[Disclosure: Microsoft is a client of the author]
This is a fascinating fight largely because the Education market, while not lucrative by any stretch of the imagination, is critical to assuring the future for any operating system. People prefer what they have learned on and firms wishing to employ them find that not having their system of choice reduces significantly that firm’s choice of top talent. The rarer your skill set the more likely it is the company will accept and embrace your platform choice. Apple was initially one of the most aggressive in education; but Microsoft displaced them over the last two decades. More recently, Google’s Chrome has been making impressive inroads into the segment over the last 5 years. To a considerable extent, Windows 10 S is Microsoft’s latest and best attempt to stop any bleeding.
Their latest announcement of 10 products that use Windows 10 S targeting education priced under $300 suggests Microsoft is ramping up their defense. Let us talk about this fight this week and extend into the future of technology in education.
Advantage of an entrenched vendor
People really, really do not like to retrain. This is one of the reasons we still have keyboards which were designed to keep the keys in typewriters from fouling rather than far more efficient alternatives. This means that once a platform is dominant, and the related skills learned, like Apple was with the iPod and Microsoft was with PCs, customers will favor that method. To keep those customers all that is needed is to prevent clones (like Windows and Android) and keep customers happy.
Look at how well Apple is holding on to iPhone users, even though the phones are significantly more expensive than competing products. Even though Apple is crippling them (slowing processors, disabling features in modems), and even though Android is almost a direct copy, migrations from iPhone to Android are still mostly noise. This is one of the reasons Samsung ads take shots at iPhones so aggressively, it is the same thing Steve Jobs did to Microsoft in the 1990s, both firms needed to get people using the competing platforms to see, and get upset, about the platform’s flaws so they would at least consider a non-Apple offering.
As the entrenched vendor you just must keep your customers and channel content enough, so they are not motivated to go through the effort to displace you.
De-entrenching
Given Windows is still the most common education platform now, it is Microsoft’s segment to lose but Google has been doing an impressive job penetrating the segment. They did this by first capturing Microsoft’s OEMs, who had become disenchanted with the company during the Steve Ballmer years (and particularly with Windows Vista and Windows 8); and then giving aggressively priced Windows solutions to education. Ironically this was very similar to how Microsoft eventually was able to replace Apple in most schools in the late 90s. They went around the users, sold the administrators on a far less expensive solutions and successfully displaced Apple. Google has been using a similar strategy for Chromebooks.
Google’s execution has been surprisingly good given they tend to have the attention span of a 4-year-old on sugar and, ironically, Google tends to look at the PC OEMs like someone getting a free ride (let us just say “respect” and “collaboration” are not words you would connect with their effort).
This last has always fascinated me because Microsoft’s exposure was partially due to the fact they treated the OEMs poorly during Steve Ballmer’s reign as CEO, then the OEMs worked with Google, and whatever Google did to them, had them thinking fondly of Microsoft again. (My mental image is that the OEMs were like kids whose parents did not pay enough attention to them, suddenly moving into a home where feeding became optional. It was fascinating how sharply feelings changed. Under Nadella Microsoft has been treating the OEMs far better and Google still pretty much sucks in this regard.
De-de-entrenching
The important lesson that often is not learned is that the entrenched firm can often still fight back when this happens. Since Google really was not taking care of the OEMs Microsoft had a chance at aggressively moving back into the space by focusing on it again. This strategy has undergone many changes but most recently it is the combination of very affordable hardware coupled with Windows S.
Windows S is an interesting effort in that reflects on what has been learned from iOS and Chrome and addresses one of the problems with a prior similar effort. That similar effort was a locked down version of Windows which needed IT to install everything and did not scale well where IT resources were tight; like education. A curated and potentially IT controlled app store bridges that gap much like it does with iOS and Chromebook hardware and the result is a solid alternative that should significantly slow the entry of Chromebooks into education.
Now Google does have a beach head in the segment and in the schools, they have captured they are now entrenched. But they tend to do a poor job of assuring customer satisfaction largely because their primary customers are advertisers, who fund the company, not the users of their products. This should leave them uniquely vulnerable even though Microsoft has yet to fully target that vulnerability. (Schools have historically rejected ad funded solutions even though this kind of funding would seem to appeal to the schools’ extremely frugal IT budget).
The recurring problem, and a look into the future
While I think every executive in these two firms gets that education is effectively seed corn; the payout for the effort is years in the future, potentially even decades. In a market rabidly focused on next quarter’s performance it is very hard to get anyone excited about education because the segment does not generate much in the way of profit. There is services revenue that keeps the PC OEMs engaged and certainly Bill Gates is making huge commitments to the segment, but Bill does not run Microsoft, Satya Nadella does. With a fully funded effort both Google and Microsoft could own education, but that effort seems beyond Google’s interest and Microsoft knows it would hurt their bottom line.
The right fix is closer to what Bill Gates is working on, improve the economics of education so that schools can afford the latest tools and thus make the segment more financially interesting. This of course, would improve dramatically the tools offered to kids in school, we often seem to forget they are our future.
This is one place I think Google and Microsoft could collaborate, increase both of their efforts collaboratively to improve funding for school technology turning what is currently largely an unprofitable market into a profitable one and raising all boats. This would better provide for children, who will be eventually entering a world defined by robotics and advanced technology, to be far better prepared than they otherwise are likely to be.
One final thought, we seem to focus way too much on technology that will be obsolete when kids leave school and start careers. This is what happened to me. I learned to program on systems that were obsolete when I left college and technology moved far more slowly back then. Fortunately Microsoft seems to get this and is pushing the envelope more like this: HoloLens Revolutionizing STEM Education
Affordable laptops are nice, but better funding could give kids access to HoloLens and a far faster path to their eventual future.