Collected Insights on Microsoft's Q3FY13 Performance

There is plenty of speculation in the industry this quarter about the future of Microsoft given the challenges facing Windows 8. Microsoft reported flat revenues in the Windows Division today, citing the transition in the PC industry overall. The good news is that Microsoft is a diversified business with strengthening enterprise multi-year licensing revenues of 16% as one good sign. New licensing models for Office and the release of Microsoft Azure IaaS platform are both positives, with Online Services Revenue up 18%.

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Is Windows 8 Killing PC Sales? Read the Fine Print: The Report of Windows' Death was an Exaggeration

On May 5, 1907, The New York Times published a column written that same morning by Mark Twain on the news of his death the day before. "You can assure my Virginia friends," said Twain, "that I will make an exhaustive investigation of this report that I have been lost at sea. If there is any foundation for the report, I will at once apprise the anxious public." The event led to the oft-misquoted phrase: "The report of my death was an exaggeration."

Everyone it seems, loves a good untimely death
So much so, the Wikipedia maintains a list of 219 famous erroneous death reports. Paul McCartney was reported dead on a radio show in 1966, with fans convinced he'd been replaced by an impostor. Pope John Paul II is on the list with the distinction of being the only known triple recipient of early death news reports. And the US House of Representatives cemented its reputation as the best comedy show in town when news of Bob Hope's death was reported on the floor and broadcast on C-SPAN...five years too early. And so it goes with taking news at face value.
 
Even me
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Has VDI Peaked? A Change in the Adoption Drivers Sheds New Light, and New Life

Winning teams delight in the 'doing', not the 'winning'
When I was growing up in Pittsburgh, Pennsylvania, Chuck Noll was the head coach of the Pittsburgh Steelers, and his leadership was my first glimpse into what separates teams that win from teams that don't. My favorite quote from Noll exemplifies his view both simply and eloquently: "The thrill isn't in the winning, it's in the doing." What Noll taught his players, including Terry Bradshaw, 'Mean Joe' Green, and Franco Harris, is how to delight in the joy of doing, over the joy of winning. Why? Because the 'winning' won't come unless your passion comes from the 'doing'!

This is why I'm so excited about the explosive trend of BYOD and consumerization of IT on so many levels, from cloud computing to tablets. Workers are putting the joy back into the 'doing' parts of their jobs by exploring different ways of working, and using technologies that often exceed what even the best IT organizations can generally provide. It's also why I think we'll see a rebound of Hosted Virtual Desktops (also known as VDI) through 2013 and beyond. But first, let's look at the data:
 
IT interest in VDI appears to be on a downward trend
Forrester's annual survey of IT decision-makers revealed a drop in interest and plans for VDI initiatives from 2011 to 2012:
 
 
But a shift in the IT drivers for VDI suggests it could actually be an inflection point
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Happy Employees, Happy Customers - How Workforce Computing Strategy Drives Engagement and Results

What do Google's Gmail, Ericsson's #1 telecom switching systems and Southwest Airlines' Ticketless Passenger Travel all have in common? Yes, they're all spectacular business successes, but what most people don't know is that they're also the direct result of employees working on their own time to solve problems and innovate above and beyond their daily tasks.

Here's another perspective on this reality: What science knows and what business does are 2 different things. These words from a TED talk from Daniel Pink were echoing through my cranium as I polished off my second glass of my brother's famous 1000 calorie-a-glass eggnog last Christmas Eve. When an idea is intriguing enough to occupy my thoughts on Christmas, it's gotta be good.

What got me noodling about all of this was a few days before Christmas, I was asked to come up with ideas for our May Forum on how workforce computing can drive better customer outcomes, and Dan Pink's "Drive: The Surprising Truth About What Motivates Us" which I was reading at the time gave me some fresh fuel to spark my synapses. Pink draws his inspiration from the work of Mihaly Csikszentmihalyi - a former University of Chicago behavioral psychologist now at the Drucker Institute, famous for his work in uncovering the conditions necessary for people to be intrinsically motivated to do their best work.

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Why Dell Going Private is Less Risk for Customers than their Current Path

To publish this post, I must first discredit myself. I'm 42, and while I love what I do for a living, Michael Dell is 47 and his company was already doing $1 million a day in business by the time he was 31. I look at guys like that and think: "What the h*** have I been doing with my time?!?" Nevertheless, Dell is a company I've followed more closely than any other but Apple since the mid-2000s, and in the past two years I've had the opportunity to meet with several Dell executives and employees - from Montpellier, France to Austin, Texas.

Because I cover both PC hardware as well as client virtualization here at Forrester, it puts me in regular contact with Dell customers who will inevitably ask what we as a firm think about Dell's latest announcements to go private, just as they have for HP these past several quarters since the circus started over there with Mr. Apotheker. Hopefully what follows here is information and analysis that you as an I&O leader can rely on to develop your own perspective on Dell with more clarity.

