Mar 282014
 
Microsoft_Office_2010_Launch_New_York_City_Taxis_Web

After several years of stalling, MS Office makes it onto the iPad with an announcement this morning by Microsoft’s CEO Satya Nadella.

The idea of tying the product into the company’s Office 365 and Microsoft’s cloud services make sense although it might be a matter of too little, too late.

Perversely, if Office for the iPad is successful, it could remove one of the last barriers for business and power home users moving off PCs.

Microsoft’s move also shows cloud services are now the main focus of the company; Satya and his team have given up any attempt to shore up the traditional – and immensely profitable – box software business.

That is going to mean Microsoft’s financial statements are going to look very different in the near future.

Regardless of the success of Office for the iPad, what were Microsoft’s core businesses are deeply affected as the company evolves to the post-PC computer marketplace. The challenge is for Satya and his management team to manage that change.

Feb 052014
 
microsoft-leadership-team-2014

Earlier this week Microsoft co-founder Paul Allen celebrated his Seattle Hawks winning the Super Bowl while his former business partner, Bill Gates, still struggles to escape the clutches of the software giant they founded forty years ago.

After a long drawn out process, software giant Microsoft has finally chosen its replacement for CEO Steve Ballmer however founder Bill Gates finds himself firmly trapped in the company’s orbit.

Hoodie wearing Satya Nadella‘s ascension to Microsoft CEO was probably the poorest held secret in the tech industry having been openly reported for several weeks.

Nadella has a massive task ahead of him as the industry that’s been so lucrative for Microsoft over the past thirty years evolves to deal with the post-PC era.

Microsoft CEO Satya Nadella

Microsoft CEO Satya Nadella

How Nadella manages Microsoft’s transition will define his business career and tenure at the top job, it will also determine the company’s position in a marketplace where PCs running Windows are no longer relevant.

The biggest news from Microsoft’s announcement though was that Bill Gates will step down as Chairman of the Board and take a new position as ‘founder and technology advisor’.

Microsoft also announced that Bill Gates, previously Chairman of the Board of Directors, will assume a new role on the Board as Founder and Technology Advisor, and will devote more time to the company, supporting Nadella in shaping technology and product direction. John Thompson, lead independent director for the Board of Directors, will assume the role of Chairman of the Board of Directors and remain an independent director on the Board.

Despite leaving the CEO role over a decade ago, Gates finds himself back in a hands on role at the company.

The value of Bill Gates

It’s questionable what value Gates is going to add in the role of ‘Technology Advisor’ as Microsoft’s markets are very different to those the company was founded in and came to dominate in the 1980s and 90s.

For Nadella, it’s not exactly a vote of confidence from the board in appointing the company’s founder to hover over his shoulder offering helpful advice.

On a personal level this must be disappointing for the founder and former CEO as well in that his mind is on far greater topics such as eliminating malaria through the Bill and Melinda Gates Foundation.

Trapped by Microsoft’s gravity

Gates’ situation though is a classic example of a business founder who’s never been able to get out of the orbit of their business. Despite their best efforts, they keep being dragged back to give a helping hand.

At least though Gates has at least been able to step away to some degree, many baby boomers with smaller businesses are going to be locked into their companies as GenX or Y entrepreneurs don’t have the funds to pay what the proprietors need to retire.

Those boomer entrepreneurs are going to work in their businesses until either they or their venture is put to rest.

Bill Gates’ dilemma though shows how tough it is for business founders to escape the gravitational pull of their creations, even when it’s as big a business as Microsoft.

Paul Allen showed how to step away from a business and is enjoying life, Bill Gates’ story though is much more typical for business founders trapped in the enterprises they built.

Jan 272014
 
apple smartphone tablet pc

“There have only been two milestone products in our industry to date,” Steve Jobs told the Boston Computing Club in 1984. “The first was Apple II in 1977 and the second was the IBM PC in 1981.”

Jobs at the time was announcing the third breakthrough – the Apple Mac – which turned 30 last week.

Looking back over the four decades of the PC industry, Jobs’ claim that the Apple Mac was the sector’s third milestone stands up to scrutiny, however the greatest milestone of all for the PC was the launch of Window 3.0 in 1990.

