Once, not so long ago, "computing" was synonymous with Microsoft Windows. But thanks to the rise of the smartphone and tablet, those days are behind us.
That's not to say that the new Windows 10 operating system is bad — far from it. It's even gotten me to switch from my MacBook to a Windows laptop, full time.
In terms of pushing the industry
forward, though, Windows 10 isn't doing much. The PC market is still
shrinking. Microsoft still has a tiny sliver of the mobile market, and Windows 10 doesn't seem to be doing anything to stop those slides.
The good news for Microsoft is that doesn't matter. Microsoft, under the leadership of CEO Satya Nadella, has a master plan:
Make Office into the new Windows.
Microsoft's big 'mistake'
Everything you need to know is contained within a single quote from Microsoft CEO Satya Nadella, from an interview back in July:
"[One] big mistake we made in our past was to think of the PC as the hub for everything for all time to come," he said.
Microsoft basically let the
mobile revolution pass it by. While the Apple iPhone and Google's
Android went on to create entire new application ecosystems and
economies, Steve Ballmer's Microsoft just couldn't let go of the notion
that Windows was forever.
Faced with the threat of the
iPhone, Ballmer's Microsoft dug his heels in on Windows. The existing
Windows Mobile operating system was, for a long time, an afterthought to
the all-important desktop. Efforts to address the growing demand for
touch-based computers, like Windows 8 and Windows RT, were disasters.
By the time the (actually pretty great) Windows Phone 8.1 came out for smartphones, it was too late: Microsoft had lost badly in the exploding mobile market.
(Kyle Russell/Business Insider)
These days, Microsoft has
a paltry 3% market share on mobile, while the iPhone and Android are
both unqualified successes — the iPhone has a smaller overall market
share, but it's crazy profitable, while Android is the most popular
operating system in the world. Last year, 1.1 billion Android devices
shipped, compared with about 300 million Windows PCs, according to Gartner.
Nadella ain't making the same mistake twice.Taking over the phone, one app at a time
The logic is pretty obvious. If
Microsoft can't come up with a smartphone platform that can topple the
iPhone or Android, why not just take over the iPhone and Android?
(Devan Joseph) Outlook for iOS is based on its acquisition of startup Acompli.
While Windows has become less relevant, Microsoft Office is still the industry standard for getting stuff done.
Office workers and students both
rely on Microsoft Word, Excel, PowerPoint, and the rest of the suite.
Google Apps (recently rebranded Google for Work) is providing some solid
competition, particularly in smaller businesses and tech startups, but
almost every big business in the world still has thousands of Office
licenses.
Rather than force Windows on users to make them use Office,
Microsoft's new game plan is to make Office irresistible to anybody, no
matter what device they're using.Microsoft has been delivering a seemingly nonstop wave of mobile productivity apps for the iPhone and Android. To start, it was the usual suspects, including mobile versions of the Microsoft Office suite.
(Microsoft) Microsoft GigJam, an upcoming app that breaks work down into shareable "gigs."
Then, Microsoft started gobbling up hot startups like Acompli and Wunderlist, rebranding their iPhone and Android apps as its own. Plus, we've seen a slew of nifty, if experimental, off-the-wall apps like the forthcoming GigJam, which tries to break apart work into discrete bits.
Even Cortana, Microsoft's virtual digital assistant, is coming to iPhone and Android.
It all comes back to the concept
of "productivity," which became Microsoft's official corporate mission a
few months back. Nadella officially stated that Microsoft's goal is to
enable people "to achieve more."
If it sounds like vague corporate-speak, that's because it is. But for Microsoft, that vagueness may actually be a strength.
With the Windows PC no longer at
the center of the company, it's free to push Office onto everything. If
the iPhone bubble ever bursts, and we move to getting chips implanted
in our heads, you'd better believe Nadella will task a team to getting
Microsoft Word running on our corpus callosum.
A whole new family of products
So far, so good. But the real
trick isn't just putting Office everywhere. It's making sure that Office
365 is the center of a whole new family of Microsoft online services
that work together, using the cloud as their glue.
One piece of this is a boring-sounding product called the Enterprise Management Suite, a subscription-based bundle of technologies
for enterprise IT administrators to help them manage their PCs and
mobile devices. Microsoft COO Kevin Turner has said it's expected to
become Microsoft's next billion-dollar business.
This suite includes three products that serve big-business needs:
- Microsoft Intune, which manages and protects mobile devices — not just Windows PCs, as past Microsoft products have done, but also smartphones and tablets, including iOS and Android devices.
- Azure Active Directory Premium, which manages passwords for employees for Windows and for thousands of other cloud apps. It's positioned as the replacement for Active Directory, a Microsoft product that companies have used for years. Only instead of running on a Windows server in a company's own data center, this version runs in Azure — Microsoft's cloud.
- Azure Rights Management, which can password protect the data in Office documents and other compatible files so unauthorized people can't see the files, copy and paste text from them, and so on. Like Active Directory, a previous version of this product ran on Windows hardware inside a company's data center. This runs in Microsoft's cloud.
No part of this product relies on Windows. This is a dramatic change from how Microsoft used to work.
Plus, once you're using the
Office apps, it's a lot more attractive to spring for extra Microsoft
OneDrive cloud storage. Or to subscribe to additional Microsoft services
like its much-hyped Power BI analytics tool. Or to get a subscription
to Skype for Business.
At the old Microsoft, it didn't
care what apps you ran, as long as you ran them on Windows. The new
Microsoft doesn't care what operating system you run, as long as you're
running Microsoft services.
Making the financial transition
Microsoft is in a weird place
financially. As it shifts away from sales of software licenses, and
toward selling Microsoft Office 365 with a monthly subscription, its
earnings are flattening out and will likely remain that way until the shift towards deferred revenue is fully realized.
But Nadella has done a good job
thus far convincing Wall Street to be patient, explaining that this
shift is in the name of future revenue growth. Office 365 subscribers
are projected to bring in up to 80% more revenue per customer than the boxed-copy customers over their lifetime.
(Microsoft) Microsoft's futuristic HoloLens holographic computer will probably get Office in some form, too.
Customers, for their part, are very much responding to Microsoft's all-apps-everywhere approach, with Office 365 sign-ups skyrocketing. Even General Electric just signed a big Office 365 deal with Microsoft.
Meanwhile, Windows 10 is largely intended to be a subscription-sales funnel for Microsoft.
On the enterprise side, a bunch of the Windows 10 identity-management
features don't work unless the company is a subscriber to the Enterprise
Management Suite.
By focusing on productivity, it
places Office at the center, where Windows once stood. And without the
shackles of the PC, it has the potential to conquer every device we own —
and a bunch we haven't even thought of yet.
Ultimately, Microsoft Office is
going to end up as the glue that binds Microsoft together. When the
operating system doesn't matter, the only thing that people care about
is what you can do with it.
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