A few years ago I came to scary realization that I am now old enough to look back — and “reflect.”
I'm still not sure that with age comes wisdom, but I am sure that I can see repeating patterns. The new becomes old and all the old becomes new again. My kids’ music selection includes a smattering of re-makes that are Top 40 material today, just as the originals were when I was my kids’ age.
I’ve now witnessed clothing come in and out fashion multiple times (although I sincerely hope bell-bottoms do not return). And this may be just me, but it seems like every other movie that comes out is a re-make.
They say art imitates life. But I'll take that one step further and say technology imitates many of the patterns I have observed over time.
Who is Number 1?
When I was graduating college in the early 90s, the top coveted jobs for any computer science grad were with Apple or Microsoft. In fact, the screening process was so competitive that to even get an interview with Microsoft was a major coup.
With Apple’s success over the past decade, few remember how close the company came to becoming irrelevant in the latter part of the 90s. Microsoft actually invested $150 million in Apple in 1997 (largely to dispel the perception that Microsoft was a monopoly). That trouble aside, I think it’s safe to say that Apple is back to being at the top of many graduates recruiting list.
More recently and despite a track record of positive financial results, the same problems that almost brought Apple to its knees in the late 90s had been spotted on Microsoft’s Redmond, Wa. campus.
The skepticism of some critics and analysts certainly had some legitimacy. With the onset of the post-PC era, the dismal showing of Windows Mobile and lackluster appeal of Windows 8 (just to name a few), Microsoft certainly seemed like it was in a decline, albeit a slow one.
In the last few months, though, Microsoft has been making strides to correct missteps with its products — and adopting strategies that intimate that it may be starting to tune in to what’s hot.
Where Microsoft Stands
When Microsoft reported its quarterly results last week, there was a big surprise. For any company to grow 25 percent year-over-year is impressive, but for one whose revenues exceeded $23 billion it is definitely an indication that things are moving in the right direction.
The good numbers came from a variety of sources including Devices, with Surface and Xbox, and Commercial, with server products and services. But what stood out for me was the performance of the cloud-centric products.
Commercial cloud revenue, which includes Office 365 and Azure grew, 128 percent year-over-year. Office 365 Home and Personal subscribers exceed 7 million, representing a 25 percent growth over the previous quarter. Although more detailed metrics would have been nice, the evidence points to the fact that Microsoft is able to entice both businesses and consumers to their cloud.
The attraction to the cloud is not a new phenomenon. It all comes down to the same value proposition Henry Ford used to make and sell his cars. You reduce costs by making a product efficiently and in bulk and then you pass those savings on to the consumer. What Henry Ford started with the Model T, Microsoft is now doing with its Office franchise, offering a solid product that people want for a fair price that they can afford.
Latest Software, Good Price
To get things off the ground, Microsoft offered Office through a subscription to Office 365. The result is that users got a great deal along with the latest software, while Microsoft got a recurring revenue stream and adoption of Office 365.
This was just the start as it was soon followed by a release of Office for iOS and Android. Both have been a big success and are among the top downloads in their respective marketplaces.
In addition, last week it was announced that OneDrive storage will be unlimited for Office 365 users, only several months after bumping it up to 1 TB. While there are accusations that these storage increases are gimmicky or are part of a "race to the bottom," the idea is to further separate Office 365 from the other file, sync and share competitors, which Microsoft is doing quite well.
Just this week, Microsoft struck a strategic partnership with Dropbox, the world’s leading file sync and share provider, to make working with Dropbox and Office a seamless experience from both platforms.
It is as if the company has woken up from its sleepwalking and changed course, just in time to prevent themselves from falling down the stairs. It's now focusing on giving users what they want, how they want it and for a price that they will be more than happy with.
For business users, products like Exchange, SharePoint and Yammer are receiving a constant stream of updates in Office 365. From new APIs that let developers integrate apps with Office 365 services to a rich set of features like Delve and Office Graph to security enhancements for DLP and Mobile Device Management, business are getting great value for money. They are also receiving an unprecedented amount of attention from Microsoft, with a slew of new announcements and commitments being made by Microsoft in the last few weeks.
So has Office 365 really brought Microsoft’s swagger back? It may be too early to tell. With every new feature and service there are challenges and plenty of competitors are working hard to attract the same customer base. However, Microsoft has a lot of momentum on its side and for once it seems to be executing extremely well.