My Blueprint for the Future of Microsoft-Part 2

Tim Bajarin / February 14th, 2014

In a recent column I wrote what I called my Blueprint for the future of Microsoft. In it, I proposed that Microsoft be broken into three separate companies or divisions – one focusing on IT, Enterprise and Business; one focusing specifically on mobile; and another aimed squarely at entertainment and the connected home. Many of the comments at the end of the article supported this viewpoint or at least saw merit to it. On the other hand, since this column was linked to by many other sites, I also got comments at the other end of the spectrum that suggested I was nuts. The best one recommended that I should apply to be on Microsoft’s board. One major blog in Seattle even used it as the basis to argue that Microsoft should not spin out Bing or the Xbox group.

When I wrote the piece I thought that allowing them to be separate companies had merit and in many ways I was thinking it could work. But since that time I have been studying more of Microsoft’s overall cloud initiatives and am wondering now if the best way to do this is to just create three distinct divisions that would have a laser focus on their specialties and integrate Microsoft’s overall cloud products into all of them in one form or another. For example, Bing would be a critical tool for use in IT and Enterprise, mobile and any entertainment and connected home products. Also their synchronization layer would be needed to keep all apps and services in sync between any of these divisions. To some degree I suspect this was part of Ballmer’s One Microsoft vision, however, I believe that ultimately his vision was still too PC centric and that is why he clearly was not the right person to move Microsoft forward.

Focus

The ultimate idea behind my blueprint still stands. It needs to be split into three major divisions that have a laser focus with objectives to be the top players in each segment they target. In past years as Microsoft grew, most of the focus was on their current cash cow products, such as Windows and Office, while the mobile group did not receive the proper attention or focus since PCs were still the major products being supported. However, with Apple introducing the iPhone in 2007, Microsoft should have seen its potential and put as much money and focus on mobile from that point on. Instead we heard that the mobile phone group was constantly competing with other more profitable Microsoft businesses for R&D funds during that time as well as clashing with the Windows group since it appears that they wanted the core Windows OS to eventually be Microsoft’s major mobile OS in the future.

By the time Apple introduced the iPad, Microsoft should have been ready to move Windows Mobile onto that platform and instead we got the current version of Windows 8.1 being pushed down to smaller screen sizes. This only emphasized the fact that the company continues down a PC centric path instead of seeing mobile for what it is – an opportunity create a rich mobile platform in its own right that could help them expand their presence in the era of mobile and its staggering growth curve.

Interestingly Microsoft already had a precedent of creating a dedicated OS that was not Windows based. They did that with the Xbox. That group fully understood it was not a PC and delivered a rich OS that focused specifically on the gaming experience but was smart enough to design it as a platform so that its use could eventually be expanded. Today it serves as a front end to a TV and delivers OTT programing from Netflix, Hulu, etc. It can also be fine-tuned to be a set top box if necessary.

In my blueprint piece, I suggested that this group, or division, also be given the connected home program and let it integrate Microsoft’s cloud apps and services into their products and services.

At the upper end of the market–mostly the commercial market–Microsoft still has to focus on Windows, Office and servers. Even though demand for PCs is declining, the industry will still sell between 280 to 300 million annually for at least the next 3-4 years. At the very least they will have to support the installed base of PCs for many years to come. Also, while demand for Office in consumer markets is also declining given the competition they have from Google, Apple and other SAS office like tools, Office 365 still has potential. This group oversees their cloud program and would have to work closely with the mobile and entertainment group to make sure things like Bing and ActiveSync is fully integrated.

