If Microsoft has the tenacity to hold the technology press in suspense for more than a week, with back-to-back conferences (Build this week in San Francisco, Ignite next week in Chicago) — and overflow sessions extending well into Sunday — then you’d think the company should have something very important to say for itself.
“We’re sorry for Windows 8” would be nice enough, but that would take no more than three seconds.
At the time Microsoft adopted its new “four-square” logo in 2012, executives said each color represented one of the company’s “pillars.” Exactly which color stood for what pillar depended upon who you asked, and maybe whether they were forced to hold conference sessions on a Sunday.
Now, no matter what you consider each pillar to represent, Microsoft is under attack. If you’re a Microsoft competitor and you see a window, you want to paint it black.
- The birthright of Windows as a desktop operating system is being challenged, both by mobile platforms that place functionality in everyone’s pocket and cloud systems that run applications servers all over the planet.
- The importance of Windows as a server is under threat by a dominant and pervasive new method of delivering functionality that renders resource-intensive servers entirely obsolete.
- The relevance of Microsoft in the database space is under intense scrutiny as an entire ecosystem of new Big Data technology has manifest itself, without Microsoft even being invited to the party.
- Salesforce keeps kicking Microsoft into next week, every week, in the CRM space, to the point where last October’s partnership of equals appears to be Microsoft’s last defense against what one Salesforce executive described just the month before as having the life squeezed out of it like a boa constrictor.
- Windows Phone continues to squeeze the life out of Microsoft like a boa constrictor, according to the company’s own SEC documents.
- Office and Office 365 continue to be revenue sources for Microsoft, but to keep people using Office, the company finds itself giving away big pieces of its platform piecemeal.
- Azure is actually a superb competitor in the cloud services space. But in recent months, whenever Microsoft’s executives exchange their developer hats for their consumer hats, the cloud doesn’t exist anymore.
- With software-defined networking enabling businesses to become their own communications service providers, the value propositions for Exchange, SharePoint and the newly renamed Skype for Business fly completely out the window.
If you’re that person who argued with me the other day that this entire situation will be saved by the magic of Xbox, why don’t you share your opinion here and let’s see how far you get with it.
“Almost every product or product line will have some announcements coming out at these conferences,” said Al Hilwa, IDC’s program director for software development research, in a note Tuesday to CMSWire. “These two represent the most important conferences Microsoft has ever had, because there are some super-high stakes for Microsoft in terms of making the PC and generally the OS relevant again.”
Jan Dawson, chief analyst with Jackdaw Research, is equally fascinated by what’s at stake.
“Microsoft is absolutely in the midst of a huge set of transformations that will totally change its business over the next few years,” Dawson told CMSWire. “The big question is how effectively and how quickly Microsoft can respond to those transformations, and whether the end result will be bigger or smaller and more or less profitable than Microsoft's business today.”
If Windows 10 is the only act on Microsoft’s two stages these next two weeks, it won’t be enough. Analysts are now expecting the final product to be generally released at the end of June, meaning Microsoft could announce these next two weeks that Win10’s code base is frozen.
That means, no new additions. And since the product has undergone a very public beta process since last February, it means no new surprises, either.
One Important Key
The story of Windows Server will be key to whether these next Build and Ignite conferences are forgotten by next fall. With server technologies moving to container-oriented platforms like Docker, and with Microsoft forging a very necessary partnership with Docker Inc., there’s a very valid argument in favor of Windows Server as we know it just going away completely.
“I think that they will continue to do a basic OS, as well as a sort of ‘meta-platform’ OS,” said Bob O’Donnell, chief analyst with TECHnalysis Research. He’s talking about a concept for a kind of services platform that presents functionality like Office, like Skype and like SharePoint in a hybrid delivery system that may involve on-premise hardware, alongside capacity from Azure.
“But I think the future is in ‘meta-platform’ OSes, and I think they are positioning themselves quite nicely in that regard,” he continued.
O’Donnell sees the possibility for a bright future for the same company that I just painted into what seems like an inescapable hole.
“First of all, with the legacy of the company, there’s still value,” he told us. “And let’s not forget — everybody likes to write it off — there are still 300 million PCs sold every year, and the vast majority of those PCs are powered by a Windows platform. A very good percentage of servers are powered by a Windows platform. A tiny fraction of phones are powered by Windows, but the net of it all is, it’s a respectable level.”
By his estimate, if we make all hardware platforms equal and all devices equivalent units, then Microsoft and Apple are dead even right now. Not long ago, Apple advocates were making similar calculations in support of their arguments for overtaking Windows.
It looks like those estimates were right. Those who wrote off Apple four years ago look pretty foolish today. And that’s how Bob O’Donnell feels anyone writing off Microsoft will look four years from now.
“Development tools are another huge part of what they’ve got, and those development tools tend to run on their own platforms, which is perfectly fine. So if nothing else,” he continued, “you’re going to need to have a platform on which to build other services for other platforms, as strangely circular as that may appear.”
A Thousand Points of Light
Jan Dawson believes that while revenue sources such as development platforms for development platforms may yet pull in some revenue, they’ll be bright spots in an otherwise challengingly dim landscape.
“The reality is that Microsoft will end up smaller and less profitable than it is today, simply because most of the new stuff it's doing has lower margins and a lower total addressable market than its historical business,” argued Dawson.
“On the enterprise side, it's capturing a lot of value in cloud, and I think there's a good chance its total revenue from businesses stays at roughly similar levels over time, and might even grow. But on the consumer side, its core Windows and Office businesses are going to be depleted rapidly, and there's nothing of a similar scale or at similar margins that could make up for that deficit,” he went on.
Hilwa sees similar challenges. “On the server side, the company has to compete hard with Amazon’s AWS, and other software companies that have kicked off aggressive transformations to the cloud like Oracle and IBM,” Hilwa said. “On the client, the company has to bring back both the comfort and excitement of using PCs.”
One gauge of the excitement Microsoft managed to drum up during its kickoff event for Windows 10 last January came from the young security and catering staff who guarded the doors to the auditorium at the company’s Redmond, Wa. headquarters. During the presentation, when Windows 10 was being seen for the first time, I took a peek through the exit doors to measure the excitement level outside.
That’s where I found three of the caterers watching a YouTube video on an iPhone. With what Microsoft has to accomplish, these next two weeks could either be the shortest or the longest in its history.