had captured just 58% of all Windows device sales since its launch, while Windows 7 captured 83% during the same period.

9) Microsoft App Store growth has been disappointing

“There comes a time in the affairs of man when he’s got to take the bull by the tail and face the situation.” – W.C. Fields

App-Growth-by-Platform

In a classic chicken-and-the-egg conundrum, the Windows Store needs more Windows 8 customers and Windows 8 customers need more worthwhile apps from the store. Microsoft has failed miserably at attracting compelling content, a painful fact for any developer — or software company — thinking about committing the resources to bring a Metro app to market. How bad is it? … In short, it’s a wasteland.

Microsoft expected 100,000 Windows 8 apps in 90 days. It took 248

Sources: Microsoft Is Paying Developers Up To $100,000 To Write Windows Phone 8 Apps

Primary-Platform

Source

Windows 8 users are turning to apps, on average, 1.52 times a day. Breaking this down by type indicates that tablet users are the heaviest app users, launching them 2.71 times per day, while touch-screen notebook users launch 47 percent more apps than those on a standard notebook. … Desktop users make the least use of Modern apps. … Soluto crunched the data further, and took a closer look at those who launch fewer than one Modern app a day. Here, the company noticed that a staggering 60 percent of users launch an app less than once a day. Even when it comes to tablet users, the heaviest users of Windows 8 apps according to Soluto, 44 percent of those sometimes go a day without launching an app.

10) Business and Enterprise are moving on without Microsoft’s products or services

If you’re in a card game and you don’t know who the sucker is, you’re it. ~ Anonymous

Gartner: By 2014, Apple will be as accepted by enterprise IT as Microsoft is today

zdnet-good-technology-mobile-report-q1-2013-620x389

Thanks To BYOD, Apple Invades The Enterprise

More Data Showing iOS, Especially The iPhone, Still Killing It In The Enterprise

Why companies are still deploying iOS apps first

Fortune 500 Companies Moving to iPad Hits 94%

Apple’s iOS still dominated the enterprise mobile circuit with 75 percent of total device activations last quarter.

11) Microsoft has lost its monopoly and its monopoly powers

That which has been believed by everyone, always and everywhere, has every chance of being false. ~ Paul Valery

Forrester Report: Microsoft’s Windows Dominance Is Over

…and Windows is no longer the dominant end-user operating system when PCs, smartphones and tablets are considered.

In the greater end-user market, as Mary Meeker, the well-regarded analyst and venture capitalist, pointed out in her May 2013 Kleiner Perkins Caufield & Byers’ 2013 Internet Trends report, Windows is on the decline no matter how you measure it. Apple iOS and Android now have the lion’s share of computing devices, including PCs, smartphones and tablets, with 65-percent share over Windows’ 35-percent.

slide-109-638

Source

Microsoft’s mobile operating system share is actually worse than it appears. None of its most recent smartphone/tablet operating systems, Windows 8, Windows Phone 8 or RT. even breaks the 0.01-percent mark on NetMarketShare’s mobile/tablet operating system market share chart. How bad it is that? Android 1.6, with 0.01-percent, does make the chart.

slide-10-638-3

While Microsoft apologists focus on Windows continuing to be the dominant desktop operating system, they keep missing the two elephants in the room: Windows 8 continues to fall behind Microsoft’s previous top operating system failure, Vista, and Windows is no longer the dominant end-user operating system when PCs, smartphones and tablets are considered.

Men occasionally stumble over the truth, but most of them pick themselves up and hurry on as if nothing had happened. ~ Sir Winston Churchill

“We had a little bit different expectations for Windows 8 than previous OS launches,” Jeff Barney, VP and general manager of Toshiba America’s PC and TV business, said. “In the past Windows was the only game in town, when it was Windows 7 or Vista it was the big event of the year. These days it’s a different environment.”

The erstwhile truism You Won’t Get Fired For Buying From Microsoft has lost its luster.

In the consumer market, we expect to Apple to gain share as the younger generation has grown up on Apples at school. … Pretty soon it could be that the ‘rebels’ will be the Windows users rather than the Mac users.