As for Mobile, as suggested above, this group would also need to have a laser focus and not be forced to push any form of PC centric thinking that would influence their vision for mobile. It has to have the ability to create the greatest mobile platform regardless of its legacy links to Windows. While I don’t propose they adopt Android, as I stated in the blueprint article they should be free to create a rich mobile OS that uses the look and feel of Windows mobile but also be free to virtualize Android apps to run on Windows Mobile devices to help them gain access to the long tail impact of mobile software apps. As it stands now , they are not going to convince enough mobile app developers to create apps for Windows to make them truly competitive with Apple and Google’s Android ecosystems. This group should also spearhead any wearable products Microsoft would create for this market that is poised to grow exponentially over the next 5-7 years.

Microsoft’s cloud apps and infrastructure are critical to Microsoft’s future and need to be tapped and integrated deeply into all of these three groups or divisions. I suspect the best way to do this is not to spin each out but by creating three distinct divisions that will be empowered to have dedicated goals, focus and autonomy.

More importantly the mobile and entertainment group has to be free to move completely away from the PC centricity of the past and to a world in which the platforms for each group are designed to be best of breed without any legacy baggage. In my viewpoint this is the only way to deliver a One Microsoft vision that will keep them competitive and relevant.

Tim Bajarin

Tim Bajarin is the President of Creative Strategies, Inc. He is recognized as one of the leading industry consultants, analysts and futurists covering the field of personal computers and consumer technology. Mr. Bajarin has been with Creative Strategies since 1981 and has served as a consultant to most of the leading hardware and software vendors in the industry including IBM, Apple, Xerox, Compaq, Dell, AT&T, Microsoft, Polaroid, Lotus, Epson, Toshiba and numerous others.
  • klahanas

    The industry is in a historical conundrum. With the surge of mobile, it’s really hard to let go of “legacy”, especially when legacy is so darn capable. Not being able to do something on the new platform, that you currently can do on the old is counterintuitive. Real progress is when you can accommodate both.

    For consumer appliances, this is irrelevant however. Consumers, as a whole, aren’t as aware of what’s missing.

    • jfutral

      “Not being able to do something on the new platform, that you currently can do on the old is counterintuitive.”

      I think the issue is less what you can or can’t do on one platform or the other, particularly in terms of legacy capabilities. It becomes a two part question, really. Do we need to do all those old things and are the ways we did them really the best way?

      Joe

      • klahanas

        Whether we “need” the old things is up to the individual user. I always strive for maximum flexibility. Do I “need” to be able to run Flash on my device? Only if I “need” the content.

        • jfutral

          To a certain degree you are correct. It is up to the individual user. But it is not based on need, it is based on preference. I don’t need to start a car by cranking a handle on the front anymore. If I really want to, I can go about figuring out how to refurb an old car that had that ability. But it would be silly of me to expect new cars to continue that legacy.

          If there is content that requires Flash, that is imposed on the user, not user choice. Seems like you would be advocating some method that lets the user choose how they want to access that content.

          Joe

          • klahanas

            Preference alone is sufficient, and supersedes need. That’s what makes these things personal.

            Yes, if the content creator imposes a certain way to view and use the content, the user should be able to access that content and not have the device be an obstacle. Then the matter is between the user and the content creator, not the device manufacturer.

          • jfutral

            What do you do, then, when even the maker of Flash abandons device support? It is silly to expect legacies to continue to be supported on new devices at any point in the chain.

            It is not the device maker’s responsibility to maintain someone else’s legacy systems if those systems are problematic, such as Flash with mobile devices. The user is not without choice. They can maintain their own legacy system if they prefer.

            Joe

          • klahanas

            You are 100% correct. My issue then would be with Adobe and not the device manufacturer. The device manufacturer should not even enter the equation. The only time it would matter is if the device is inept.

          • steve_wildstrom

            I don;t know why money would change hands to get Office apps on iOS. It clearly seems to be in the mutual interest of Apple and Microsoft for this to happen.

            Apple actually has reasonable clear (though not as transparent as we might want) rules for rejecting software. “It sucks” isn’t one of them; it has to “suck” in particular ways. In any event, as you say, the availability of Office on iPads is likely to sell iPads. Why would Apple not want it?

