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Microsoft's New Business Plan (zdnet.com)
71 points by mef 1907 days ago | hide | past | web | 55 comments | favorite

The article makes a lot of reference to the importance of an integrated hardware/software platform for Win8. But XBox Live is the elephant in the room here.

Quietly -- or not so quielty, depending on your perspective -- the XBox has become a behemoth in the entertainment world. Not just with video games, but with all forms of entertainment content (aside from music, which MSFT has never really been able to nail). Take, for instance, the interesting stat that over 60% of all Netflix streaming users stream via a gaming console. Or that close to half of all XBox owners watch one hour or more of TV or movie content per day through their consoles. Though it has formidable competitors in Amazon, Apple, and to some extent Google, Microsoft has a pretty impressive strategic position in the battle for the living room.

The only chink in the armor has been mobile. That's why MSFT kept investing so heavily in Windows Phone, and why it's going to fight as hard as possible in the tablet space. Not owning mobile means not owning the total entertainment experience, which means not having a ubiquitous ecosystem. So mobile is pretty darned crucial here.

I'm guessing your 60% figure is (a) accurate, and (b) from memory. If so, this is trending in the wrong direction for Microsoft:


The figure quoted is 50%. Also bear in mind that it's not exclusive, and it's counting all supported game consoles (e.g. including the Nintendo Wii).

My guess is that TVs with built-in Netflix streaming support and AppleTV (now outselling XBox http://macdailynews.com/2012/07/25/some-hobby-apple-tv-outso...) are hurting this.

Given that XBox has been marginally successful as a business and was greatly dependent, for its success, on the dominance of the PC gaming platform, I don't think XBox is Microsoft's ace in the hole.

Just as an anecdote: I used to stream my Netflix through my console (PS3) as my primary usage of said console. I got so frustrated with having to do Software Updates, seemly "every time I turn the bloody thing on!", just to launch the Netflix app that I went out and bought an AppleTV. My console is no longer even connected to a TV or power cable.

I did a similar thing because I was almost exclusively using my PS3 for Netflix, but my motivation was mainly because the AppleTV runs at ~6 watts and my "fat" PS3 runs about 170 watts at idle and we were always leaving the damn thing on. By my calculations, my Gen2 AppleTV paid for itself in electricity savings about 3 months ago.

I keep it because it's my only way to play discs on my TV, but it's seldom used, and PSN's massive security blunder left a bad taste in my mouth.

I never even considered the power consumption of AppleTV but that's a great point. (It's also silent, and as of today supports Hulu+.)

"Linux may be neutralized as a competitive threat" was his prediction based on last years 10-k.

What world is this man living in? One where servers don't count, only direct consumer products?

From his article on last year's 10-k:

>Linux is no longer a desktop threat. A few years back, it looked like Linux might carve out a niche on low-end, low-priced netbooks. But the iPad took care of that hardware category, and this year Microsoft confidently eliminated Linux from the list of competitors to the Windows operating system ... (On the server side, of course, Microsoft continues to acknowledge that Unix and Linux are strong competitors.)

(in other words it wasn't his prediction - Microsoft removed Linux from the list of threats to their desktop business).

In the big multi national corporations that I am involved with, there has been a dramatic shift away from desktops running Windows, to thin clients running Linux that connect to Windows virtual machines. The servers these virtual machines run on are also Linux. The Windows virtual machines exist so that users can run Microsoft's office products and Outlook, and legacy applications made for Windows. The legacy applications are generally being replaced with on-line/cloud based applications, or multi platform applications. In this respect, Linux has been neutralised in the way that Microsoft can still extract tax for the desktop environment for a while, but only a while.

I suppose Android is not Linux in their view. But agreed that the current generation of desktop Linux isn't much of a threat.

Business desktops? Or? My parents run Android (it is Linux despite what MS thinks :) desktops; much easier to use. My business friends use bring-yourself iPads and Macbooks. I have to think hard to find someone who uses Windows. Maybe it's different in the US, but even in the village where I live where everyone is very non-tech and mostly poor, everyone uses Android or Ubuntu (because it's free, not because it's easier to use in this case) on their computers, phones and tablets. The simple reality now is (and that's why I think Windows 8 is a good idea but not radical enough) that Android and iOS are significantly easier to use for non-geek people. Windows is just hard; I am a programmer and gadget geek; when I sit behind Windows to compile for WP7 it always takes me a lot of time to find things and work around it's annoying interface. I can only imagine what people who do not have a tech background think about it.