12) Microsoft is dependent upon legacy products – Windows and Office – for the bulk of its profits

There is only one boss: the customer. And he can fire everybody in the company, from the chairman on down, simply by spending his money somewhere else. ~ Sam Walton

Microsoft makes more than 75% of its profits from Windows and Office. Less than 25% comes from its vaunted servers and tools. And Microsoft makes nothing from its xBox/Kinect entertainment division, while losing vast sums in its on-line division (negative $350M-$750M/quarter).

Microsoft uses a licensing model. A licensing model only takes a portion of the total profits from a sale. In a licensing model, volume matters.

If Microsoft can’t move its Windows and Office products and services onto mobile phones and tablets, well…

Next Week

The first part of this two-part series focused on what’s gone wrong with Microsoft Windows. Next week, I’ll conclude the series by focusing on why Microsoft is in this position and what, if anything, they can do to resuscitate the dead horse that is Windows.

A Deep Dive Into The Morgan Stanley Holiday Quarter Survey

On December 16, 2012, Morgan Stanley issued the results of a consumer survey.

We surveyed 1,010 US adults between November 26 and December 3 2012. The sample is representative of US individuals (18+) by gender, age, income and geographic regions. Conclusions based on total sample have a maximum margin of error of +/- 2.5% at 90% confidence level.

(NOTE: All quotations are sourced from the Morgan Stanley report.)

1) TABLETS

The first and most obvious result of the survey was that tablets, as a whole, were going to be clear winners of the 2012 holiday quarter.

One-third of respondents own tablets today, compared to only 8% a year ago.

While this can come as no a surprise to anyone following the tech industry, it is important to note that, in terms of gift giving for this holiday quarter, the growth of the tablet has come at the expense of notebooks, desktops and especially e-readers.

2) E-READERS

Among consumer electronic gifts, tablets are the most popular, followed by smartphones, while e-readers experienced the largest decline.

— Tablets (50% in 2012 vs. 31% in 2011)
— Smartphones (26% in 2012 vs. 17%)
— E-readers (9% in 2012 vs. 31%)”

Tablets are the number one gift idea in consumer electronics this year, while it was a tie between tablets and e-readers last year.

iSuppli seems to concur with this sentiment, indicating that general purpose tablets are harming e-reader sales.

It appears that they e-readers may well be relegated to niche status as general purpose tablets – which also serve as e-readers – become lighter, smaller and lower-priced.

3) AMAZON KINDLE FIRE

While the Kindle Fire is not strictly an e-reader, it too seems to be suffering this holiday season.

Kindle Fire appeal seems to be waning as 16% of potential tablet buyers would pick the device vs. 21% in last year’s survey

Lower end tablets may be suffering from the effects of increased competition. While the Amazon Kindle Fire was the a hot holiday gift in the fourth quarter of 2011, it now has to compete with the Nexus 7, Windows 8 tablets and the iPad Mini. As a result, Kindle retention numbers dropped from an already low 40% to and even lower 36%.

If these numbers bear out, this has to be terribly dissapointing for Amazon. Last year, there was a burst of enthusiasm for the Kindle Fire line during the holiday quarter but that enthusiasm seemed to all but evaporate as soon as the quarter ended. This year, Amazon introduced several new lines of tablets and vastly improved the quality of their hardware offerings. Surely they anticipated increased, rather than decreased, enthusiasm for their products.

It is too early to tell for sure, but it is possible that we’re seeing a trend away from single purpose tablets and a trend towards higher quality, general purpose tablets instead.

4) SAMSUNG

Samsung phones made an impressive leap in rate of retention from 37% to 63%. (Note, however, that this still does not match the iPhone’s stellar 83% rate of retention.)

While Apple’s retention rate is by far the highest, iPhone users who plan to buy a Samsung device increased slightly from 3% to 8%, though this share came entirely from other Android vendors who saw less interest from current Apple users compared to a year ago. This reflects Samsung’s dominating position in the Android ecosystem and success in marketing itself as an iPhone alternative.

