Only huge a company with massive cash flow can make a mistake of the magnitude of Microsoft’s error in missing the movement from PCs to smartphones and tablets and survive as a major player. Legacy cash flows allowed IBM to recover from its errors of the late 1980s and the money flowing in from Windows and Office can do the same for Microsoft. But time is growing short. With the latest version of Windows Phone and its partnership with Nokia, Microsoft is at least making a play in smartphones. But it’s a long way from even playing in the increasingly important tablet market.
Apple iPads and Amazon Kindle Fires are flying off shelves now and even the justly criticized Android tablets could become attractive in coming months with a new version of the the operating system, Microsoft is at least a year away from tablets running Windows 8 on either Intel or ARM processors. But Microsoft has to make some critical decisions right now about what these tablets are going to be.
The first thing the company should recognize is that by the fall of 2012, the consumer market is likely to be lost. Over the next year, Apple is likely to sell at least 50 million iPads, Android tablets should gain traction, and Kindles and Barnes & Noble Nook Tablets will be gobbling up the low end of the market. In consumer markets, Microsoft is shooting at a moving taget that’s not moving in a favorable direction.
The enterprise market, on the other hand, is wide open. iPads have definitely been turning up in the enterprise in large numbers. And Apple has worked hard, including some quiet cooperation with Microsoft, to make the iPad play reasonably well in an enterprise environment dominated by Microsoft back-end services such as Exchange. But enterprises need more than Exchange mail, contacts, and calendar. They require support for all of Microsoft Office, including the SharePoint collaboration and document management service on which many enterprises depend, far better document handling than today’s tablets provide, and better ways to load and maintain custom applications.
Office is the key, and it is where Microsoft faces the hardest choices. The cool kids, startups, ands tech pundits may be happy with Google Apps or perhaps OpenOffice and emacs, but the fact is that business (and government) runs on Office. Documents are written in Word, numbers are crunched in Excel, presentations are shown in in PowerPoint, mail is read, meetings are scheduled, and calendars and contact lists are kept in Outlook. And it is all tied together with Exchange and SharePoint.
There have been large-scale corporate deployments of iPads, but as ancillary tools, not really as replacement for computers. For example, airlines have given thousands of iPads to pilots as replacements for the paper documents that used to fill their weighty flight bags. Tablets will remain in enterprise niches until they can offer reasonable support for corporate Office installations. This is unlikely to happen on iPad, even if rumors about some sort of Office version for the Apple tablet are true, and even less likely on Android, where the lack of standardization and built-in security are a huge barrier to enterprise adoption.
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The problem is just what does Office on a tablet mean? While Microsoft has been very transparent about the development of Windows 8, an accompanying new version of Office remains nothing but a bunch of fragmented rumors. It’s clear that a dramatically new version of Office is needed for tablets; five minutes spent with Office 2010 on a Windows 7 tablet will convince you of that. Making office work on a mouseless, keyboardless touch tablet is not a matter of tweaking the user interface–the UI most be radically rethought. Menus are the essence of Office, but menus are death in tablet apps. How many of Office’s existing features–thousands of them–could be supported in a drastically simplified interface? How many can you lose before Office ceases to be useful for enterprises? (Few consumers care or know about Word’s Track Changes feature; enterprises cannot live without it.)
More needs to be done than just fixing the UI. The current Office is a multi-gigabyte resource-sucking monster. It’s probably an order of magnitude too big to be a reasonable fit on a tablet. Microsoft promises tablets running on both Inter and ARM processors. The current Office, particularly Outlook, is a slug on Intel Atom processors and a converted version would likely be even worse on ARM. Office has to become dramatically smaller and lighter without losing its essential character, a daunting task.
Maybe Microsoft is well along in solving all these problems, but they have been uncommonly quiet about the process. For a new Office to ship together with Windows 8, I’d expect to have seen a technical release by now and a large scale beta early next year. There have been rumors of a beta being made available at the consumer Electronic show in January. I hope so, but I am dubious.