A simple example was a large migration I did for PwC.com in my country; that was a real eye-opener for me and it took this long (this was 10 years ago) to be an eye-opener for MS themselves. I interviewed people in that company and they all said the same thing;

me: How do you start your word processor? employee: I click on Start, then 7 up (All Programs), then 3 down

If the migration would MOVE word in a different place, people would need a course to know where to find it, and that's expensive and annoying for so many people. It came out the interview that it was of vital operating importance to leave all software in the same place in the start menu; the people didn't actually READ words as they simply didn't understand the concept.

A huge button saying WORD PROCESSOR among a few program they actually USE would have helped much, so like iOS/Android/WP7-8 have...

Another thing that came from the interviews (and from my experience with non technical people as well); people in Windows ONLY have one window open, fullscreen. Android/iOS/WP7-8. Not Windows <= 7; non tech people find the actual window concept confusing and annoying, so they just close the current window when they want to do something else.

Android uses the Linux kernel as glue between the hardware and Android userland; it's otherwise totally separate from GNU/Linux. Calling Android a Linux is misleading.

Maybe their idea of "neutralized" was supporting it on Azure, in a bizarre way that is more neutral as it is more embraced...

No longer a DESKTOP thread. Servers are not desktops.

Too little, too late? While Microsoft fantasizing about an ecosystem to thrive on; there are plenty others that have an established footing and beyond.

I have already put down my WP7 phone, not pleased that I cant upgrade to WP8. I am sure the MILLIONS of lumia owners will never pick up one again either.

Microsoft has demonstrated again and again that they can enter a market late yet gain massive traction. They do this by being dogged and throwing money behind a project until it works.

See for example I.E, XBox, and Outlook. All markets that they had no control of, all weak early products followed by a big push and then solid market penetration.

That's not to say that it will happen this time with phones and tablets, but MS has a lot of money, a lot smart skilled developers and tenacity. It would be foolish to rule them out just yet.

This was possible in Microsoft's glory days before Google, Apple, Amazon became formidable forces - they've never seen smart and talented competitors like this where they're effectively rendered helpless - a distant competitor in each of these companys primary markets.

Not only can't they compete, but they can't even maintain their own lead in these markets - as they've lost their dominant lead with Windows Mobile (which still has 2x market share than WP7) and Internet Explorer has recently conceded the most popular browser spot to Chrome. This is even after making these markets primary objectives where they shell out $1B a year to Nokia to be an exclusive WP7 Carrier.

They've achieved their dominance in the PC world thanks partly to their open 3rd party hardware ecosystem. The problem is this model doesn't seem to translate well in the vertically integrated Smart Phone + Tablet market, and if they price Surface too aggressively it will effectively kill all incentives for their hardware partners to compete (and make any profit).

It also doesn't help that Microsoft isn't a consumer brand, (e.g. its logo is dwarfed behind the XBOX moniker). All Microsoft's strength is in the enterprise space where the 2 cash cows that have ever really made them any money is Windows(+Server tools) & Office, effectively every other market they've entered have had marginal profits or have been massive loss leaders.

They're stuck between the worlds most valuable company and a one of the worlds most loved brands giving away the mobile + tablet OS for free. I give them a small chance to be able to leverage Windows 8 to become the 2nd largest tablet provider (after iOS), but I'd say the best they can do with Windows Phone is #3.

I wouldn't rule them out until they've still got their cash cows to fund their massive efforts - but take those away and they're another footnote in history.

"This was possible in Microsoft's glory days..."

This is still eminently possible. As an aside, by implication you're suggesting that market leaders displaced in the past (Netscape/Sony/BlackBerry/etc) were neither smart nor talented.

"...model doesn't seem to translate well in the vertically integrated Smart Phone + Tablet market..."