You simply have to be amazed at what Samsung has accomplished and in such a short time. But ironically, Samsung’s growth is not only coming at the expense of competitor’s like RIM and Nokia, but it is also coming at the expense of other Android manufacturer’s as well.

One of the strengths of a licensed operating system like Android is supposed to be diversity of hardware manufacturers. That simply hasn’t happened. While Microsoft distributed its software licences to thousands of hardware manufacturers, Samsung has become the one and only hardware manufacturer that matters to Android. We’ll have to save the discussion of the consequences of this unexpected development for another day.

5) MICROSOFT

The survey contains two interesting points regarding Microsoft’s recent tablet efforts.

First, Microsoft Surface is preferred by 12% of those planning to buy a tablet.

Second, while 81% of iPad users plan to stay with Apple, 8% plan to purchase Microsoft’s surface.

Additionally, a different survey indicates that Windows 8 is a very distant third, to iOS and Android, when it comes to developer’s platform preferences.

I think these results have to be terribly dissapointing to Microsoft. Some pundits were expecting a flood of defections from the iPad once Microsoft debuted its tablet offerings. That clearly is not happening.

Further, I had anticipated an initial burst of enthusiasm for Windows 8 tablets. The real question, in my mind, was whether Microsoft would maintain that initial enthusiasm. Instead, sales of Windows 8 tablets has been tepid, at best. Having 12% of consumers intending to buy your products is far better than having 0% able to buy your products, but I believe that it is far, far less than Microsoft was hoping for or expecting.

6) APPLE

It seems as though the bad press for Apple has been endless of late, but that negative view is not supported by the Morgan Stanley survey. They point to at least four reasons why Apple can be optimistic about sales this holiday quarter.

First, more survey respondents want to buy the iPhone 5 today than the iPhone 4S a year ago.

34% of consumers plan to buy an iPhone in the next 6 months, compared to 30% in last year’s survey

If I recollect, the iPhone 4S was pretty popular last year. And one would assume that even more enthusiasm for the iPhone 5 should lead to even more sales this holiday quarter.

Second, analysts keep opining that Apple needs to sell a cheaper phone but customers keep disagreeing.

More respondents plan to buy the newest iPhone model today than a year ago (86% vs, 82%), likely due to key hardware improvements in the iPhone 5: LTE, brighter screen, and lighter and thinner phone.

Third, the iPad Mini does not appear to be cannibalizing the larger iPad but it does appear to be bringing new customers into the Apple ecosystem.

We believe iPad Mini’s cannibalization risk to iPad 9.7” is manageable. 47% of iPad mini purchasers are new to Apple, according to our survey. This is only slightly lower than 56% for the larger iPad 9.7”, suggesting the smaller iPad is attracting new users to the platform in addition to some incremental or replacement purchases from the existing 9.7” iPads.

Fourth, Apple actually INCREASED its already industry leading retention rate.

Apple’s iPhone retention rate improved 10 points over the last year, and 83% of iPhone users today plan to buy another iPhone.

I find it hard to believe that Apple’s sales are going to suffer this quarter when both purchasing enthusiasm and retention rates are going up.

7) CONCLUSION

There is definitely going to be a shake-out in the mobile sector. There are just too many entrants with too little differentiation.

In phones, not only are Samsung and Apple rapidly increasing their sales numbers but their RETENTION numbers are also rapidly rising. This bodes ill for the likes of RIM and Windows 8 contenders like Nokia and HTC.

In tablets, Apple seems to be maintaining its grip on half the market while Amazon, Google, Microsoft and Samsung battle it out for the other half. Again, in the long run, retention numbers may be what matters most but it is too soon to measure retention for newly minted products like the Google Nexus 7 and the Microsoft Surface.

We’ll know far more in January when (some of) the numbers come out. But until then, the Morgan Stanley survey may give us a peek at what we should expect.

