Opinion by Scot Finnie

Microsoft awakes

The company is finding its way again. It’s already a power in cloud computing. Could it finally begin to master mobile?

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Batholith (Public domain), via Wikimedia Commons (Creative Commons BY or BY-SA)

Opinion by Scot Finnie

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We may be witnessing the beginning of a turnaround for one of the mainstay companies of the IT industry: Microsoft. And by turnaround, I don't mean financially. Microsoft is a prodigious revenue and profit generator. But the company has been rudderless for years. It has essentially been reactive, not an industry leader. It's been resting on its laurels.

For the first time in a long time, Microsoft is doing well on several fronts (whereas companies like IBM and HP, not so much). Microsoft’s Surface Pro hardware is well designed and useful. The company is smartly cutting its losses on Windows 8 and plans to launch Windows 10 next year. Microsoft's stock has nearly doubled over the last couple of years. After coming late to the party, Microsoft's Azure cloud computing platform for enterprises is doing well, helping to drive 128% growth of its commercial cloud revenue in the company's latest quarter compared with the same quarter last year.

In fact, Microsoft is emerging as a significant power in enterprise cloud computing. Cloud is in part a platform play — something Microsoft knows very well how to do. Think cloud clients/cloud servers. Office 365 is just one of Microsoft's early cloud clients. It's no accident that Microsoft used basically the same strategy almost 20 years ago with Windows 95 and Office 95. Other companies have been out in the field much longer with their cloud solutions for business, but Microsoft has been selling servers and desktop software to enterprises for decades. For many IT decision-makers, Microsoft is the devil they know. Enterprise cloud computing is Microsoft's arena to lose — or not.

Microsoft CEO Satya Nadella has made some good course corrections, too, especially in his recognition that individuals are as much the customer of enterprise applications as the CIO or other IT purchaser. Nadella doesn’t use the word “consumer” in this context. He uses words like "people” and "personal.” In a long memo delivered to Microsoft employees last July, he wrote: "[Microsoft] will reinvent productivity to empower every person and every organization on the planet to do more and achieve more." Productivity is another decades-old Microsoft marketing mantra.

But connecting with end users is where Microsoft is still heavily challenged. It's ironic, too, since Microsoft incubated as a customer-focused company. It was David to IBM's Goliath in the late 1980s and early 1990s. It listened to customers, the press and analysts, and it iterated its software over and over, until people loved it. People joke that Microsoft's products aren't good until version 3.0 or later. It was that relentless attention to software features and usability that formed the basis of that perception.

Somewhere in the late ’90s, Microsoft decided that it could make a lot more money selling enterprise software. At the time, no one thought you needed to make enterprise software intuitive and fun to use. That’s when Microsoft gradually began to lose touch with the preferences of its actual users. Under former CEO Steve Ballmer, Microsoft actively tuned out people's responses to its software, focusing instead on delivering products that served the company's strategic needs. The result was Windows Me, per-device licensing, draconian Windows anti-piracy measures, Windows Vista, the Office Ribbon and Windows 8. In fact, Microsoft missed its chance to take part in any meaningful way in the largest end-user technology trend of the last decade: mobile. Right now, Microsoft is about as far away from being focused on individuals as a company can get.

Nadella appears to recognize that sometimes it's the individual users of enterprise technology that drive the bus. That was the case with BYOD. It's also the case with mobile apps, which are simple and have a limited set of features. There is a fierce demand for enterprise applications to be mobile and fun to use, with streamlined functionality and smart analytics.

Never count out the will of millions of computer, smartphone and tablet users worldwide. Microsoft has taught that lesson to other companies; now it needs to relearn it. Nadella has an uphill battle ahead of him, but he's moving in the right direction.

Copyright © 2014 IDG Communications, Inc.

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