For a long time Microsoft ruled the knowledge worker part of the IT seas with impunity. They have fended off attacks from the expected folks like IBM and Oracle rather handily. Then the consumerization wave hit. Turns out the danger came not from a frontal assault from another battleship, but from a huge array of small pirates. Knowledge worker eyeballs that always belonged to Microsoft strayed to Evernote, Dropbox, Box, Jive, Yammer, Google Apps, Confluence, you name it. Even IBM donned an eye patch and went pirate with Connections. A few leaks were found in the Microsoft battleship. Nothing too alarming if you follow the revenue and profit growth numbers from the Office group, but Microsoft has always thrived on paranoia. And for a paranoid company, this is very key moment in time.

Today Microsoft announced the biggest release of Office ever. Every product with an Office brand, Word, Excel, PowerPoint, Outlook, Exchange, Lync, SharePoint and on and on, will be updated with this new release. The strategy is in stark contrast to that of the competition. The pending acquisition of Yammer notwithstanding, the strategy is vintage Microsoft. Generate deeper and deeper integration between multiple products, marginalize competing products down to the level of core product features and bundle, bundle, bundle. 

The consumer trends that Microsoft is reacting to are well known at this point: mobile, social and cloud. Here are some of the highlights that IT needs to pay attention to:

• The investment in cloud has accelerated. Going forward, Microsoft's business cloud offering, Office 365, becomes the lead platform for new introduction of functionality. The Yammer acquisition ($1.2B) reinforces the strategy. Beyond that, there are some subtle changes. The default location becomes Microsoft SkyDrive (SkyDrive Pro for the enterprise) so the cloud becomes the place where all of your content and preferences are stored. By doing that Microsoft can provide synchronization across multiple devices, not only for content, but for the actual code. So, you can actually walk up to a new machine, download an Office application like Word, and open it in exactly the same place with the same preferences that you left it on another device. Hence, Dropbox is paying close attention. Can Microsoft make them a feature, not a standalone offering? IT needs to be paying attention to this. 
• Windows 8 takes the lead on mobile, at least for today. OK, here's the deal. We heard a lot about Windows 8 and mobile devices. Does that mean Microsoft is making the big bet on Windows as its mobile strategy? Maybe, maybe not. Don't read too much into today's event because Microsoft is not only doing a major Office launch, they're also doing a major Windows launch next year. So, this may be more a matter of PR than long-term product strategy. IT needs to pay attention to whether Microsoft tries to leverage the Office franchise to prop up Windows mobile at the expense of more prevalent devices like those from Apple or those based on Google Android. We don't know the answer yet and will need to give Microsoft a bit more time to tell the whole story. 
• 1.2 billion dollars is a big statement on social. OK, today's announcement was about Office, and Office social means SharePoint. That said, Steve Ballmer made multiple references to the Yammer acquisition. I'm guessing that was not by accident. While Office is a battleship, Yammer is a speed boat, and an awfully expensive one. Does it represent a sea change in Microsoft's thinking? Will they be able to take full advantage of the disruption of the cloud? Time will tell. 

At the crux of today's announcements, Microsoft is taking a very traditional approach to a market that is undergoing massive disruption. Their approach is about enticing users through deeper and deeper integration. Make no mistake, many users will embrace and enjoy the experience. But, the fundamental approach of the large battleship that will always be hard to turn remains in place. Actually more so as the stack becomes more integrated and more products and development teams take increasing dependencies on one another. The approach sets up a dynamic that will drive a fundamental strategic alignment on the part of IT: the Microsoft battleship or hundreds of fast-moving nimble pirates? While this a huge release, it's that dynamic, not the number of applications and lines of code that make this the biggest release of Office ever.