If you dig into any documentation from Microsoft that speaks about their vision you'll find that their model is based on a lot more than "Smart Phone + Tablet". It includes phone, tablet, laptop, PC, console, TV, desktop, server, and cloud. Think about that for a minute.

>> This is still eminently possible.

Everything is still possible, like RIM making a comeback (who still has 6x market share than that of WP7) - it's just not likely.

>> As an aside, by implication you're suggesting that market leaders displaced in the past (Netscape/Sony/BlackBerry/etc) were neither smart nor talented.

Nope, I'm suggesting Microsoft has never had competitors as smart, talented or as resourceful as who they're facing right now (not that they're previous competitors weren't smart - they're just now in a completely different league). Somewhere in the last decade they went from being the most feared tech company to one that is no longer even viewed as a competitive threat:


>> In past eras of technology, one company has ruled. Microsoft and IBM, for example. But now, Schmidt sees a “gang of four” companies providing the major consumer technology platforms

>> — Google, Apple, Facebook and Amazon.

It also doesn't help that they've seen many high-profile employee defects - many of whom are now working for Google. They haven't been the place to be (if you're an elite hacker) for quite some time.

If you look at the past focuses of all the different companies you'll find a pattern of Microsoft doing all the chasing - where they try to get their finger in every new market pie and mostly failing (besides XBOX). They tried to take on Google's Cash Cow with Bing, Apple's iPod with Zune/Kin, Amazon AWS with Azure - now they've had a complete rewrite of their Smart Phone OS to try compete with iOS/Android and still can only muster 1.3% Market Share (even after shelling $1B to Nokia) http://www.geekwire.com/2012/chart-microsoft-nokia/

The only hurt they've been doing lately is to their only real partner, Nokia - after they Osbourned all of Nokia's WP7 products when announced earlier this year that NONE of the phones Nokia is selling will be able to run WP8 - with no release date when they have a device that will?! The only possible excuse for this madness is to see Nokia's sales and market value crashing so they can pick them up for a cheap buy later.

The re-imaging of Windows 8 are warning signs of desperate times for Microsoft, as they're trying to leverage their Desktop OS Monopoly to compete with the iPad - but at the cost of disrupting one of their primary Cash Cows and actually providing a worse UX for Desktop users. Win 8 does look pretty but it's frustrating to use! I'll still buy a Win8 promo licence but I'm waiting for the first ServicePack UX with improvements before I'll even consider the switch.

>> If you dig into any documentation from Microsoft that speaks about their vision you'll find that their model is based on a lot more than "Smart Phone + Tablet". It includes phone, tablet, laptop, PC, console, TV, desktop, server, and cloud. Think about that for a minute.

They can pack as many complex and numerous features in as many devices as they want, but if it doesn't appeal to end consumers it will be as good as their current efforts to date. The Post-PC world is a consumer market, a place where Microsoft's brand has no mind-share.

You can roughly measure this by looking at the popularity of some of the brands:

https://twitter.com/google - 5.1M

https://twitter.com/facebook - 4.3M

Apple's too cool to have a twitter or facebook account, but they do manage some popular brands on twitter:

https://twitter.com/iTunesMusic - 2.9M

https://twitter.com/iTunesTrailers - 2M

Meanwhile in enterprise land...

http://twitter.com/microsoft - 267K

To conclude: smart money is not on Microsoft winning the hears and minds of consumers in this Post-PC world.

I think this is a very important point. A lot of Microsoft's previous competitors handed MS the sword. They're facing much more formidable competition this time around and they don't even have the biggest warchest this time.

And yet people blame Google for using their "search profits" to go into other businesses. But Microsoft has been doing this for a lot longer and a lot more aggressively than Google.

>> I am sure the MILLIONS of lumia owners will never pick up one again either.

People aren't very good at holding grudges when a shiny new carrot is dangled in front of their face. (Assuming the carrot is shiny -- only time will tell but signs are pointing to yes, it probably is sufficiently shiny.)

Not to nitpick or defend MS, but it sounds like they don't want to call it 8 unless it has all of the hardware features specified by 8 (like NFC). From what I understand it will get all of the new software benefits/features of Windows 8, just not in name.

