Microsoft, increasingly the underdog in a range of markets, had a glimpse of good news over the weekend. New data from Net Applications shows the Redmond giant made Lilliputian gains against Firefox in the browser wars. Bravo.
Even so, it must be hard to get excited in Redmond these days, what with Google (s goog) and Apple (s aapl) tag-teaming to hobble Microsoft’s (s msft) frustratingly feeble attempts to become relevant in the world’s most important market: mobile.
Just as the desktop market defined technology’s winners and losers of the past 20 years so, too, will mobile establish “the next Microsoft.” Unfortunately, Microsoft doesn’t appear to be in the running to succeed itself at the top of the technology heap.
Why? Because the company has no answer for a market in which the operating system (OS) is free, and the dominant application isn’t Office. Much as it might want to, Microsoft can’t change these facts about the mobile ecosystem. Apple and Google have decreed that OSes will be subsidized by revenues from hardware, advertising, and/or third-party applications. And the market has decreed that social applications like Twitter and Facebook are the way we communicate ideas, rather than through Word documents or PowerPoint presentations.
But this doesn’t mean Microsoft is doomed. Far from it. It just means that Microsoft is going to need to learn to cannibalize itself in much the same way that Apple has. Apple, after all, also has a legacy desktop business to protect and grow. And yet this hasn’t stopped Apple from continuing to put its Mac sales in jeopardy by improving the iPhone and then releasing the iPad. Importantly, it also hasn’t stopped Apple customers from buying Macs. It’s not an either/or choice, apparently. It’s an “and” decision: Macs and iPhones/iPads.
As Apple COO Tim Cook said in the company’s last earnings call:
If you look at the iPod historically, all of the people here felt that the iPod created a halo for the Mac, and in fact as the iPod volumes kick off you will see a dramatic change in the Mac sales back in time that we experienced.
And so could that happen on iPhone and iPad….[T]he Mac has outgrown the market 17 straight quarters. However, the Mac share is still low and so there is still an enormous opportunity for the Mac to grow and certainly the more customers we can introduce to Apple through iPads and through iPhones and through iPods, you would think that there would might be some synergy with the Mac there, and there may be synergy between the iPad and the iPhones….[I]f it turns out that the iPad cannibalizes PCs [then] it’s fantastic for us because there [are] a lot of PCs to cannibalize.
Yes, Apple is the underdog in the personal computing market, with lots of room to grow, but that’s not really his point. His point is that Apple foresees growth in all of its products as the synergy between them grows.
Why can’t Microsoft do something similar? Why can’t it risk self-cannibalization in order to grow into new markets? It’s not as if Microsoft hasn’t thought of doing so. It clearly has. It even creates pretty slideware that declares it. But its actions largely belie its words, at least in mobile.
I’m not suggesting Microsoft get (further) into hardware. Nor am I advocating a throw-back to its illegal tying arrangements that got it into trouble with the U.S. Department of Justice and the European Commission.
Instead I’m suggesting that Microsoft needs to start rewriting desktop productivity for the mobile age, starting from its enterprise and consumer desktop perch, rather than letting others write its eulogy. Microsoft already has some exceptional mobile technology: just ask Apple, which licenses Microsoft’s ActiveSync technology for its iPhone.
Now Microsoft needs to build on that. How? Release a mobile, tablet OS that comes with cool XBox games, as John Biggs suggests, but also a web-friendly spin on Office, one that involves more cut-and-paste assembly of content, rather than keyboard-based data entry of content.
And simplify. Release one, not many, mobile OSes. Not Windows 7 dressed up as a mobile OS. A truly mobile OS. One that can take on a variety of guises, from family room entertainment-savvy tablet to multipurpose smartphone to next-generation business “PC” (i.e., tablet).
Like Android. Like iOS4.
An OS that need not start with mobile phones, but could grow down into smartphones from the more familiar territory of business computers. Apple moved from the iPhone to the iPad, but Microsoft could easily go in the reverse direction.
The company also needs to go a step further, however, and learn to monetize its technology in a different way. The world doesn’t pay for an OS anymore. Not directly, anyway. Microsoft should either give Windows away, or latch onto an existing, leading mobile OS, like Linux (perhaps Intel’s and Nokia’s MeeGo?).
This is easier said than done, of course, particularly for those of us outside Redmond who don’t have to navigate Microsoft’s calcified bureaucracy.
But there are signs that the company is willing to make some tough decisions in order to remain relevant in the next generation of computing. For example, Microsoft is challenging its enterprise server and applications businesses with its Azure cloud strategy, and seems to be doing so with serious intent.
Is Microsoft irretrievably addicted to its old-fashioned, fat client and fat license view of the world? Perhaps. But things like Azure suggest signs that Microsoft can break the habit.
It must. I’ve been hearing from more CIOs that they’re looking to dump desktops in favor of the mobile devices their employees already carry. They’re the start of a trend that Microsoft needs to guide, not one from which it can hide.
Matt Asay is chief operating officer at Canonical, the company behind the Ubuntu Linux operating system. In addition to Canonical, Matt is an advisor to or holds (minor) equity interests in the following companies: Alfresco, Jaspersoft, Jumpbox, LoopFuse, Lucid Imagination, MindTouch, Openbravo, rSmart, SugarCRM, and Volantis. Outside of mutual funds, he has no financial positions in any public companies he covers.