What Does Cloud-First, Mobile-First Mean for Microsoft?

by Jan Dawson   |   August 7th, 2014

I’ve been meaning to write about this for some time now but with all the tech news lately I’ve been focused on other things. In Satya Nadella’s first email to employees on the day he took over as CEO, he said, “Our job is to ensure that Microsoft thrives in a mobile and cloud-first world.” That mobile-first, cloud-first refrain has been repeated several times since, and it was even used as the title of the press conference in May where Microsoft unveiled Office for iPad, among other things. So — what does it mean? What does it mean for Microsoft?

I think first of all there’s been some confusion about how both mobile and cloud can be “first” – Nadella even alluded to this in the aforementioned press conference to laughs from the audience:

Now, we describe this, and I talked about this in my first mail to all Microsoft employees as a mobile-first, cloud-first world. And like any place that’s got predominantly computer scientists, I get back this mail saying, hey, look, how can two things be first? I mean, do you have a problem with ordinal numbers or something?

The answer, of course, is mobile and cloud sit in different spaces in the overall scheme of what Microsoft is trying to do, as shown in the graphic below:

Consumer technology choices - Jackdaw Research“Mobile” refers to endpoints. Your definition of mobile might be narrow, referring only to what we used to call mobile phones; it could be slightly broader, referring to all those devices we primarily hold in our hands rather than setting them on a surface, such as tablets; or it could mean all those devices which are in a fundamental sense portable, including laptops.

Regardless of which definition you use, mobile is about the endpoints and devices on which we consume (and create) content, engage in communications, and generally get things done. Cloud, on the other hand, is, in a loose sense, a location and a philosophy: an architectural approach to where data and intelligence should live as part of an overall product or service. Whether or not this data or intelligence sits in a distributed cloud environment is completely separate from the endpoint it happens to be consumed on. To be cloud-first is to design new products and services with cloud back-ends in mind and to be mobile-first is to design them with mobile front-ends in mind. Those two complement each other well, and there’s no conflict here.

The other major difference between the cloud and mobile aspects of Microsoft’s strategy is decisions about these things are made by different people: individuals primarily choose their endpoints and care deeply about which they use. But organizations primarily choose the location of the back-end data and infrastructure, and if products and services are designed and architected well, end-users should be blissfully unaware of that architecture. That applies both to enterprises deploying services used by their employees and to developers creating services for consumers. Think of Gmail, arguably one of the biggest mass-market cloud services out there: do any significant number of its users think of it as a cloud service, or wonder where their email is stored? Of course not. They do care about whether it’s available and works well on their devices, and that may even be a factor in which devices they choose to use, but the fact it’s a cloud service is neither here nor there. It is arguable, of course, that mobile endpoints, with their limited storage and computing capacity and their tendency to move around a lot, are a perfect match for cloud back ends, which tend to be distributed and can readily serve up relevant data and functionality to mobile devices on a reliable and ubiquitous basis. But again, that’s not something end users should have to worry about.

Being cloud-first means designing new products and services to be delivered from a cloud infrastructure rather than sitting on a server in a company office or on a computer in a home. That has significant implications for how services are designed and delivered, as any enterprise looking to migrate legacy systems from on-premise to cloud environments has discovered. Systems designed for on-premise models don’t take into account the latency introduced when servers and endpoints are separated by hundreds or even thousands of miles, and tend to break down pretty quickly when they’re moved to cloud environments. But systems designed with cloud environments in mind can easily be deployed in an on-premise fashion, so this is a sensible move on Microsoft’s part.

Microsoft is also a primary provider of cloud services, both for consumers and for enterprises, and that part of its business is expanding rapidly. There’s been a lot of debate about “who has the biggest cloud” this past week, but the answer is somewhat irrelevant: Google, Microsoft and Amazon are three of the largest providers of a certain class of enterprise cloud services, and that’s all that matters. The combination of consumer-facing cloud services such as Outlook.com, large-scale enterprise cloud infrastructure services such as Azure, and a shift to new, cloud-based business models such as Office 365 for consumers and business end users is a major strength for Microsoft as cloud models become more important in the overall architecture of modern technology. Microsoft is well placed to succeed in all these categories and controls much of the underlying infrastructure needed to deliver it.