Why The Wheels Are Falling Off Microsoft

This week, highly respected web and technolgy analyst, Mary Meeker, released her end of the year 2012 report on internet trends. The slide deck is 88 slides long and is highly recommended. You can view it here.

As I reviewed Ms. Meeker’s slides, some thoughts on Microsoft’s current prediciment and future prospects jumped out at me. I thought I would use the slides to help illustrate and examine those thoughts.

1. iPods, iPhones, iPads

Take a long hard look at the graph, above. That little green sliver you see represents the growth of the iPod. The very same iPod that powered Apple from near-bankruptcy to a genuine tech contender in less than five years.

Now take a good hard look at the much larger red portion of the graph. That represents the iPhone. The iPhone was the device that rocketed Apple from just one of many to the largest tech company, then the largest company, by market cap, in the free world. For context, that red portion of the graph, alone, is now worth more than all of Microsoft put together.

Now look at the much, much larger blue portion of the graph. Take a long, hard look. Now look at it again. That blue ramp represents the growth of the iPad. It’s growing at three times the rate of the iPhone. Three Times. If you are not awe-struck by the iPad’s rate of adoption, well, you should be.

If you want to know why Appe is rapidly expanding its influence in computing – and why Microsoft is scrambling to catch up – look no further. The above graph says it all.

2. Android And iPhone Adoption

Most people look at the above graph and conclude that the iPhone is in trouble. But you’ll notice that the iPhone is still growing in real terms.

Do you know who’s really in trouble? Anyone not named Samsung and Apple, that’s who. Apple is doing just fine, taking in most of the industry’s profits. Samsung is doing just fine. Google? Not so much. All that market share and little to no profit to show for it has to be worrisome. But this article isn’t about Google. This article is about Microsoft. And no matter how closely you scour the above graph you won’t find a Microsoft product on it anywhere.

(Chart via AllThingsD)

3. Microsoft’s Minuscule Phone Market Share

According to some reports, Microsoft’s phone market share may actually be falling. In the past six years, Microsoft has managed to take its 12% share of the mobile phone market, combine it with Nokia’s 30% share, and convertert it into Windows Phone’s current 2% market share. That’s reverse alchemy – like turning gold into lead.

Steve Ballmer recently claimed that Windows Phone was selling four times faster than it was a year ago. But four times very little is still very little. Microsoft sold 2.8 million Windows phones a year ago. In the same quarter, Apple sold 35 million phones and there were roughly 123 million Android phones sold. So yeah, Microsoft is selling more phones. But so is everyone else that matters.

4. Operating Systems

People think that Microsoft’s Windows is still a powerhouse because it runs 90% of the world’s personal computers. That’s nonsense. Take a look at the chart, above. When you combine phones and tablets and notebooks and desktops, Windows’s only runs on 35% of the world’s personal computers. Android already runs on more personal computers than Windows does and iOS is expected to pass Windows by the end of 2012.

Just as importantly, look at the direction in which Windows is trending. Windows runs almost exclusively on notebooks and desktops, which are a rapidly declining portion of the market. If Windows doesn’t escape its notebook and desktop base and spread to phones and tablets, it is rapidly headed for niche status.

5. Smartphones + Tablets > Notebooks + Desktops

I know that the above graph has a legend, but let me spell this out so that there’s no mistaking the significance of what you’re seeing. The orange portion of the graph represents desktop PCs. The blue portion of the graph represents notebook PCs. Look at how those two portions, combined, are shrinking while the green – representing smartphones – and the yellow – representing tablets – are rapidly growing.

If you look at the above chart, you can clearly see Microsoft’s dilemma. Even if Windows were to power each and every notebook (blue) and desktop (orange) computer made going forward – which they won’t – their share of the market would soon dwindle to near nothingness. Microsoft NEEDS to get their operating system onto phones and tablets and they NEED to do it now.

6. Microsoft Isn’t Even Trying

Here’s the thing. Microsoft isn’t even trying to break into the pure tablet (yellow) portion of the market. Instead, they’re trying to create a hybid device, a new category, a new color, if you will, on the chart above.

