Understanding Microsoft: What is it doing and where is it going?
Things used to be very easy. Microsoft was supplying its operating system and software for that operating system to PC's. It teamed up with companies such as IBM, Dell and Intel (Wintel) to make it all work in the PC industry. Microsoft was an untouchable, kind of cool, and almost unrivaled brand. Then, the moment that the world started to transition away from PC's, we started to lose a sense of what the identity of Microsoft 2.0 would be and thus, what it would be pursuing. Sure, Microsoft keeps updating its operating system Windows, launched the Xbox, went into the smartphone industry with Windows Phone, but let's be honest, which of these was really a success? The Xbox could be argued about, as it still is one of the leading consoles, but the other two? I know, you know, and having read Satya Nadella's book 'Hit Refresh', luckily Microsoft knows also.
To provide a bit more detail here, the PC business still is Microsoft's cash cow and so any problems here are potentially lethal, because many of Microsoft's applications were solely tailored toward Windows. So, what could be worse than Microsoft's operating system facing immense criticism? Due to issues with respect to design, computational heaviness, and backward compatibility, Microsoft incurred a lot of such criticism, seriously harming its brand and position among leading technology companies. Windows Vista, 7 and 8 were anything but disputed, as they were regarded as complex, lacking the familiar, and thus all that users do not want and need. An unique selling point, a reason to exist, was lacking. Consequently, many corporations stuck to the lighter and more familiar Windows XP. The lower amount of users of the newest versions of Microsoft and the need for administrating also outdated operating systems stalled learning effects for Microsoft and prevented it from being able to provide security and innovations in a more cost effective manner. The dilemma here was that forcing corporations to switch would not have been smart either, as this could go at the cost of market share. Convincing through a user-friendly operating system would have been the only way toward reaping maximum benefits.
With Windows Phone, Microsoft lost big time especially because it provided users an inferior operating system with unappealing devices, and did this also way too late. Being too late prevented success through iteration-based learning. Also, it made it difficult for customers to be lured toward Microsoft as they were already used to iPhone, Samsung and Blackberry handsets as much as they were already locked-in by the iOS, Android and BlackberryOS operating systems. It was also not helpful that Microsoft persistently continued with its smartphone operations. Being blinded by being too late for the smartphone party, Microsoft went after a partnership with Nokia, after which it even deepened its blunder by buying Nokia. Lots of money was lost here, in addition to reputation and time.
Sad story? Indeed! But, Satya's book has made me happy, because I read about a CEO who is aware of past blunders and recognizes that for years, Microsoft has been chasing others rather than being chased. Now, Satya writes that Microsoft focuses on its original core of empowering customers through partnerships and a facilitative culture, and not anymore aggressively, nor necessarily by itself.
For example, in terms of a partnership focus, Microsoft pulled itself out of the smartphone branch in terms of handsets and operating systems, but has allocated resources into providing applications on operating systems of its competitors. In a chapter centered around the word 'frenemies', Satya explains how Microsoft starts to see competitors not necessarily as enemies, but sometimes as partners and sometimes as rivals (but not enemies!). Why would you not be able to partner with competitors in some areas and rival based on quality in other areas? For example, Microsoft is a rival of Google in terms of search engines, but is a partner in terms of providing applications to the Android operating system. Microsoft forfeited the thought that it should do everything itself and decided to focus on what it does best in collaboration with other organizations. Microsoft's operating system, applications and hardware thrive on its relationships with other organizations, making a partnership-focused approach much more sensible than an aggressive posture.
In terms of a facilitative culture, Satya describes that to be able to accrue benefits of a distinctive concept or to be able to leverage distinctive capabilities, an organization requires a culture that stimulates and motivates. One in which people believe, empathize, share, and seek to grow. Not one in which egos come to the forefront and essentially limit an organization's growth potential. This, Microsoft also tries to reflect to customers. For example, under Satya's reign, Microsoft granted free updates to the newest version of Windows, so that customers would start to love Microsoft rather than just stick around because they have to.
Purchases such as Github, LinkedIn and Minecraft show that Microsoft, under Satya's reign, has already made an important transition to the cloud, having seen its tremendous potential from Amazon Web Services (see my past articles for a deeper understanding) in terms of empowering others and becoming an indispensable part of global technology networks and having seen the shortcomings of a focus on hardware. As nowadays, in the age of the Internet of Things, devices operate in ecosystems and platforms, a hardware focus would have simply been too stringent and therefore not beneficial in the long run for a company that seeks to empower others. Such empowerment requires connectivity and integration of organizations and their products and services.
Additionally according to Satya, Today Microsoft is also making 3 'bold bets' on what types of technology are going to shape the future, are going to be vital for empowering others, and will enable Microsoft to lead the industry once again. Firstly, he bets on the potential of mixed reality, a technology that seeks to provide immersive experiences by mixing the real and virtual word. Secondly, he bets on artificial intelligence, through which machines will be able to learn, find solutions, and generate novel outcomes by themselves, thereby not only following instructions but enhancing them. Finally, Satya bets on quantum computing, being a technology which enables such an enhanced way of computation that many unsolved problems may be solved due to the alleviation of technological constraints.
In short, Satya seeks to transform Microsoft in a company that is 'cool' again and is already setting some interesting steps for this purpose. His bold bets could turn Microsoft in an organization that does not lag behind but leads. His focus on transforming Microsoft's culture could lead to an environment where talents would happily want to work in. But will they? Let's see where we will find Microsoft in a couple of years from now. In the end, in the age of technology, shifts in the business landscape are a daily occurrence.
Founder Langepedia - Consultant at WatchBox
5 年Great article as usual. I want to share a rather small interpretation I've made from the news I've read here and there: What I see, he's trying to turn the company from product to service. That's why he keeps pushing "Windows as a Service" motto. He cancelled most of direct to consumer products such as groove music, media center etc.. Since I do not know the revenues from consumer products, judging from Microsoft's share; it seem to work! However; not only they turn their face towards enterprises with Azure and benefited from most companies Windows based OS; as you've mentioned, acquiring Github was a blink to open source system and as the way I see it they want to become monopol once again with .net core 3 by directly infiltrating the Linux community. In the future; probably after they've completed the transition to Windows 10 with the crushing majority of users they'll delete the numbers (7-8-10) from releases, everyone will be on the same platform and they can implement their services much faster without the user noticing it. Bill Gates can fully focus on philantrophy now :)