Stowe Boyd via GigaOM Research
We’ve already see the push in Office 365 to make Yammer the default user experience in Sharepoint (see Yammer is becoming the social UX for Microsoft). They are going to enlarge what Yammer is, and make it the social stream for the passage of all sorts of newly socialized information.
The missing piece of the puzzle for me — along the lines of Sullivan’s comments about ads and social having no owner — is this question: Who owns the mobile experience at Microsoft, now? The new Microsoft has no place for a Jonny Ive controlling user experience.
The simple and wrong answer is Julie Larson-Green, who is building devices like tablets and smartphones. Another wrong answer is Terry Myerson, who is building the Windows software that runs on those devices. These are both wrong — and especially wrong in the enterprise area — because many Microsoft customers are having their primary interaction with Microsoft software through the browser, or on non-Microsoft devices. And if the trend lines are to be believed, in the near future those proportions will continue to rise. So, already today the most important user experience to consider is in the browser, and soon it is likely to also include mobile apps running on hardware not produced by Microsoft. And I don’t mean Internet Explorer, either.
Yes, I know that Ballmer, Qi LU, and anyone else in authority at Microsoft will have to publicly stick to the party line — “Windows will continue to be a dominant operating platform for decades to come, we are turning the corner with Microsoft smartphones and tablets, yada yada yada” — but the numbers say different. Ballmer’s memo only mentioned PC four times, and mostly in retrospect, phone only three, and Internet Explorer zero. (I noticed that Surface’s price was dropped today by around $100. Too little, too late?)
However, behind the scenes, Qi Lu and his colleagues must be planning for a transformation to a very different operating model: a leading enterprise software company, integrating a collection of tools necessary for the functioning of business in the past decade, right up to the business of today. But the battle now is to contrive the software platform for the emergent company of next year, and the decade that follows. Qi Lu, with the people at Yammer, Office 365, Sharepoint, Exchange, and Skype, will have to connect the dots in a way that transitions to a very different tomorrow while delivering value at every today along the way.
[Go read the whole thing, if you’d like.]
So the Microsoft reorg is coming, and it looks like, as expected, Ballmer is structuring the company to play defense:
Microsoft Restructuring Set for Thursday - Kara Swisher - AllThingsD
The effort, said many insiders who have talked to Ballmer and other involved, is to create something that is being called “functional coherence” at the company, although it is not among Microsoft’s talking points when the restructuring will be made public. That also includes putting more wood behind fewer efforts and eliminating overlapping functions.
In theory, it also presumably means things going where they belong in product cycle. In practice, which is a lot messier, that means moving a lot of important people around.
That includes a new cloud computing and business-focused products unit headed by current Servers and Tools head Satya Nadella; Online Services leader Qi Lu could add Microsoft Office and other apps to his portfolio that already includes the Bing search service; Julie Larson-Green, who now co-heads Windows efforts, is in line to be in charge of all devices from Surface tablet to Xbox game player, as well as music and TV services; and Windows Phone chief Terry Myerson is expected to take over Windows engineering and platforms.
Meanwhile, Windows CFO and CMO Tami Reller is expected to have a larger marketing job; and current Skype president Tony Bates gets purview over all of business development, corporate strategy and M&A, playing the role of outside guy to Silicon Valley and developers (complete with a giant checkbook for acquisitions and other investments).
It’s not clear where Microsoft Office president Kurt DelBene or Microsoft Business Solutions president Kirill Tatarinov could land in the new set-up, but presumably either out the door or under new units headed by Qi Lu (DelBene) and Satya Nadella (Tatarinov), respectively.
As to the fate of COO Kevin Turner, sources expect he’ll stay (at least until he is offered a tasty and big operationally-heavy CEO job outside the company).
Current CFO Amy Hood — who was just appointed — is also stay in place, as will HR head Lisa Brummel, who has played a key role in this reorg effort. Chief lawyer Brad Smith also seems safely away from the hubbub.