In July, I wrote an article entitled: “The PC is the Titanic and the Tablet is the Iceberg. Any Questions?” The purpose of that article was to demonstrate the multitude of tasks that could be done well by a tablet but poorly or not at all by a traditional notebook computer. Windows 8 tablets – with their 16:9 aspect ratio, their desktop mode and their reliance upon keyboards – fall far closer to the notebook than they do to the tablet. One can’t help but feel that, even now, Microsoft still doesn’t totally believe in the stand-alone tablet form factor. Windows 8 tablets are notebooks first – and tablets only in emergencies.

After failing to field a competitor to the iPad for two and a half years, Microsoft is now ceding the tablet market (yellow) to Apple and the rest of the industry – yet again.

7. Conclusion

Microsoft faces a host of problems in the the years to come. Their competitors are far ahead of them in phones and tablets. Their bastion of strength – the notebook and the desktop – is an ever shrinking island. And their strategy to compete in the tablet market is, in my opinion, fatally flawed because it doesn’t even attempt to create a true tablet competitor.

Take a look at that last graph again. The green and the yellow portions are the future of computing. And in that future, Microsoft is nowhere to be found.

Windows 8: Tepid Marketing–>Slow Sales

Win 8 display at Microcenter

Kind of sad, isn’t it? This sorry attempt at a festive display of new PCs at a Micro Center store in Rockville, MD, says a lot about the thud with which Windows 8 seems to have landed.

Windows guru Paul Thurrott recently reported that Win 8 sales are running below Microsoft’s expectations. Microsoft executives, Thurrott says, put much of the blame on OEM partners for being late to market with exciting hardware. But much of the problem may be closer to home. Neither Microsoft nor its retail partners seem to be making all that great an effort to sell new systems, especially compared to past efforts.

This week, I stopped by several big box retailers, the sort that generate most of the sales of Windows PCs, and what I saw was dispiriting. Instead of the end caps, banners, ceiling-high stacks of boxed software, and the occasional brass band that accompanied past Windows launches, I saw a distinctly low key effort. Windows 8 has only a modest presence on TV–most of Microsoft’s ad buy is dedicated to Surface, which is sold only online and in Microsoft’s own sparse retail outlets–and I saw no sign of any Microsoft promotional effort at my local Best Buy, Staples, Microcenter, or H.H. Gregg. In fact, the display below, at Staples, was about as flashy as it got:

Now it is a fact of life in retailing that vendors literally get what they pay for in terms of shelf position, end-cap displays, store advertising, and other promotion. It appears Microsoft isn’t paying much this time around. It doesn’t help that Microsoft is not, at least at this point, selling Windows 8 as physical media, so there are no in-store displays of the software itself. Still, it’s telling that Windows is missing from this row of promotional posters at the Micro Center entrance:

Micro Center poster display

On the shelves, things are just as bad. The main selling point for Windows 8 is touch, but most of the new touch models have yet to come to market. Laptops are generally grouped by price, sometimes by size. In no case did I see touch models grouped together or in any way featured. Best Buy at least had little tags on some non-touch models proclaiming their lack of touch screens, but otherwise, you had to figure it out for yourself, either by reading the detailed product descriptions or by touching the screen and seeing whether anything happened. (A clue: If it costs less than $1,000, it probably doesn’t has a touch screen.) In most stores, there are some Windows 7 machines mixed in among the newer models, and I wouldn’t be surprised if few shoppers managed to figure out just what was supposed to be superior about Windows 8.

Unless Microsoft is going to open a whole lot more of its own stores (there is only one full-fledged Microsoft Store in the Washington area–in Arlington, Va.,–and just two pop-up stores, really glorified mall kiosks, in the entire state of Maryland), it should work with OEMs and retailers to do something to improve a horrible shopping experience. Most of the machines I saw on shelves made it impossible to get any sort of meaningful Windows 8 experience. Many of the machines were dead, or were locked into demo screen shows. Of those that were running Windows 8, almost none were both connected to the internet and linked to a Microsoft account, two features necessary to understanding what the new OS is all about. And while I understand the need of retailers to keep stock from walking off, their approach to theft prevention is lethal to sales. For example, it’s impossible to get a real sense of the sleekness of this Hewlett-Packard Spectre XT Ultrabrook at Staples with that horrible anti-theft clamp and cable device on its side:

HP Spectre

 

Even worse was a similar clamp (at Best Buy) that prevented a Lenovo Yoga convertible notebook/tablet from going through its agile tricks.