The rise of Windows

Windows 3.0 changed the business model of the industry, it established software vendors – particularly Microsoft – as being dominant over hardware manufacturers, that shift nearly killed Apple and eventually sent most PC builders to the wall.

Microsoft’s advantage over Apple, IBM, Atari and dozens of other systems, was that users weren’t locked into one vendor’s products. It was possible

The Windows 3.0 milestone was even more important in that it forced a shakeout in the software industry as well, many of the incumbent vendors – most notably WordPerfect – though the Windows Graphic User Interface (GUI) was a flash in the pan and that most office workers would prefer to use keyboard instructions rather than mouse clicks.

WordPerfect was horribly, horribly wrong in judging the market and by the time they released the Windows versions of their product Microsoft had captured key market share for Word and the bundled Office suite that dominates the business world today.

Going mobile

So things were good for Microsoft until the next milestone, which again was marked by Steve Jobs, the launch of the iPhone genuinely did change the smartphone industry and was the first inkling of mobile would eventually destabilise the PC sector.

It’s interesting comparing Jobs’ iconic 2007 iPhone which sets the standard for product launches with the somewhat rough at the edges 1984 Boston presentation although both show how Steve Jobs was a master salesperson and a passionate believer in his products.

The PC’s final milestone

Three years later Steve Jobs delivered the milestone product that marked the beginning of the end for the PC industry, the iPad finally delivered a mobile computing device that businesses and consumers wanted.

Apple’s iPad also marked a fundamental shift in the computer industry – no longer did the software companies control the market, power had shifted back to the manufacturers.

From that moment on the PC, and Microsoft’s Windows business, started a terminal decline.

The rise and fall of the personal computer is a great illustration of a transition technology. That Steve Jobs bookmarked the beginning and the end of the PC industry is an interesting note about a technology that changed the home and workplace.

Jan 242014
 
honestly you'll love the new Microsoft Windows

Microsoft’s evolution to the post PC era has been a fascination of this blog for several years now as the company’s once flagship Windows becomes irrelevant in a world dominated by smartphones and tablet computers.

The launch of Windows 8 and the Surface tablet were the great hope for the company, but it appears the business model that built Microsoft into one of the world’s biggest companies is doomed. Microsoft is shifting to the post-PC era where Windows has little role.

Yesterday’s financial results emphasised the shift as the consumer licensing business fell 6% year against last years revenues while the company’s overall revenues rose 14% – the old consumer Windows business is dying.

This is illustrated in the company’s quarterly report, where the business units that delivered the growth were all in non-Windows areas.

  • SQL Server continued to gain market share with revenue growing double-digits
  • System Center showed continued strength with double-digit revenue growth
  • Commercial cloud services revenue more than doubled
  • Office 365 commercial seats and Azure customers both grew triple-digits.

Drilling down into the numbers the trend against Windows is even more stark, here’s a chart of the performance of the division over the last ten years.

Microsoft Windows division financial performance

Microsoft Windows division financial performance

As we see, life was good for Microsoft Windows until the iPad arrived.

Following Apple’s proof that tablet computers could deliver what business and home customers wanted from a portable device, Windows’ revenue stagnated and now income and margins are falling.

The devices and services strategy of outgoing CEO Steve Ballmer recognises is a reflection of how Windows is becoming irrelevant to the business.

It’s hard to see where Microsoft now goes with Windows, the product still remains a key part of the business with 22% of revenues – although that’s down from 27% last year – and its hard to see a buyer parting with the hundreds of billions the division would be worth as a stand alone business.

For Steve Ballmer’s successor as Microsoft CEO dealing with the Windows problem will be one of many big issues they’ll have to deal with, the future of the once iconic product though won’t define the future of the business.

Nov 042013
 
internet-and-IT-as-plumbing

One of the things that jumped out of last week’s smart city tour in Barcelona is that Nicholas Carr’s IT Doesn’t Matter is coming true — IT is now the plumbing.

That’s not to depreciate IT, it means the technology is now becoming so embedded in society and business that people no longer notice.

Like roads, electricity and water people assume it will be available but don’t notice the massive effort or investment required to make sure these services work.

With cloud computing, pervasive internet and connected devices, most business never need to see an IT worker.