The key phrase for me is ‘putting more wood behind fewer efforts and eliminating overlapping functions’ which translates into 1/ closing down some products and services, and 2/ consolidating control of the remaining products and services into the hands of a small number of actors.
This can be good for Microsoft customers, potentially, although it’s been pointed out that people buy products not organizations.
Consolidation of all Windows operating platforms makes real sense, even if it is a business line with a seriously precarious future, or near-term collapse, depending on how pessimistic you are. (I’m very.)
Some things are still head-scratchers though, like putting Microsoft Office and other apps together with Bing.
Mostly I’m interested in the final disposition of enterprise services and products. I’ll wait for the dust to clear, and I’ll write something in more detail after the formal announcement is made, over at GigaOM Research.
One comment: Looks like Tony Bates won’t be heading up Skype anymore, and that is likely to be consolidated into Qi Lu’s Office + apps + Bing world? And Bates new role — biz dev, strategy, M&A — could be read as either a sidelining while looking for a new CEO job or operating as Ballmer’s lieutenant, looking to buy new startups to reboot Microsoft’s future. We’ll have to see.
Here’s the closing paragraphs of my weekly update at GigaOM Research. I started by looking at recent news about Zygna, Accenture, and Intel, who are all being whipsawed by the shift away from the PC and the rise of proximal devices (smartphones, tablets, and other ‘mobile’ devices). I finish with Microsoft:
Last fall, Microsoft CEO, Steve Ballmer, outlined his new vision for Microsoft in a letter to shareholders, and rumor has it that this week he will be announcing a major reorganization of the company to try to make that vision a reality. Bottom line: I think much of that reorganization will fail because he is still gambling on Windows and Surface to break through, and they won’t.
But what might emerge from the ashes of that house on fire could be a credible player in the very different world of enterprise IT coming down the pike. Let me characterize it:
100% Cloud — We are continuing to hear reasons why companies cannot move everything into the cloud, but in the final analysis they are quibbles disguised as prudence. Ultimately, anything that can be done on premise will be possible in the cloud, with the exception of physical on-site security (which is like pretending that your money is safer in the cookie jar under your bed than in a bank).
100% Proximal — There will be functionally zero stationary computing devices in just a few years, and people will be always on, wherever they are.
100% IT-less — The downturn in Accenture’s fortunes is the start of a collapse in enterprise IT consulting, and that will rapidly cascade across the industry. Why? The use of cloud-based enterprise software and proximal hardware cuts a huge hole out of the middle of what those consultants configure for their clients. Note that this won’t stop with outsourced IT staff: it means the end of IT internally, too. (Yes, companies will still own computing devices — on the factory floor, and in the hands of retail clerks. But increasingly they will be communicating with back office software running in the cloud.)
I am going to get a lot of flack for zooming ahead five years based on these trends, but I will stand by the prediction.
This is the deep background on the future of enterprise software in general, and specifically the form factor of future cowork (collaborative and cooperative) tools.
The enterprise software companies that will weather this sea change will be the ones that drop their efforts to stop the tide. They will have to make the change that Krzanich is making at Intel, betting on the future instead of fighting it.
One last prediction: Ballmer’s reorg this week — if it comes as expected — will be a hedge. The reorg that will indicate that Microsoft has turned the corner will be when Ballmer leaves the company, and a new CEO joins, shuts down the company’s hardware efforts, and deadpools Windows. I give Ballmer another year, at most, before the shareholders demand his head.
Morris gives a quick summary of some Android ‘desktop’ machines — mostly tablets that can dock with a keyboard, like HP’s Slate 21, various Acer products, and Samsung’s ATIV Q — but misses the point completely, sounding almost apologetic for suggesting these things might have utility.
I’ll go strongly in the opposite direction. Windows is (nearly) dead, especially on smartphones and tablets. Android will soon be the largest OS in the world. Inevitably, Android will become the largest player in the shrinking laptop/desktop market. Mac OS X and Android are the one-two punch for Windows, and that includes the desktop/laptop market, too.