I only ran into one true Windows tablet in my shopping tour, a $600 Asus Vivo Tab RT. To my complete lack of surprise, the display was free of any information on the differences between its Windows RT software and the full Windows 8 on the systems surrounding it, another bit of consumer education that Microsoft is sorely ignoring.

 

 

After Sinofsky Can Microsoft Move Beyond Windows?

Windows 8 logo (Microsoft)The departure of Windows chief Steven Sinofsky, hard on the heels of the release of Windows 8, came as a shock, but not a surprise. But the important question is less what led to the departure of the talented but abrasive Sinofsky than how Microsoft uses its latest executive shuffle to move forward in a tech world it no longer dominates.

Microsoft is, in many ways, the anti-Apple. Unlike Apple’s tightly centralized, unified structure, Microsoft has long been a collection of fiefdoms. Although promoting Windows was the goal of just about every Microsoft product and effort, operating groups were often silos and turf was fiercely defended. Sinofsky, who had run the Office group, took over Windows after the Vista fiasco and proved his chops with the successful delivery of Windows 7 and Windows 8. (While it is far too early to judge the commercial success of Windows 8, it was an exemplary development process, especially in contrast to the chaos that gave us Vista.) Along the way, Sinofsky built the power of the Windows group by gaining control of  mobile device efforts. (Windows Phone operations are part of the Entertainment & Devices group, but have increasingly come under the sway of Windows.)

It’s hard to overestimate Microsoft’s dependence on Windows. The chart shows the company’s operating profits by division:

Windows and Microsoft Business are responsible for nearly all of the company’s profits, and the business division, consisting primarily of Office and Office-related back-end services such as Exchange and SharePoint, is very heavily Windows-dependent. Only the tiny Entertainment & Devices unit (primarily Xbox) and the money-losing Online Services (mostly Bing) and meaningfully independent of the Windows empire.

The problem Microsoft faces today is that it has to move beyond Windows, but its recent instinct seems to have been to extend the franchise. The Surface tablet is an interesting product, considerably more PC like than the iPad and Android tablets. It’s a good match for a space Microsoft is trying to create between traditional PCs and the new tablets, heavily dependent on a keyboard and with an operating system that is a stripped-down version of the full Windows 8 experience and access to Microsoft Office applications–but only at the price of running in traditional desktop mode.

I don’t think Microsoft can afford to leave the more tablet-y market to the competition, because while the Windows and Office lines of business will remain profitable for years to come, they provide very little opportunity for growth. Sinofsky was widely blamed, or credited, with derailing the imaginative Courier tablet that came out Entertainment & Devices group. I don’t know that Courier was the right device for Microsoft to make or even if it was a viable product, but it was very un-Windows-like in a way that probably sealed its fate.

For many years now, Microsoft has been built on the proposition that its products exist to promote the greater glory of Windows. This kind of thinking has been most destructive in the mobile business, where efforts to force a Windows-like user interface onto Windows Mobile devices produced some of the world’s clunkiest smartphones. The unification of the Metro design language, originally developed for Windows Phone 7, across desktops, phones, and tablets is a step in the right direction. But when you scratch the surface on the Windows 8 desktop or go beneath the Surface,  you find the same old Windows. And it is increasingly a bad fit for the way people want to use devices today.

Julie Larson-Green and Tami Reller, who are taking over Windows engineering and business operations, respectively, are able executives with solid track records. But they won’t have Sinofsky’s power within the organization. If that means they will be less able to protect the windows-centric thinking that has long been at the heart of Microsoft, it will probably be a good thing for all concerned.