Some of the features of Windows Phone 8 are being backported onto the Windows Phone 7 platform. It's not in any way shape or form a version or variant of Windows Phone 8 though.

>> "It's not in any way shape or form a version or variant of Windows Phone 8 though."

I wonder, how would you characterize WP8?

Judging by the fact that very similar situations to this one have happened over and over again throughout history, I'm fairly sure that once Windows Phone 8 is out, people will forget very quickly that previous Lumia phones never supported WP8. They'll simply get excited about the current offerings and that's it.

People aren't very good at holding grudges when a shiny new carrot is dangled in front of their face.

Most people never upgrade the software on their phone (iPhones being the notable exception).

Windows Phone 8 won't even be on their radar till their contract expires in 18 or 24 months.

Prior to smartphones, sure, nobody updated them. I recall updating my WM6 to 6.5. Palm issued updates too. It's rarely an option for Android users though and WP7 users got the shaft.

iPhones are the exception because Apple is currently the only one who has widely supported their products long enough for a software update to even exist.

RIM owned mobile, Apple was derided when arriving late into a non-sequitur field, and Google - how did an ad-targeting search engine become a major OS competitor?

We've seen amazing churn in tech of late. If MS has been paying attention, they could pull it off. (Then again, there's Zune and Kin.)

I think Azure is the sleeping giant that will allow MS to keep enterprise customers for decades to come. Heroku got traction because they made it dead simple for Rails developers to publish a web application. Azure has the potential to be the same kind of solution when linked with Visual Studio for the Microsoft stack.

Amazon, Rackspace, Google, etc. don't own the entire stack from run time to developer tools to cloud hosting and that gives Microsoft a unique advantage. No, Azure won't be the best cloud solution. No, it won't be the cheapest solution. What it will be is just enough goodness to be like crack to millions of Microsoft developers. It won't be worth their time to figure out how to get running in any other cloud provider when Visual Studio has a "Deploy to cloud" button available.

Microsoft will offer on-premise versions of Azure and some larger customers will adopt it but economies of scale will soon see 3rd party web hosting companies struggling for business. This is were the extra revenue for growth will come from. Microsoft will be making less on license sales and SPLA contracts in favor of locking in hosting revenue.

Google app engine for Java has an Eclipse plugin. So you get a deploy to cloud button of sorts. I still had a distaste for the persistence layer (think hybernate + big tables) but it was easy to use.

The problem with GAE is that it's not quite there yet when it comes to web-app development in Java.

1) Does not have Maven support

3rd party exist, but not from Google

2) As you said it: persistence layer/ORM mismatch with BigTable

You could use Objectify but what are we talking about here: apps that use RDBMS or being dictate by Google what your app architecture should be?

3) Limitations imposed by GAE

There was a time where if you use Spring Framework, once in a while GAE will throw exception due to longer bootstrapping time. Does not support all Java classes and keeping GAE up to date to the latest spec.

What most Java developers want is to support Tomcat/TomEE/JavaEE5+6, deployment via Maven, with RDBMS and less restriction. Up until now, no one in the market (Heroku, CloudFoundry) do this (user-experience) well except Jelastic. Unfortunately Jelastic does not provide infrastructure; they provide the software and work with 3rd-party hosting provider for the infrastructure.

#1 has been addressed; the GAE jars are officially published to the maven central repository.

#2 is a puzzling statement to make. Compared to an RDBMS, GAE's datastore is a much more natural fit for Java object graphs because it supports hierarchical data and is naturally polymorphic. Hibernate makes crazy contortions to match up the models and this complexity bleeds through to the API. There is definitely a learning curve if you have a background in RDBMS development, but you can say the same about MongoDB or Riak or any other NoSQL store. Nevertheless, the benefits of an autoscaling, distributed, replicated, zero-administration datastore are compelling.

#2a If you really really want MySQL, GAE now offers it (Cloud SQL).

#3 is a bit ambiguous - yes, there are limitations, as there are in any hosted environment. There's a 60s deadline on startup requests, but it's not usually hard to keep even Spring apps under this limit. The missing Java classes are things like Swing - you won't miss them. Yes, things like the Servlet spec are a little old, but the servlet api hasn't changed in any material way in the last decade.