In mobile on the other hand, even if we take the broadest possible definition which includes laptops, Microsoft has a tiny share of the devices and a minority share of the platforms which run on these endpoints. Even though Nadella apparently has plans to grow beyond what Microsoft has described as a 14% share of computing devices, the reality is Microsoft’s products and services in a mobile environment will primarily be running on others’ devices and platforms. That, in turn, means Microsoft’s mobile-first focus will be implemented primarily in the user interfaces for individual products and services. But this is where your definition of mobile becomes really important: for certain of Microsoft’s products, starting with the smartphone makes perfect sense: Skype, for instance. But for others – Office being an obvious example – focusing on a device where most of the use cases will likely never be employed doesn’t make sense. Tablets and PCs should be the focus for Office, with a subset of the features available there available on smartphones.

The bigger challenge, though, is Microsoft will increasingly be competing against the owners of the two major platforms even as they seek to broaden their offerings onto these platforms. Apple and Google both have their own offerings which compete with Microsoft’s Office, Skype, OneDrive and Outlook.com products. Their competing products are in most cases free to the user, bundled into a broader suite of online services or into a hardware purchase. How will Microsoft compete against these two companies on their own platforms in a way that both adds enough value to justify charging money and overcomes the disadvantages of being a second class citizen? Other commentators are saying Microsoft should abandon both its devices and platforms businesses and focus on cross-platform services, but the fact Microsoft’s two major competitors own those platforms should be cause for reflection.

In summary, there’s no conflict, as such, between being cloud-first and mobile-first: one refers to architectural decisions and the other to endpoints and user interfaces, and the two are complementary. Organizations care deeply about the former, while end users care deeply about the latter. The bigger challenge for Microsoft is, although it is increasingly strong on the cloud side, it remains weak on the mobile side, and will be trying to compete on platforms owned by its two major competitors. I continue to be skeptical it can succeed in making money from its current set of products and services as long as they’re primarily running on Apple and Google’s platforms.

Jan Dawson

Jan Dawson is Founder and Chief Analyst at Jackdaw, a technology research and consulting firm focused on the confluence of consumer devices, software, services and connectivity. During his thirteen years as a technology analyst, Jan has covered everything from DSL to LTE, and from policy and regulation to smartphones and tablets. As such, he brings a unique perspective to the consumer technology space, pulling together insights on communications and content services, device hardware and software, and online services to provide big-picture market analysis and strategic advice to his clients. Jan has worked with many of the world’s largest operators, device and infrastructure vendors, online service providers and others to shape their strategies and help them understand the market. Prior to founding Jackdaw, Jan worked at Ovum for a number of years, most recently as Chief Telecoms Analyst, responsible for Ovum’s telecoms research agenda globally.
  • David Olson

    “I continue to be skeptical it can succeed in making money from its current set of products and services as long as they’re primarily running on Apple and Google’s platforms.”
    I look forward to your next article which argues and explains this important opinion.

    • http://www.beyonddevic.es/ Jan Dawson

      I explain it briefly in the previous paragraph (the penultimate one). I’ve talked about it elsewhere too: http://techpinions.com/how-to-make-devices-and-services-work-for-microsoft/27940
      http://www.beyonddevic.es/2014/02/04/what-is-microsoft-uniquely-good-at/

      • Mark Langston

        From your attached article:

        “But it needs to go significantly further both in developing and creating compelling apps and making the experience on Microsoft devices better than on any others.”

        Herein lies the problem of Microsoft being “mobile first and cloud first”. If the strategy is to offer their services on “competitor’s” devices then there’s no way they can have a device that trumps the others and remain committed to industry Kum By Ya. At least not in the way that Apple and Google have done.

        Apple is the only company that can get away with being a walled garden by offering next to nothing on competing platforms and retain industry leadership. Other than iTunes and the upcoming iCloud Drive, that will be available for Windows, everything else Apple offers is exclusive to their platform and their devices.

        FaceTime, App Store, iMessage, Notification Center and even the infamous Apple Maps are only available if you buy an Apple device. My way or the highway.