For telco executives, IT managers and tech support people this is a blow to their egos as they always wanted their industries to be more than utilities.

In one way being a utility legitimises IT as it makes the industry more important than just a bunch of geeks playing with computers.

That also means that things have to work, ‘best effort’ services no longer cut it when you’re a utility and things have to work 99.99% of the time. Just like in plumbing.

Becoming the plumbing could be the best thing that happened to the IT industry.

Oct 202013
 
intel-CPU-manufacturer-corporate-headquarters-image

Twenty years ago people cared about the specifications of their computers and chip maker Intel led the industry with its marketing of 486, Pentiums, Pentium Duos and Pentium IIs.

As we come to the end of the PC era, the consumerisation of technology and the rise of cloud computing mean customers no longer care about what’s inside their systems and Intel is struggling to find a new message.

Over the last few months Intel have been showing off their latest range of Central Processing Units (CPUs) to enterprise and small to medium business (SMB) groups. Last week the company hosted an SMB event in Sydney that illustrated how Intel is struggling to cut through the market.

Speaking at the event was Steph Hinds – an evangelist for cloud computing – who told the story of how her Growthwise accounting practice was flooding out during storms.

Because her systems were on the cloud Steph and her staff were able to work from home and local cafes while the landlord fixed her offices. Had Growthwise been using a server based system the business would have been crippled while her IT people implemented a disaster recovery plan.

Steph’s story in itself illustrated the Clean, Well Lighted Place argument for cloud computing and also showed how Intel is struggling to sell its PC and server upgrade cycle message in an era where that business model is dead.

This didn’t stop some of the other speakers at the small business event trying to sell the idea that upgrading computer systems and retaining an IT support company were essential to small business success but it’s a message that was valid a decade ago.

For Intel the challenge is to find a new message – it may well be that the company’s future lies in supplying the powerful CPUs that run data centres, or maybe the low energy and maintenance chips required to control the billions of intelligent devices that will run the internet of everything.

The company’s launch of their Galileo board – a tiny computer designed to compete in the intelligent devices market with the likes of the Raspberry Pi – is a step in the latter direction and shows Intel is exploring the possibilities.

Wherever Intel’s future lies, it doesn’t lie in trying to sell a business model that is quickly going the way of the Brontosaurus.

During most of the PC era, it was the Wintel partnership that dominated the computer industry, now Microsoft have realised this fundamental market change and started their journey to become a devices and services company.

The challenge now lies with Intel to decide where their journey will take them in a post PC world.

Oct 112013
 
Steve_Jobs_Headshot_2010-CROP

Today Apple reinvents the smartphone.” Steve Jobs announced at the 2007 Macworld Conference when he showed off the new Apple iPhone.

As with most of Jobs’ speeches, the iPhone launch was an impressive display combining the man’s talents, vision and technology to rally Apple’s adoring masses.

Last week the New York Times magazine had an excellent feature on the story behind the landmark launch of the iPhone. It’s worthwhile reading to understand the theatre that goes behind a major tech company’s launch event.

In the case of the iPhone, a myriad of tricks had to be performed to make sure the still being developed device didn’t fail in Steve Jobs’ hands during the launch – one can be sure the Apple founder wouldn’t have been as relaxed as Bill Gates when a Windows 98 system crashed onstage a decade earlier.

A key part of Jobs’ presentation was the ‘Golden Path’, a script that would showcase the iPhone’s features while avoiding known problems.

Hours of trial and error had helped the iPhone team develop what engineers called “the golden path,” a specific set of tasks, performed in a specific way and order, that made the phone look as if it worked.

Much to the relief of Jobs’ staff, the demonstration worked flawlessly and Jobs’ polished presentation showed why he was one of the most admired, if flawed, business leaders of his generation.

While most tech CEOs could never dream of emulating Steve Jobs, almost every one has a ‘golden path’ to show off their product in a new light.

Something we should remember when watching these demonstrations and the press coverage that follows is that most of them are carefully staged theatre and we should hang onto our wallets until well after these devices are on the shop shelves.

As it turned out, the iPhone was a spectacular success and did re-invent the smartphone industry. Along with being able to deliver a killer presentation, Steve Jobs was also good at driving teams to deliver his vision.

Steve Jobs image courtesy of Wikimedia.