It's not perfect, but App Engine is still an awesome platform for startups. It eliminates ops and devops roles so you spend all your time writing features.

#2 it's not that puzzling. Plain and simple most of us want RDBMS not NoSQL.

#2a they _just_ offer this (private/invite beta since last year). And no, I want PostgreSQL ;)

#3 In the past, JAXB doesn't work well, ditto with some of the reflection stuff.

List of unsupported stuff: http://code.google.com/p/googleappengine/wiki/WillItPlayInJa...

No JMX, JMS, JAX-WS (server), iText (PDF generation). Various libraries seem to require little "tweaks" here and there, no, I want to get it from Maven and be done with it.

The problem is keeping up to date with the latest spec fast enough.

I'm not looking for perfect though, I'm looking for standard JavaEE stuff.

You sound like someone who has arrived at a steakhouse and is upset because they don't have Big Macs on the menu. Okay... you have very specific desires and GAE isn't that. That isn't necessarily a problem with GAE.

Can't argue with your assessment but the top parent of our thread talks about Azure and Heroku where both platform support fully whatever their bread-and-butter (Azure with .NET and Heroku with Rails), meanwhile GAE does not.

TL;DR - In the Risk Factors section of this years 10-K, Microsoft used the word "service" almost twice as much.

You made it up to paragraph ~ 11 out of ~ 30.

I don't think OEMs should be worried about Microsoft going into hardware. At least in the near/medium term.

Microsoft is trying to defend their turf from competitors. If they think they can lead the way (vs OEMs)...then let them. Microsoft is willing to take a little risk to push their platform. It is just adding a little more wood behind that arrow.

Apple produces hardware. Google is in a position to produce hardware. Only makes sense for MS to do the same.

Frankly, Microsoft needs the OEMs as much as the OEMs need Microsoft.

Windows 7 is the last Microsoft OS I will buy. There's no way I'm supporting Microsoft anymore with these dangerous decisions they're making. I wish them all the best and that they see what damage they will do to everyone that supports/supported them.

Why is it bad to make big decisions, especially when an extremely flawed model that has been in place for the past ~20 years is finally changing? (Fear of change aside)

To compare, Apple makes big decisions like this fairly often. People complain, get over it, and the world is usually a better place afterwards.

I've never believed the theory that Microsoft is just making a "reference design" with the Surface. No. They are in this to make money with it, and compete heavily with their partners. If it was just a reference design, they wouldn't have kept their partners in the dark until the launch day like that, and piss them off.

Valve and Blizzard are right. Everyone in the "PC space", watch out. Windows 8 is coming to destroy a lot of "PC" businesses, whether it's software or hardware related. I'm actually surprised many of their partners haven't figured it out yet, and are actually helping Microsoft kill their business by promoting Windows 8 heavily in the beginning.

They're digging their own grave, just like HTC and Samsung kept WP7 alive for a year, only for Nokia to get all the credit and all the support from Microsoft with WP7, and they are, without realizing, helping Nokia, one of their former biggest competitors, make a comeback.

It actually makes sense for Microsoft to do hardware now. Back in, say, 1995, PC technology was moving so quickly that keeping up with the Joneses was horribly unproductive and risky, so Microsoft "outsourced" PC development to the likes of Dell, Gateway, and Compaq. These guys did quite well (in the short term, two are gone and one is struggling now).

Today, PCs are progressing so slowly that you can bump your lineup once or twice a year and do just fine. When the real differences between products diminish, it's time to start thinking about other ways to differentiate products, such as industrial design and lifestyle branding. Clearly the likes of Dell have never been any good at this, so Microsoft might as well step in.

You could even look at Apple's problems in the 90s being due to their not being able to iterate hardware designs quickly enough and having to compete against faster iterating products with real advantages. As the pace of hardware advancement dropped, Apple's advantages became more salient, and its slow pace of hardware iteration became another advantage (no confusing list of overlapping products and discounted slightly-out-of-date products).

All of this presupposes that Microsoft can actually execute. The only true hardware products Microsoft has ever really done have been the XBox and XBox 360. Everything else was pretty much built by someone else with a Microsoft logo stamped on the box.