Microsoft continues to move away from a commitment to its own OS and hardware platforms. We’ll be playing Xbox games on iPhones in no time.
Perhaps no coincidence this is announced a week before the rumored reorg in Redmond?
Windows is (nearly) dead, and we tumble into the post PC era, and they can’t get anyone to use their phones or tablets. But Microsoft still has opportunities in the enterprise software space, so long as the company doesn’t spend everything in an attempt to resuscitate the rapidly cooling carcass of that OS.
(via GigaOM Research)
Rick Sherland of Nomura Holdings, cited by Ian King and Dina Bass in Microsoft’s Surface Tablet Is Said to Fall Short of Predictions
There is no going back for PC sales, and for the decreasing number of users that require a ‘real’ PC there are other solutions that are significantly better than Windows 8-based PCs, especially high-end, well-designed OS X-based laptops.
We are well past the time of Peak PCs, and Microsoft doesn’t really have a response. So far they have sold less that 1.5M Surface tablets since October’s launch. Apple sold over 22M iPads in the last quarter of 2012 alone.
Jun Dong-soo, president of Samsung’s memory chip division, doesn’t think much of Microsoft’s latest efforts:
John Paczkowski, Windows 8 No Better Than Vista, Says Samsung Exec
“The global PC industry is steadily shrinking despite the launch of Windows 8,” Jun said. “I think the Windows 8 system is no better than the previous Windows Vista platform.”
No better than Vista? Too cruel, too cruel.
And Jun was just getting started. That Vista quip was part of a one-two sucker punch that ended with a slag of another one of Microsoft’s big new efforts.
“[Microsoft’s] rollout of its Windows Surface tablet is seeing lackluster demand,” he said. “Meanwhile, previous vigorous pitches by Intel and MS for thinner ultra-books simply failed and I believe that’s mostly because of the less-competitive Windows platform.”
A brutal commentary on Windows 8, which has so far utterly failed to catalyze PC sales.
When will Microsoft’s board finally get rid of Ballmer?
Somehow I missed this post from Sarah Lacey in December, when Yammer crashed for a day, and Pandodaily’s entire work flow crashed along with it.
Let this be a warning for companies trying to run their business on freemium cloud apps. And as a business owner, here’s my response to cloud companies: If you expect me to run my company on this, it has to work. I don’t give a shit how pretty the UI is. I don’t give a shit about your mobile app. I don’t give a shit how cutesy your name is or if your company has a mascot of some cute animal. I don’t give a shit if I’m paying you or not paying you. It has to work. And should something go wrong, you owe me some sort of communication letting me know when it’ll be back up.
In the early years of Salesforce.com, the users would go apeshit if the service was down at all. This was even before the era of social media when venting was a lot harder, but the outcry was still huge. CEO Marc Benioff used to sigh and point out that the software was up more than 95 percent of the time — something that users should be impressed with.
But the message was loud and clear: If you want us to stop using on premise software and use this instead, it has to work. Back in those days, people used the analogy of electricity with on-demand or SaaS or Cloud software. You just turn on the light switch, and there it is! Like magic! If that’s the pitch, you have to deliver with the reliability of electricity or plumbing or whatever your utility analogy is.
And because Benioff understood selling to customers and marketing, he got this. And Salesforce got rapidly better.
The problem with so many of the new generation of software moguls and the obsessive move to the “consumerization of enterprise” is that they don’t know how to build enterprise-grade software that doesn’t crash. As consumers who just want to Tweet witticisms, we can forgive a Fail Whale. When a Fail Whale can bring your business to its knees, it’s simply not acceptable. It’s when launch first and iterate later will cost you your entire customer base.
Especially enjoyed the description of her team trying out a bunch of alternatives to Yammer, desperately trying to get up and running again.
And this one-liner:
Using Chatter is like watching your dad trying to moonwalk. “Hey, look, kids! We can be cool and social too!”
Now Microsoft is only left with two instant messaging/video/voice solutions to juggle, Skype and Lync. One too many I think, so I am betting on Skype: the better brand.