Microsoft Losing Its Way?

Recently the big news was this: Microsoft is removing the START button in Windows 8 and the new Server OS.

The news was here:

An update to the news is here:

What’s the big deal? It’s just a button! Right? Actually it indicates the changing landscape of IT and how Microsoft perceives the change. They are responding to Apple and the cloud and prepping the company for the future. Microsoft is also making this change to address the growing tablet market segment. However a knee-jerk reaction to Apple’s and Google’s success isn’t the best move for their own future. I’ll explain why this could be a poor overall business strategy for Microsoft…but first a quick history recap.

In the 1980’s and 90’s Microsoft directed their efforts in gaining business market share while Apple went after the consumers and the education market. Microsoft won as technology filtered from businesses into homes and the PC became a useful tool at home and at the office. Additionally the Microsoft OS was an open platform allowing for rapid growth and for hardware to (eventually) be commoditized. Simply put, the technology mass-migrated from businesses to the home not vice-verse.

Over the past several years there’s been a push from the home to the office as Apple put mini-computers (iPhones) into the mass market’s hands. Working in the IT field I’ve seen IT departments trying to figure out how to integrate Apple technology into existing infrastructure. The other new challenge was the reverse flow of home technology forcing its way into the corporate world.  Corporate IT processes have had to adapt as technology has never before moved from the home into corporate IT on this scale.

Many months before Microsoft released Vista, Ray Ozzie, Microsoft’s Chief Software Architect, approached Steve Balmer and said “Windows needs to be rewritten from scratch.” Apple had done this with OS X successfully but it took several years and Microsoft/Balmer didn’t want to take the time and resources to do it. Later Vista was born and Ray left Microsoft in 2010. Ray was correct. Vista’s replacement, Windows 7, has new improved features but was essentially as a fixed version of Vista with a newer GUI.

As Microsoft was contending with Windows Vista problems, Apple was making billions off the iPhone and apps ecosystem. Apple has once again become a tech powerhouse and one of the wealthiest companies in the world with it’s mobile and end user friendly GUI. Microsoft wants a part of this mobile/tablet market (or all of it). But in the process they may be losing their way. They have forgotten that business leads the way, not consumer products.

It is still businesses that drive mass market adoption, even if mobile/table devices are popular, businesses still require a workstation to create documents, graphics, databases and so on. Mobile and tablet devices are for consuming media/data while a traditional monitor/mouse/keyboard is used for creating media/data. Generally, corporations hire employees to CREATE not consume data.

When Microsoft released Windows 8 Pro they forced Metro UI, a tablet/mobile GUI, on business users. Business users and corporate IT departments will revolt against it. This gives IT admins another reason to consider delaying Windows 8 deployments. The metro UI hijacks the traditional business data creation workflow with that designed for home data consumption.  Microsoft’s core is revenue is the Windows Server – Windows Server Applications (Exchange/SQL/Others) – Windows Desktop OS – and Office. This quadfecta powers most businesses in every industry, whether healthcare, real estate, finance, construction and others. Smartphones will not (at this time nor for the foreseeable future) be driving the backend tech (but one day tablets might). Microsoft’s move to force a consumer GUI in Windows 8 on business users was a mistake – obvious from ten miles away. They have made a knee-jerk reaction to Apple’s success, hastily going ‘all-in’ on home user crowd. Microsoft should be busy moving forward instead of looking back to Apple 2008. They should be focused on creating improved ecosystem such as smartphones and tablets accessing corporate apps/desktops remotely and speedily. Making reliable server and desktop OSes and allowing businesses to naturally and slowly move to new tech.  The remote connection technology has been around for a while but if Microsoft could make this ecosystem affordable (while fixing latency and printing issues) while integrating tablets, they would have a winner. Instead they are almost forcing users and SMBs to the cloud.

(update: As of mid-2013 corporate users are still shunning Windows 8. fyi-To boot directly to the Windows 8 desktop I run startmenu8 by IObit, not exactly an enterprise solution but it works. Additionally MS is killing Small Business Server, not a good move as this will force business to decide between paying full licensing fees and moving to the cloud. They think Office365 will capture most of this market – and it’s possible – but to force the migration, well, that’s a risky gamble.)

The company to benefit from Microsoft’s poor management decisions is Google, Amazon, Rackspace and other cloud companies. Google is in the driver’s seat as they are going after businesses with FREE applications with Gmail, google docs, spreadsheets and so on. Additionally, like the 80’s and 90’s Microsoft, they have the premier open source smartphone/tablet OS that is gaining corporate support and once other applications move to the cloud (in the next decade) I see little reason for Microsoft’s existence. Microsoft should have kept Windows 8 and the new server upgrade bland – speed improvement and some functionality improvement with a desktop tablet interface as OPTIONAL and then chased cloud and allowed corporate users to slowly migrate as they can. While Windows 8 is being released they should furiously begin to prep for the low end of the SMB market to migrate to the cloud (and they have with Office 365). Office 365 is Microsoft’s last grasp once most SMBs and Mid-size companies (in a decade) are fully migrate to the cloud why would Microsoft current core mean anything to anyone? It won’t and by favoring tablets over corporate sales they are pushing IT admins to skip the windows 8 upgrade cycle which means lost revenue now and lost revenue later as the mass migration to the cloud gains steam (but not theirs).

Amazon is losing money on its cloud products, they believe it’s a race to outlast every other tech company and to be the last one standing. In light of the competition Microsoft needs to tread carefully and to make the correct decisions or they’ll be outdated very shortly. That said their stack of cash will cover many more short sighted decisions – maybe even enough to survive the mass cloud migration.

Note to IT firms. If your company specializes in providing “hosted client VMs” for the SMB market – beware your current service lineup won’t be needed in about 5-8 years and your engineer(s) will be reduced to registering and loading apps on smartphones/business tablets. Not a profitable business model.


2015 Update: Microsoft has a new CEO and while it is still too early to tell I like his decisions thus far. The Windows 10 platform launches in several months and guess what? If the OS detects a mouse and keyboard with switches back to desktop mode and without it switches to tablet mode. Smart. Well done. On the negative, Microsoft server/application/licensing software prices keep rising making SAMBA on Linux with sendmail very attractive for the SMB market and eventually the enterprise.

mpasatieri posted at 2012-6-5 Category: Cloud Articles, General News, Managed Services Insight