How Microsoft Can Embrace the Post-PC Era

I truly believe Microsoft is approaching a fork in the road, where some of the decisions made in the next 6-8 months will set the stage for their long-term success or failure. Microsoft is a software company primarily, and many of the decisions that need to be made relate to their philosophy and strategy as it relates to software.

My observation with Microsoft so far is that they don’t actually think like a software company, rather they think like an operating system company.

My evidence for this observation is how Microsoft had withheld key assets from other OS platforms. A classic example of this was up until the latest release, their Office software for OSX lacked Outlook, the standard e-mail program for many businesses. One could argue Microsoft’s reasoning for this was because the Mac had very little enterprise adoption, therefore Outlook was not necessary. I believe, however, they withheld Outlook for the Mac in order to continue to make differentiate Windows and make it more attractive to corporate IT.

I am pleased Office for Mac now has Outlook. I don’t believe it is as good as Outlook on Windows but at least it is there.

Up until iOS and Android hit the market, I would have argued that thinking like an operating system company was good strategically for Microsoft. Now, however, I believe their software divisions need to begin to think about how to get all their key applications onto iOS and Android as well.

Just this week Microsoft released an iOS app for XBOX Live. A solid first step in my opinion, but one that should have taken place much sooner.

There have also been reports / rumors that Microsoft has plans to release Office applications for iOS. This again would be a great move for Microsoft and one that needs to happen sooner than later. Office brings a familiarity to many consumers and business and I believe it would be quite successful on other platforms, like iOS and Android.

One simple example of this is OneNote.    I was a heavy tablet PC user and OneNote was on of my favorite applications. This is an application that since day one of using the iPad, I believed belonged on that platform.   Even though Steve Jobs was adamant against a pen, Microsoft could have sold OneNote with a pen / stylus package that was just designed for note taking and document markup.  This could have been done very similarly to the Wacom Bamboo Pen and paper app. I personally believe Microsoft has a lot of expertise in this area that would bring incredible value to iOS and Android. I agree that a tablet computer should not require a stylus but as an accessory it could be quite valuable.

Although I believe Microsoft has many software assets to bring to iOS, they have even more to bring to Android. Android has a void of quality core applications. If Microsoft brought Office, including a renovated and elegant version of Outlook, to Android, I believe it would be extremely successful, useful, and perhaps even give Android tablets a needed boost. Given that Microsoft actually makes money on IP licensing fees on Android, it actually makes business sense for Microsoft to see Android succeed.

Microsoft needs to realize that they do not dominate the OS and software landscape like they once used to.  They may still dominate on traditional PCs but that is not where the growth is taking place.   It is key for their future that they embrace all platforms and bring the entire breadth and depth of their software expertise to every device, regardless of the OS.

This strategy or shift in thinking would, however, be entirely disruptive to Microsoft as a whole but it would follow where it appears the industry and their revenue is headed. Also in this case disruption is a good thing for Microsoft as they look to the future.

In this last quarter their business division, which makes Office and other key applications, grew 21%. Whereas the Windows 7 segment revenue was down 7% due to PCs in general trending downward.

I don’t see too much light at the end of the tunnel for the PC (non Apple) sector in 2012 either. With Windows 8 on the horizon, I expect 2012 to be a down year for PCs again as consumers wait to see what the new OS brings but also because many consumers are purchasing tablets and delaying the purchase of new notebooks or desktops.

This may very well be a continual trend, which is why it is critical that Microsoft begin to think more like a software company and bring existing application roadmaps to cross OS platform devices and create new applications and roadmaps and innovate with software in general for not just Windows but OSX, iOS, Android, and of course Windows Phone.

Again, this would require a significant change in philosophy at Microsoft. A change that would embrace a platform agnostic approach to software development. Where instead of simply trying to protect Windows, they went out and innovated and created new software experiences for every software platform.

The “app goldmine” is a massive opportunity that Microsoft has been missing out on but it is not currently in their DNA as a company. But I am convinced that the key to Microsoft’s future is to begin thinking about the role of software in a non-Windows world and begin to innovate and lead again by meeting the software needs of consumers on every platform.

My desire for Microsoft is that they create visionary software again, not just an operating system.

Published by

Ben Bajarin

Ben Bajarin is a Principal Analyst and the head of primary research at Creative Strategies, Inc - An industry analysis, market intelligence and research firm located in Silicon Valley. His primary focus is consumer technology and market trend research and he is responsible for studying over 30 countries. Full Bio

1,677 thoughts on “How Microsoft Can Embrace the Post-PC Era”

  1. “My observation with Microsoft so far is that they don’t actually think like a software company, rather they think like an operating system company.”

    Uh…no. They think like a monopolist, using their vast amounts of money to decimate competition. They will take enormous fiscal losses (XBox, for example) to try to control an area. They will make incredible promises of wonderful new software features to spread FUD and never deliver.

    Unfortunately for MS, even with their control of certain areas (OS, Office suite), they have missed in other areas and don’t even realize it. They don’t control gaming. They’ve blown it with phones and slates and the internet.

    Thinking like a software company won’t move MS out of a slow decline into irrelevance. They need to start thinking like a competitor, not a monopolist. For example, Win8 looks like it will be good for phones and slates. They should have directed their finances and attention to it years ago. Now it will be appearing three years too late, no matter what suck-ups and apologists like Paul Thurrott say.

    It’s not just Microsoft’s thinking that is the problem, it is an endemic culture of entitlement that is often found among monopolists. The cure is to break Microsoft up into multiple areas:
    OSes
    Office Productivity
    Servers and server software
    Games
    Hardware

    Each division would need to compete with other developers in those areas as well as each other.

    The problem is not Microsoft’s thinking, it’s the nature of the beast. Destroy the mother so that the children can survive and thrive.

  2. Microsoft primarily serves the enterprise and, as another contributor said, Windows is a cash cow that will keep producing large quantities of milk for a long time. I suspect the board has informed Ballmer very clearly that Windows is what he needs to focus on.

  3. MS right now has 3 divisions;

    1. Entertainment & Devices
    2. Business
    3. Platform

    Maybe a good idea for MS would be to split the company up into their 3 respective division and have them compete on their own. Otherwise MS will do whatever it can to protect its major cash cow that is Windows.

  4. There is a fly in your ointment. Apple has reduced the price of software to such lows that Microsoft will find it hard to compete and maintain profitability.

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