Microsoft’s Bot Vision is Expansive but Faces Challenges

Wednesday’s first day Build keynote from Microsoft was a mishmash of many different topics, between incremental upgrades that will be delivered in this summer’s “Anniversary Update” to Windows 10 to new demos of HoloLens functionality and using the Xbox as a developer device. But it was the last hour or so of the keynote, when Microsoft articulated its conversations as a service vision built around bots that was by far the most interesting thing talked about. Microsoft is getting in on the ground floor in the conversation UI trend and clearly has some solid technology here as well. But it also faces some significant challenges.

Conversations as a platform

By now, it’s well established Microsoft has largely missed out on the mobile operating system opportunity – Android and iOS are dominant while Microsoft’s mobile operating systems have tiny share. Closely related to this marginal role is the failure of Microsoft to attract many of the world’s most popular apps to its mobile operating systems. Meanwhile, it’s becoming clear messaging platforms can act as quasi-operating systems in some important ways. This may well be a way for companies like Microsoft and Facebook, who missed out on mobile operating systems, to find roles for themselves as mobile platforms.

Enter Microsoft’s new vision for conversations as a platform or conversational user interfaces, as others have referred to it more generically. Such a vision potentially helps Microsoft overcome both its poor mobile market share and its lack of apps – a messaging platform takes the place of a mobile OS, while bots take the place of apps. And of course, this is very similar to Facebook’s strategy for Messenger and their M assistant as well. (I’ve written quite a bit about all of this on Techpinions previously – see here, here, and here.)

The vision Microsoft articulated at Build on Wednesday was expansive and impressive and it’s clearly laid a lot of the groundwork to make the technology here really impressive. Both Microsoft’s own mockups of potential bots and the tools it’s making available to developers have been well thought through and perform their tasks admirably. I absolutely believe conversational UIs have an important role to play going forward and Microsoft has demonstrated that it has the technology chops to be a major participant. It’s also launching its effort very early in this trend, which should help it avoid the slow start it got in next-generation mobile operating systems.

Challenges for Microsoft’s bot strategy

However, as I see it, Microsoft has several key challenges as it aims to implement this strategy:

• The need for context and rich data may be thwarted by Microsoft’s third party status on the vast majority of mobile devices
• Skype isn’t a leading messaging platform and getting users to see it this way will require a significant education effort
• With many others building similar conversational UIs, Microsoft may struggle to compete against those with much larger installed bases

Firstly, Satya Nadella emphasized Microsoft’s conversations as a platform strategy rests on the foundation of massive amounts of data and specifically context for the conversations users may have with these artificial intelligence agents. That’s fine as long as all the information is contained in users’ PCs, as it may well be if such conversations are exclusively restricted to business use. But if these bots are to manage elements of our personal lives which we’re much more likely to manage on our mobile devices, Microsoft will be flying largely blind, especially when users are iPhone owners. This is where Microsoft’s lack of mobile market share still comes back to bite it – it has very little access to the most personal information we tend to keep on our phones, whether messaging conversations, phone calls, personal notes, and so on. This can only really be overcome if users opt in to sharing this information with Microsoft (something iOS doesn’t enable as fully as Android) or if Microsoft can also convince people to use its own apps for managing other parts of their lives. That’s an uphill battle and, unless Microsoft can solve it, it may be left hamstrung as a participant in its customers’ personal lives.

From the keynote, it was apparent the combination of Skype and Cortana will be a major part of Microsoft’s strategy here. Yet most people don’t think of Skype as a messaging platform along the same lines as Facebook Messenger, Apple’s iMessage, WhatsApp, Snapchat, or WeChat. Some users certainly do use the messaging functions but my guess is this is mostly within an enterprise context, not something many people do in their personal lives. As such, it’s going to be another uphill battle for Microsoft to get users to see Skype in this new way and to think of Skype as the platform when they want to engage with companies and brands. This will again be especially challenging on Android and iOS, which each have tightly integrated personal assistants and messaging apps.

Thirdly, Microsoft may be getting into this market early but it’s far from the only player here. With so many potential channels for bots to communicate with users, companies are going to have to prioritize which they target in much the same way as they do with app development today and a lot of that depends on the size of the various user bases. Given that other messaging platforms have hundreds of millions of active users already, Microsoft will have to fight hard to convince companies and developers its version of the conversational UI is worth targeting. Given there are no standards for these bot apps, developing for each is going to require working with different APIs and their unique capabilities and Microsoft will have to convince developers its platforms are worth developing for. Its vision seems more expansive than just Skype and Cortana, although this wasn’t well articulated during the keynote. So it may be able to solve this problem in other ways through opening up APIs for other platforms. But proprietary approaches from huge competitors such as Google, Facebook, and Apple are likely to be hard to compete against.

Parallels to VR

As with virtual reality, what we’re seeing here is the emergence of a variety of possible approaches, all of them proprietary, in a market that’s still in its very early stages. There are no guaranteed winners or losers yet and it may well be we see a period of significant proliferation before we see any consolidation and the emergence of dominant players. It may even be that, over time, there’s enough de facto standardization on some elements that several players can coexist. Microsoft has certainly positioned itself well to succeed by starting early and leveraging many of its existing technology assets. But it’s not yet clear whether it will be able to overcome these significant challenges it faces and win out in the end.