Microsoft CEO Steve Ballmer announced today that he will be retiring within 12 months. My Forrester colleague Ted Schadler laid out some of the strategic challenges his successor will face in coming years. Here, I add to Ted's analysis.
Microsoft remains one of the great global technology companies, a solid member of theFortune 50. Although it no longer enjoys the reputation for innovation it did in the 1990s, it’s a critical player in every aspect of end user computing (including devices, software, browsers, development platforms, and services) and of other technology product and service markets.
As CEO, Steve Ballmer solidified Microsoft’s stronghold in enterprise solutions. Microsoft built and maintained — or built and made itself into a key challenger — in several enterprise markets. Microsoft Office remains a titanic success, even as it faces lower-cost competition from Google and others. Windows Azure has been cultivated into a full-fledged contender in the cloud services market. Exchange remains entrenched in enterprises, as do many of Microsoft’s Server and Tools offerings. Microsoft remains the company to beat in some of these markets, and has become a formidable challenger (e.g. as Azure takes on Amazon Web Services) in others.
One noteworthy detail emerged from Microsoft’s quarterly earnings call yesterday: A $900 million write-down for “inventory adjustments” related to the underperformance of Windows RT. This result didn’t come as a surprise because:
Microsoft’s Windows RT strategy has long been puzzling. Launching the Surface RT device before the Windows 8-based Surface Pro offering never made sense – an insufficient number of Modern UI apps made the Surface RT hard to position and sell from the beginning. Samsung recognized the shortcomings of RT early on, exitingthe market a mere three months after RT’s release.
Microsoft still hasn’t convinced developers that Windows RT should be a top priority. Our survey of 2,038 global software developers revealed that developer support for Windows RT trails Windows 7, Windows 8, Apple iOS, Google Android, and even Apple OS X. For example, while 21% of global developers support or plan to support Windows RT, 64% say the same for “Windows 7 and earlier versions.”
Today's re-org at Microsoft comes amidst mixed success as they straddle the gap between capricious individual consumers and the cash-strapped, risk-averse needs of enterprise IT buyers who find themselves years behind the demands of their own capricious workers, who are also consumers when they go home. Windows 8 shows us that Microsoft has more learning to do about where to place those bets, but we also think their work on server, cloud and hybrid cloud is excellent, and that their longer-term strategy is viable. We see this organizational re-alignment as very positive.
The Server and Tools Business becomes Cloud and Enterprise Engineering Group
Satya Nadella and Scott Guthrie both have done a great job of driving Agile development and continuous delivery into every team in STB and that is resulting in faster moving and more compelling products and services. They deserve a lot of credit for this and so putting even more under them seems a good thing. The key is whether it is the right things.
For perspective: one of Microsoft's greatest strengths is that they give smart people development tools that are extremely easy to use and deceptively powerful. So much so that generations of developers will commit themselves and careers to mastery of Visual Studio, for example. Microsoft democratizes software development by lowering the barriers to entry like no other company. The shift to cloud gives them the chance to do it again, and the improvements in Visual Studio 2013 shown at BUILD in San Francisco are superb and stretch smoothly from the datacenter to the cloud.
Voice-controlled intelligent assistants offer a tantalizingly productive vision of end user computing. Using voice commands, users can extend the computing experience to not just mobile scenarios, but to hyper-mobile, on-the-go situations (such as while driving). With wearables like Google Glass, voice command promises even deeper integration into hyper-mobile experiences, as this video demonstrates. And voice controlled intelligent assistants can also enable next-generation collaboration tools like MindMeld.
In spite of this promise, there remains a lurking sense that voice control is more of a gimmick than a productivity enhancer. (As of the time I posted this blog, a Google search for Siri+gimmick yielded… “about 2,430,000 results”). To see where voice control really stands, we surveyed information workers in North American and Europe about their use of voice commands.
Information workers’ use of voice control today:
In reality, many information workers with smartphones are already using voice commands – at least occasionally. Our survey revealed that:
Today’s new details on Windows 8.1 show that Microsoft is on track for updating Windows annually, that they’re engaged in significant product improvements and they are listening to market feedback. There were a ton of improvements and new built-in apps. Among all the details, three were the most significant to advancing Windows:
· Smart Search. By combining Bing’s web search with search across my devices and Skydrive, search becomes more relevant and personal. We’ll be watching to see how third-party developers can use this and where Microsoft goes with it. Very interesting.
· Making Windows desktop modern and more synergistic. The tweaks to allow the desktop background underneath the Start Screen and the return of the Start button make it feel a little less like I’m running two PCs in one, but the difference is still jarring.
UPDATED 26th June 2013 As you may be aware Microsoft has finally introduced its Office Suite for the iPhone (launched in the US on Friday 14th June, and now available in much of the rest of the world according to my sources). This is great news — it has been one of the real holes in the iOS application store and in high demand in many businesses we speak to (although will be MUCH more valuable when it's available as a native iPad app). Over the next week or so it is likely that many of your senior executives will read this news — as it has already made the consumer press. Soon they'll be knocking down your door asking how to get access to it.