If this is really the case, then for the sake of PC gaming, I sincerely hope that Windows 8 fails.

The only good thing about Windows 8 is that it provides a huge opportunity for Valve to make a Linux based Steam box. I'd be all over that...

>Windows 8 is coming to destroy a lot of "PC" businesses

Actually, this might be something positive if crapware (SW and HW) producers take most of the blow.

Commodity hardware, as we know it, grew up on the back of Windows. As MS transitions into their "lifestyle" phase, what will the effect of a reduction in crapware have on the prices of components for everyone else?

If a significant number of component purchasers exit the market, the cost of iterating new technology will go up and we'll see prices go up or the rate of technological increase go down (or both).

Hardware became commodity because of abudnance of mass-produced cheaper IBM clones (producers of "IBM PC-AT compatibles").

Harwdware "grew up" thanks to the innovation by the big guys: IBM, Intel, Apple, [even MS] etc, and their products have always been more expensive. But innovation happened, even though the money didn't go to them when people bought cheap clones.

Therefore, I believe that the "purchasers who will exit the market" never were in the market in the first place, and innovation rate won't be affected.

I think that the only thing that will happen is better HW/SW quality for buyers of quality brand names. Windows will (hopefully) evolve much quicker [heck, maybe even cheaper!] given that it won't have to support legacy crapware any longer.

Windows PCs will probably become slightly more expensive, but that's the price I'm willing to pay for not having to deal with crapware. Users unwilling to pay the price of quality will still be able to run Linux.

I wonder whether MS is doing any research on application sandboxing and controlling information flow, possibly from within a lightweight hypervisor. (Singularity project may have been a step in this direction.) It is THE missing piece in Windows infrastructure. Switching users to do different tasks is still very cumbersome, even with a fast machine.

Microsoft could be using Surface to not only to force the manufacturers to create interesting products but to drive the prices down.

I believe it is Microsoft's interest to get as wide adoption to Windows 8 tablets are possible. Even if means selling them with very thin margins (as Google seems to be doing with Nexus).

It's more complicated than that.

OEMs pay Microsoft for the OS, then take on the risk of trying to design and sell a product. The $35 or whatever OEMs pay for Windows 8 becomes part of their manufacturing costs. When Microsoft makes their own design, they essentially don't have that cost.

Google can afford to sell at thin margins because they make most of their money off advertising. The more Android units out there, the more ads they can display. Microsoft hasn't yet cracked the post-sales revenue problem; once the OS is sold it goes into the hands of the OEM who tends to make their money off hardware upsells, crapware preinstalls, service contracts, etc. So, Microsoft can't discount their Windows 8 licenses to near-zero without the risk of making nothing on the deal.

If you read further down into the article, I think that is what the "services" part of the 10-K is implying. Microsoft is looking for a way to slice off some of that post-sale revenue. An easy way to do that, obviously, is to make their own hardware, but it will be even more interesting to see how they transition from their OS-licensing revenue model to a post-sale-services revenue model.

I wonder how many times I've read "X isn't a hobby." about a company. Seems like Microsoft and Google are the target of that phrase far more often than most. Kinda sad what that says about the fickleness of the product management organizations in these companies.

I'd like to hear what Joel Spolsky has to say about this. He seems to get MS and their business.

The number one priority for MS needs to be unifying the SDKs, app and payment platforms for Win8, WP8 and XBox Live.

If developers were able to target all three with a single codebase it would be a game changer and I can easily see it being the number 2 development platform behind iOS.

No, the number one priority is shipping a product that customers buy. As Apple has shown, developers will learn a new language, new API, and new toolchain if the customers are there.

Heck, Microsoft proved it with Windows 3/95.

  Never gonna happen (regarding the SDKs).Sure...some things might be somehow similar (XAML) but some codebase won't run on all 3 type of devices. Different things for different hardware.
  Only thinking at how inefficiently apps are build today make me shudder at running those things on a Xbox.

Please don't format your own comments like this. It's difficult to read on mobile devices.

Heck, it's difficult to read on a desktop. Having horizontal scrollbars in the middle of the page is less than ideal.

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