          • klahanas

            A determination would have to be made as to who benefits, and by how much, to assess the value of the deal. If it benefits one party more than the other, money would change hands.
            As you say, it has to suck in particular ways. Particularly arbitrary ways, always in Apple’s favor…

        • Kizedek

          This only addresses the first part of Joe’s question: “Do we need to do all those old things?”

          The second part is: “Are the ways we did them really the best way?”

          The answer to that is that we don’t know until we see the new way. This can be a disruption.

          To a certain point you can provide “choice” and give the user some “power” to “exercise” his “preference”. For example, Metro frustrates some people, so MS puts out an update that puts the Start Menu back in its customary place, or allows you to switch Metro off. Whew, all is right with the world because I have a flexible choice and I can exercise my preference.

          But, looked at another way, that is simply a failure on the part of MS to make some decisions and effectively serve their legacy customers and to move forwards. What should have remained similar was too different, and what should have been more different was too similar.

          • klahanas

            “Are we really using them the best way?” That is for the user, or the user’s boss, or the user’s clients to decide. It most certainly isn’t the manufacturer’s decision. The manufacturer should present their vision of course. It’s a suggestion, not a mandate. As happened with Apple, users did choose to endorse that new way of doing things, organically. Some (enough) didn’t and they chose to jailbreak. They shouldn’t have to jailbreak. Such defensiveness of how their user’s operate the device, and what they get to run read and watch is too authoritarian. I frequently callout Apple as their users de facto IT department, because that’s what IT departments do. Unlike a true IT department, however, Apple doesn’t own the devices. They sold them to their users.

            The best way to move users forward is to show the way (as Apple did) and let them go by themselves, not by “enforcement”. This is not directed at you, or anyone else specifically, but it’s certain to offend some people… If you “enforce” your users forward, you are in fact “herding” them.

            MS tried it halfway with Win8 and still got their heads (correctly) handed to them. They correctly don’t enjoy the loyalty Apple has. Heck, even Apple doesn’t deserve that, but so it is.

            My ideal company would be an amalgam of Apple representing the one extreme, and MS representing the other.

          • Kizedek

            Well, I am not sure what we are talking about here, anyway, specifically. Perhaps the separation of OS X and iOS vs a single Windows 8 for desktop and mobile? I think Apple has made the right decision about users not touching the desktop and not using the mouse on the iPad. If that is too much “herding”, so be it.

          • klahanas

            If it only stopped there…

          • jfutral

            “The best way to move users forward is to show the way (as Apple did) and let them go by themselves, not by ‘enforcement’.”

            I would say this is precisely what made Apple’s approach so successful and MS’s so painfully unsuccessfully in the mobile space. And Apple’s “IT services” is exactly part of what people are buying. The average person out there sees no benefit in the things you do. To attempt to address both markets is exactly (IMHO) what is causing MS so much trouble and why Linux has yet to see broad adoption.

            Apple as IT also solves the long troublesome issue for the average user of whom to call when something goes wrong. In the traditional model the software developer would blame either the hardware or the OS. The OS developer would blame the hardware or the software developer. The hardware developer would blame the software or the OS. The retail people would just stand there stupified without a clue. No one would take responsibility. Tell me how the customer benefitted in that arrangement?

            Joe

          • klahanas

            Great! So we agree. It may even justify the “Apple Tax”. But if you don’t want it, it’s not optional. That’s where I have a problem. It’s not like it doesn’t have it’s own severe downsides.

          • Kizedek

            Just for future reference: I know “Apple Tax” has come into the common parlance somehow. But perhaps even the controversial term “Premium” is better. You get a value proposition with Apple. Take it or leave it. In fact, it keeps on giving: you get free updates, you go to the genius bar and get surprised when they hand you a new device, etc. At the very least, your device’s life is extended and improved as time goes on. That’s not a tax. There is nothing hidden; you pay up front, and get pleasantly surprised.