        Meanwhile Google services can be had almost everywhere and there are times when Google will release a service, feature or refined interface first on iOS than eventually make it available for Android devices. Or sometimes the release is simultaneous.

        The fact that Microsoft made the first tablet-optimized version of Office available for the iPad first is proper evidence that the premiere Microsoft experience is not from a Microsoft device but rather from an Apple device (as they’re still “working on” the Android version).

        So to the earlier point of “…making money from its current set of products and services as long as they’re primarily running on Apple and Google’s platforms” contradicts their ability to offer a better experience on devices that aren’t Apple or Google platforms.

        As much as they’d like to Microsoft can’t afford to be as bullish as Apple. It’s too late for that strategy. Even something as universal as Skype has brisk competition in the form of Google Hangouts and Apple’s FaceTime. Because both products are so integrated into their respective platforms consumers would have to go out of their way to download and establish an account — as well as the recipient — in the case of Skype. With FaceTime all two people need are iPhones. No accounts, no setup, just an iPhone and your face.

        And if Office is their last saving grace they’re in trouble. Apple offers iWork for free across all Apple devices and Google’s productivity cloud-based apps, as feature-poor as they may be, are very capable. Proof of that is many Fortune 1000 companies using Google Mail and/or Apps to conduct business.

        I hate to be all doom and gloom but Microsoft has had way more misses than hits in the past 10 years — Zune, Windows Vista, Windows 8, Surface RT, the original Surface table, the vaporware Courier tablet, the Kin 1 & 2 phones, the Nokia acquisition, Bing, Xbox One (that’s lost to the Playstation 4 since release) — that I don’t see how they survive the next decade.

        • http://www.beyonddevic.es/ Jan Dawson

          Mark – I think you may be seeing a difference in opinion where there isn’t one here. As I said right at the end of my piece, I’m highly skeptical of Microsoft’s ability to be broadly successful in the consumer market and skeptical of even narrow success in the consumer market going forward, for all the reasons I mentioned here and elsewhere (some of which you also cited).

          Two points where I disagree slightly: Microsoft made Office for iPad and released it first, yes, but Office is already available on the Surface and a touch-centric Windows interface is clearly in the works too. I suspect Nadella accelerated the launch of Office for iPad as a way of highlighting the commitment to the broader services strategy on all devices, but as I say I’m skeptical that that will work long term. I don’t think it means Microsoft will prioritize the Apple device experience over the Microsoft device experience – in fact, quite the reverse. We just haven’t seen the full implementation of that yet.

          Secondly, Google does make Android the best instantiation of its services, even if the gap between the Android and iOS experiences for some key Google services is shrinking. That’s inevitable – there are inherent limitations to what Google can do on Apple devices versus its own from a perspective of deep integration, default apps and so on (and the same goes for Microsoft). Look at how differently Google Now operates on iOS and Android, for example. So I don’t think a “services on every platform but best on MS platforms” strategy is that different from what Google has done these last few years.

          • Space Gorilla

            I wonder if Google wishes it could ignore iPhone users more, but Apple users are actually quite valuable to Google.

  • JoeS54

    I think all of this is valid, but is losing sight of the most important ingredient, which is Windows. The big advantage Microsoft has is that they can integrate their services into Windows, which will be the central organizing hub, while the mobile front ends serve as access points.

    I’ve already found this to be true for myself. I have a Windows 8 device (Surface Pro 2) and I have Windows 8 installed on my laptop. I also have an iPhone. I organize all of my files on one of the Windows devices, and then access them through Microsoft’s apps on the iPhone. It’s working very well for me.

    OneDrive in particular is the best personal cloud storage option on the market. OneNote is excellent, and much better than Evernote in most use cases. The Office app for iPhone, however, is extremely limited, if not useless. But you can at least access those files and do some basic editing. I haven’t tried Office on the iPad.

    Apple’s offerings in those areas are so poor that they’re not even an option, not to mention that they don’t put much effort into making them work well on Windows.

    PCs are not going away, and Microsoft still dominates them. That’s their strongest entry point for getting people to use their services.