Microsoft is at a Fork in the Road

Many of us have caught the news that Microsoft’s CEO Steve Ballmer’s tenure is up. Over the next 12 month’s Ballmer will work to transition a replacement. This replacement will be faced with extremely hard decisions about Microsoft’s future. Whoever he or she is, I hope they are ready.

In my opinion the crux of Microsoft’s fade into irrelevance is their complete ineptitude to understand consumers. I believe Bill Gates, Steve Ballmer, and the rest of the crew at Microsoft understood a business user but I don’t believe for a second that they had any genuine understanding of consumers and consumer markets. On the flip side Steve Jobs had an amazing understanding of consumers. This was who Steve Jobs built products for and unfortunately in the early days it almost killed the company. The reason for this was because there was no true consumer market for PCs there was only a business/enterprise market. Bill Gates and Steve Ballmer and crew, built solutions that they understood–business and enterprise focused solutions. And during this time it was exactly what the market needed to grow. However in the early 2000s things changed. A pure consumer market emerged for computers and Microsoft was not prepared to compete against a company whose focus and passion were consumers.

The Fork in the Road

So Microsoft finds itself at a fork in the road. I find it very hard to believe in todays global marketplace that a single company can compete effectively in both consumer and enterprise markets at the same time. I believe Microsoft must choose to focus on business/enterprise customers OR consumer customers. They cannot do both.

Not much need change in the way of Microsoft’s outlook and strategic direction should they choose the enterprise focus. However, I don’t believe this is the path they will choose. RIM was in a similar position and chose to go after consumers and it killed them. But I believe the allure of a giant, yet not always profitable, consumer market will entice Microsoft to go this route. If this is the case, a lot must change at Microsoft.

The new CEO must change the culture first and foremost. Microsoft needs an agile and forward thinking group of executives with a vision of the 20 year future and Microsoft’s role in that future. Microsoft needs to focus more consumer oriented RND and innovation efforts. But perhaps most importantly, Microsoft needs to bring executives to the forefront who actually understand consumer markets. Things like the whats and why regular consumers buy things. This is not easy and only a few companies even remotely do this well.

The other expertise Microsoft needs to acquire if they choose the consumer path is regional expertise. Consumer markets in each region outside of the US like Asia, India, etc., will all behave differently. Gaining consumer intelligence is key but so is gaining that insight for the nuances of each region.

Without question Microsoft’s new CEO will be faced with a gamut of challenges. Even a new CEO does not guarantee Microsoft’s future security.

The Era of Personal Computing

I have adopted a philosophy in my analysis over the past few years where I distinguish between personal computing and personalized computing.

In a post a few months ago, I wrote about these differences and pointed out that because of the differences in personal and personalized computing the Post PC Era will happen in two different stages.

The first stage is personalized computing. In this era, the one we are currently in, all of our personal computing devices are personalized by us. What I mean by this is we take the time to personalize the devices with our personal content, apps, preferences, interests, etc. In reality, however, how personal are these devices? They don’t actually know anything about us we just simply use them to get jobs done. We customize them and they contain our personal content but they really aren’t that personal.

However in this next phase, the era of personal computing, things may actually get very interesting. In this era our devices will actually start to learn things about us and in the process become truly personal. Our most personal devices will learn our interests, schedule, preferences, habits, personality, etc. I know it sounds a bit scary but that is where we will inevitably end up.

I believe Apple’s latest feature–Siri–demonstrates this future reality of personal computing. As Tim pointed out in his article yesterday, Siri and the underlying artificial intelligence engine, will learn key things about our unique tastes, interests, and more and over time become even more useful as a personal assistant.

What is absolutely central for this personal computing era to become reality is we have to allow our devices to get to know us. Perhaps more specifically we have to trust our devices or the underlying company providing us the personal computing experience.

John Gruber points this very point out in a post with some comments from Ed Wrenbeck, former lead developer of Siri.

In an interview with VectorForm Labs Ed Wrenbeck states:

“For Siri to be really effective, it has to learn a great deal about the user. If it knows where you work and where you live and what kind of places you like to go, it can really start to tailor itself as it becomes an expert on you. This requires a great deal of trust in the institution collecting this data. Siri didn’t have this, but Apple has earned a very high level of trust from its customers.”

In the era of personal computing we will get beyond personalizing our devices and instead enter the era where they truly become personal to us because of their ability to know, learn, and be trained about who we are and our unique interests and needs.

There are many great examples of this in Sci-Fi movies and novels but perhaps my favorite, because it is fresh, is how Tony Stark interacted with Jarvis in the Iron Man movies. Jarvis is what Tony Stark named his personal computer and as you can tell from his interactions in the movie, Jarvis knew quite a bit of the intimate details of Tony Stark.

Jarvis was a personal computer, one that took on an entirely new way to be useful because of the artificial intelligence that was built on top of incredible computing power.

Of course, this all sounds extremely futuristic but it will be the basis of what takes us from having to manually personalize our devices, to a future where our devices truly become personal and indispensable parts of our lives.