            By contrast, there is more of an “MS Tax”. TCO of ownership is hidden (and always proven to be in Apple’s favor); you get nickle-and-dimed; you get viruses; your device’s performance degrades; you need to get it sorted out… If you are in a corporate setting, you have annual tax for network and server connections, etc. …Lots of hidden payments to make, and you aren’t quite sure what benefit you are getting — sounds like a tax to me.

          • klahanas

            Yet there are users that don’t need that extra service, but are otherwise required to pay it. This is compounded by the diminishing user serviceability of the devices. Again, great if you want it, bad if you don’t. Take it or leave it? Well then, leave it. It’s a pity though.

          • jfutral

            That’s like saying I got “taxed” because the house I bought came with a roof.

            Joe

          • klahanas

            This is something only we geeks know (apparently). For $2K, you should be getting eight threads of execution, not four. You should also be getting deeper caches.
            Not expecting more is giving them a “bye”. It would be said of any other $2K computer.

  • stefnagel

    Apple had nothing to lose and everything to gain ten years ago; it will be another ten years before Microsoft sees itself that way. Why? It’s having a hard time realizing it’s been kicked to the curb.

  • Mauryan

    So long as Bill Gates and Steve Ballmer are involved in any way with the company, these suggestions will not go anywhere. Gates founded the company and he wants to look at the world only through his “Windows.” He might believe that people are wrong and will know what they need only when Microsoft gives them something he thinks is the best for the world. They have cash to burn. So for a long time, they can afford to experiment with various trials and make errors. They are just rolling the dice and hoping that one of the rolls will get them the jackpot that they are looking for.

    Consumer market is like movie business. A producer or a director might believe that technically and story wise the movie would be welcomed by everyone. But sometimes the public might shun that movie altogether and some other movie might do well at the box office. One can make mediocre products that cater to public sentiments (through small changes and market analysis). Or one can make revolutionary products that set new standards. Most tech companies belong to the former category. There are very few that belong to the latter – Apple and in the past, Sony. If Microsoft has to do well, it has to make a complete paradigm shift in its business philosophy. They do not have any leader that can do it today. So let them learn from their own mistakes.

    • steve_wildstrom

      I don’t know what Bill Gates is thinking about the future of Microsoft and I’m pretty sure you don’t either. Bill is a man who has always kept his own counsel. By most reports, he played a big part in the departure of Steve Ballmer and it was he who pushed for Nadella, the engineer, to get the job rather than Ballmer’s choice, outsider/manager Alan Mulally.

      My point is that I don’t believe that anyone knows whether Gates wants drastic change or to stand pat, and particularly whether he is still wedded to the “Windows everywhere” philosophy he espoused 20 years ago,

      • Mauryan

        When we cannot even speculate what Bill Gates will or will not do, I do not see the point in the article itself about what Microsoft must do. They will do what they think is best for their success and vision. You and I simply hold on to our opinions based on how we see things.

        • steve_wildstrom

          Microsoft is being run by Satya Nadella, not Bill Gates (or Steve Ballmer.) Failing evidence to the contrary, it is what Nadella, not BillG, thinks that matters.

          • Mauryan

            We know all that. The question is whether Mr. Nadella gets enough room to do what he wants or whether the Windows makers get to control him from behind. If the latter is true, then Microsoft will head along a slippery slope. My guess on why Mr. Nadella was chosen was because he would not think drastically to change anything. He will mostly consolidate what is there (with approval from you know who). At this time we can talk about many scenarios from outside the closed windows. I still feel Mr. Gates is running the show from behind. After all Microsoft is his baby. He is not going to give up directing it that easily.

          • mscritic

            You’re basing your view on logic. Unfortunately logic can be completely blind to reality and in this case I think it is.

  • Jobsismyhero

    I never heard of Satiya Nudella. He looks very suspicious to me. He should be deported.

    • Mauryan

      Yeah he is not white.

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