 
Complexity is Dell's enemy
The complexity of Dell as an organization right now is enormous. They have been on a "Quest" to re-invent themselves and go from PC and server vendor, to an end-to-end solutions vendor with the hope that their chief differentiator could be unique software to drive more repeatable solutions delivery, and in turn lower solutions cost. I say the word 'hope' deliberately because to do that means focusing most of their efforts around a handful of solutions that no other vendor could provide. It's a massive undertaking because as a public company, they have to do this while keeping cash-flow going in their lines of business from each acquisition and growing those while they develop the focused solutions. So far, they haven't.
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The Coming PC Management Crisis: A Hypothesis

When it comes to management, less is more
I was at an industry conference recently, standing in the booth of a large PC maker while being indoctrinated with the latest word: "You can manage it with existing tools!" - a marketing director beamed, as he waved a new Windows 8 tablet under my nose. He seemed so happy I thought for a second he might grab my hand and drag me skipping through the tradeshow floor followed by a troupe of merry singing penguins, like a sort of demented convention center edition of Mary Poppins.
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Back of the Napkin: Why Microsoft Windows Intune Should Be On Your Radar

It's a little-known fact that both Southwest Airlines and the (soon-to-be) famous Yee-Haw Pickle Company began life on a cocktail napkin. What better medium to illustrate why Windows Intune should be on your radar as an I&O leader or professional?

In the late 1990s, no one could have imagined what PC management would eventually entail in an always-on, always-connected world. Those of you who know me, know that I've either managed or marketed 3 different client management product lines in my career. All of the vendors in the space, including Microsoft, have spent the last 15 years trying to make it easier to manage Windows PCs on an enterprise scale, for utility, security, business continuity and performance.
 
A mess? I'd say! I spoke with a mid-sized oil company a few weeks ago about their client management tools, processes and maturity. They use only a fraction of System Center Configuration Manager (SCCM) 2007's capabilities. The weekly patch cycle and packaging alone are a full time job for one person, and endpoint protection and remediation are still wishlist items. Half of their assets sit at the end of satellite links 50 miles from the nearest towns and they have a fleet of trucks manned by a small army of techs dedicated to just fixing PC problems over 5 big western US States. Expensive? You bet. Ineffective? Absolutely.
 
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Hands-On Observations Of The Microsoft Surface: Compelling.

Last weekend I spent several hours with a Microsoft Surface tablet running Windows RT, courtesy of a Forrester client. I liked it. A lot. Some quick initial observations and thoughts on what it means for I&O professionals:

  1. The combination keyboard/cover is genius. The keyboard on the tablet I used is the flat, non-tactile one instead of the one with Chiclet keys, but like the iPad it cleans the screen when it's closed. I got used to the feel quickly but would still prefer a tactile keyboard if I bought one.
  2. The performance is smooth and quick. I find RT to be very responsive on the Surface. It's not quite as fluid as iOS on an iPad, but it's close, and the touchscreen is precise. The screen is also bright and clear with rich, vibrant colors - at least to my eyes.
  3. It feels heavy but solid. Any concerns about Microsoft as a hardware vendor will vanish in the first 5 minutes with it. One glitch however: This was the second Surface for this client because the original device was defective and wouldn't recognize the keyboard, so there may be some QA glitches with early versions.
  4. I use the touchscreen more than the touchpad. I thought I'd have a hard time giving up the mouse, but found myself tapping the screen even though the Surface has a mini touchpad. It's a natural motion, and I found Office 2013 Preview a joy to use - but did need to use the touchpad for some things.
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Seven Reasons Windows 8 Adoption In The Enterprise Is At Risk

In my previous blog on Windows 8, I discussed the gap between IT decision-maker interest in migrating to Windows 8 and employee interest particularly with touchscreen tablet devices. Employee interest was even higher than I expected prerelease, which means that Windows 8 will likely become a bring-your-own-device (BYOD) force for many organizations, but the high number of undecided respondents suggests that the next 12 months will be critical. Note that the survey was taken before the public Windows 8 release, so I don't yet know how interest will change with more people using it hands-on. I'll share my personal experiences with it in a future blog post. With that in mind, below are seven factors that put adoption at risk through the first 12 months after release.

IT decision-maker interest is affected by the following:
  1. Most IT shops are still in the midst of their Windows XP to 7 migration. Clients report that migrating to Windows 7 is an expensive process, with application migration and modernization, the OS upgrade process, and the associated labor and costs. With only 4% of firms having a plan to migrate to Windows 8 in the next 12 months, the majority of new corporate PCs currently being deployed with Windows 7, a three- to five-year life cycle on PC hardware, and the end of Windows XP support coming in April 2014, Forrester believes few firms will be anxious to make another major investment in desktop OS migration.
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By The Numbers: Is Windows 8 Dead On Arrival In The Enterprise?

With the release of Windows 8, Microsoft is in the midst of its largest marketing effort ever, hoping to reach 2.1 billion people over the next several months. Because of its lukewarm initial sales, but with new tablets and convertibles on the way, Forrester clients are understandably asking how much attention they should  give it. Here's my take:

The data tells us two important things. The first is that Windows 8 is seeing roughly half of the interest from IT hardware decision-makers that Windows 7 saw at the same point in its release cycle. Only 24% of firms expect to migrate to Windows 8 but have no specific plans to do so, versus 49% for Windows 7 back in 2009. Only 5% of firms have specific plans to migrate to Windows 8 in the next 12 months, versus 10% for Windows 7 in 2009:

The second important thing that the data tells us is that Windows 8 has higher interest than we expected among employees, with a full 20% already saying that they would prefer Windows 8 on their next touchscreen tablet versus 26% for iOS. That bodes well for Windows 8's prospects for bring-your-own-device (BYOD) demand:

What It Means: Forrester does not expect enterprises to adopt Windows 8 as their primary IT standard. More on why in a future blog. But we do expect that employees will force IT to have a formal support policy for Windows 8 for employee-owned devices. Windows 8 will accelerate BYOD demand. Look for more from Benjamin Gray and yours truly in a report due out shortly.

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