However, the licensing model that Microsoft has chosen is one to encourage the uptake of the Office 365 Suite. ONLY those users with a MS Office 365 license will be able to activate the apps on their iPhone. This may mean a significant licensing impact for you. If, like many companies, you have not yet made the move to Office 365, your company’s employees will not be able to use the Office apps on their iPhone. There is a big risk here that you will see employees activate the license themselves and charge it back through the traditional expenses channel. And if senior management are doing it, it is hard for them to say no to the more junior ranks.
I reached out to Duncan Jones, one of our resident sourcing pros and Microsoft licensing experts to get his analysis of the situation. Here are his thoughts:
Folks, this one is going to be short because it's the easiest case I've ever made. Microsoft wins the next-gen game console launch wars by launching something that the company doesn't even call a console. Where Nintendo offered us a tablet to accompany the millions we had already bought and Sony then offered us a box that we couldn't even see, Microsoft has trumped them both by delivering the Xbox One. Let's tally up the points:
The name. Wii U means something, I'm sure, to someone. PS4 means "we like the past and want to extend it." Xbox One takes a bolder and more important stand by saying, "It's time to reboot the whole category." This is beautifully illustrated in the way that the Xbox presenters never referred to Xbox One as a game console. It is an All In One Home Entertainment System.
The reveal. PS4 famously flopped its launch by hiding the console entirely. That would have been fine last generation, maybe. But this generation comes in the post-Steve Jobs era where the device and its price are shown. Microsoft debuted the box, the new Kinect, and the new controller in the first 60 seconds of the event.
The scope. Wii U and PS4 both promise to provide access to video and other interesting media experiences. Xbox One actually delivers those things in the most satisfying and complete way anyone other than TiVo has done so far, letting you switch from gaming to TV to movies to web browsing with simple voice commands and practically no waiting.
For our Forrsights Workforce survey, Forrester annually surveys information workers.* I’m leading final preparation of our Forrsights Workforce survey focused on end user hardware and aimed at five major markets – the US, Canada, the UK, France, and Germany. By end user hardware, we primarily mean PC/Macs, tablets, and smartphones, but we may also focus a bit on peripherals. And we hope to mirror some of the questions from the Forrsights IT Hardware survey, which we develop after this one, so that we can compare results from this information worker survey to what IT buyers report in their survey. Analyst Heidi Shey is working on the other half of the survey, which will focus on security issues.
Below are the hypotheses and topics we plan to explore in the survey. Please give them a quick read, then post or email feedback by Friday, April 12 (Tuesday, April 16 at the very latest). If you are a Forrester client and would like to see a survey draft, please email your account rep and me.
These are statements of ideas we are planning to test in the survey questions, which are designed to confirm or disprove the idea. But we probably can’t fit all of these, so please help us prioritize – especially if you are a Forrsights Workforce client!
Have multiple devices used for work, including many that are personally chosen and/or owned; they spend significant money on devices used regularly for work; and they expect to continue doing so.
Often blend work and personal tasks on the same device, despite employer policies to the contrary.
In recent research, I have laid out some similarities and differences between tablets and laptops. But the tablet market is growing ever more fragmented, yielding subtleties that aren’t always captured with a simple “PC vs. tablet” dichotomy. As Infrastructure & Operations (I&O) professionals try to determine the composition of their hardware portfolios, the product offerings themselves are more protean. Just describing the “tablet” space is much harder than it used to be. Today, we’re looking at multiple OSes (iOS, Android, Windows, Blackberry, forked Android), form factors (eReader, tablet, hybrid, convertible, touchscreen laptop), and screen sizes (from 5” phabletsand to giant 27” furniture tablets) – not to mention a variety of brands, price points, and applications. If, as rumored, Microsoft were to enter the 7” to 8” space – competing with Google Nexus, Apple iPad Mini, and Kindle Fire HD – we would see even more permutations. Enterprise-specific – some vertically specific – devices are proliferating alongside increased BYO choices for workers.
Infrastructure & Operations (I&O) professionals, in the age of Bring-Your-Own (BYO) technology, are keeping closer tabs on the comings and goings of the consumer market. Most of the devices they find their companies’ employees using come from consumer retail, whether from physical retail locations like the Apple Store or Best Buy, or online venues like Amazon or Dell.com.
Samsung announced yesterday that it will be opening “Samsung Experience Shops” -- based on a store-within-a-store concept -- in 1,400+ Best Buy locations in the US in coming weeks and months. By the second half of the year, Samsung will possess a significant retail presence tailored to its own devices and staffed with sales associates with greater knowledge of its products. CNET reports: “The shops in large-format Best Buy stores will include blue-shirted consultants who are employed and trained by Samsung, as well as Best Buy staffers who receive special instruction.”
Apple, of course, has enjoyed incredible success with its Apple Stores since they opened in North America in 2001. The Apple Store has been a powerful pillar of Apple’s overall consumer strategy because of:
The quality and effectiveness of its sales associates. Apple has been able to attract, train, and retain high quality staff for its stores. In an era when cost-cutting affects retail experiences across all categories, Apple’s associates create a high-quality customer experience for Apple's customers and prospects.