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9/20/2013
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Microsoft's Next Moves: 11 Takeaways

As Microsoft charges ahead with retiring CEO Steve Ballmer's "One Microsoft" plan, here's what customers can expect.

6. Windows XP migrations are coming along, and Microsoft is bullish on new hardware.

According to Turner, only 21% of Microsoft customers are still using Windows XP, and XP holdouts should drop to 13% by the time the OS loses official support in April. Turner also suggested new hardware could help ailing PC sales and jumpstart Windows tablet sales. He noted that Intel's new processors give OEMs the capability to build cheap, powerful, fanless devices that will "open up new form factors at new price points."

7. "One Microsoft" is more than Windows.

Turner emphasized that Microsoft is a "balanced and diverse business" that extends far beyond Windows. Windows is only the company's third biggest source of business, accounting for 25%, he said. Office takes up the biggest chunk of the pie, at 32%, while the Server and Tools division is second, at 26%. Microsoft's revenue streams are rounded out by Entertainment and Devices (13%) and by Bing and Online Services (4%).

Still, Windows revenue declined troublingly in the most recent quarter and still plays a huge role in Microsoft's portfolio. The PC market could also take a toll on Microsoft's important OEM revenue. The company is diversified and advancing, but remains tethered to some of its old methods.

8. Microsoft is already benefiting from making its own devices.

Given Microsoft's Nokia purchase and its imminent Surface event in New York City, it's clear the company intends to keep making its own devices. Turned explained that the effort is worth pursuing despite the struggles Microsoft has weathered, because making hardware helps the company to make better software. He acknowledged that some of Microsoft's partners didn't appreciate added competition from the Surface but stressed that Microsoft is still committed to working with a variety of OEMs.

9. Microsoft knows Windows Phone 8 needs to succeed.

By buying Nokia's device business, Microsoft has already shown that it's finally ready to double down on the smartphone market. Ballmer said Thursday that he regrets dedicating too few resources a decade ago to Windows phones. The attention went to Windows Vista instead.

"We have almost no [smartphone] share," Ballmer conceded before countering, "Low market share sounds like upside opportunity to me."

10. Windows RT's future might be in phablets.

A whiff of death has hung over Windows RT for months, but Microsoft VP Terry Myerson told attendees at Thursday's meeting to expect more Win RT tablets. He said the devices would proliferate as phones extend into tablets, suggesting that Win RT phablets might be in the company's pipeline, and that Windows RT and Windows Phone 8 might eventually merge.

11. Office 365 is building momentum and staving off Google.

Turner reminded attendees that Office 365 is already on pace for $1.5 billion in annual revenue. Next year, he promised, the cloud-based subscription service will "blow through" that mark.

Turner also took a customary swipe at rival Google. He said 440 of Google's corporate customers switched to Office 365 in the last fiscal year and suggested customers don't want Google snooping through their email or monitoring their Wi-Fi. It's hard to know what to make of the 440 defectors without knowing how many Office 365 customers Microsoft lost to Google, however.

Office 365's enterprise success story is well established, but CFO Amy Hood said the service is also gaining traction among consumers. She said it now has 2 million subscribers, up from 1 million in May.

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Palpatine
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Palpatine,
User Rank: Apprentice
9/21/2013 | 7:57:58 AM
re: Microsoft's Next Moves: 11 Takeaways
ballmer really needs to go away quickly, he is still doing damages.
he seems not aware of strategic importance of windows domination, and not seeing impacts of that domination going away on ms entire product line and business plan.
he wants to copy big g advertising and loud strategies and still wants to delude himself customer are running to ms as they do not want data snooped by google - do they want data snooped by ms, steve? do you really think so?
one more year could be deadly to ms with such a mo...on as ceo.
DDURBIN1
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DDURBIN1,
User Rank: Ninja
9/23/2013 | 2:57:42 PM
re: Microsoft's Next Moves: 11 Takeaways
#1. Ballmer was a poor pick for CEO, don't expect anything better this time around.
#2. Hundreds of millions of iOS devices shows how arrogant Microsoft has become to ignore billions in profit.
#3. Corporate priority over consumers is why MS is behind on mobile and will stay behind.
#4. Duh...and over the past 10 years has MS really done right by consumers? Xbox maybe?
#5. Tell us something we don't know. Windows Vista was embraced better than Windows 8 by corporations.
#6. Those migrating from XP now have more choices than ever. Look to higher sales of iMac and Chromebooks than Win8 PCs unless Microsoft makes Win8.5 a more Win7 compatible IU for desktop use.
#7. How much of Google's income is from Android? None. MS wants what Google Play and iTunes has so much it forces Metro down consumers' throats while charging them for the privilege to do so. Can you say "consumer backlash"?
#8. This author is dreaming. I don't call a 900 million right off as a benefit.
#9. Another Duh... Windows Phone version what? 8? How many tries do you think MS should get but still doesn't have it right. Sure the latest is finally competitive, very competitive actually but the cows are already out in the pasture.
#10. RT just confuses the market. A slightly lower cost than a Windows device with no other advantages still doesn't compete with iPad or Android tablets.
#11. Office 365 will cannibalizing Office licensing for a net breakeven.
Laurianne
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Laurianne,
User Rank: Author
9/23/2013 | 4:31:38 PM
re: Microsoft's Next Moves: 11 Takeaways
"It's hard to know what to make of the 440
defectors without knowing how many Office 365 customers Microsoft lost
to Google, however." This is an important point.
Shane M. O'Neill
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Shane M. O'Neill,
User Rank: Author
9/23/2013 | 8:52:14 PM
re: Microsoft's Next Moves: 11 Takeaways
Microsoft would be wise to hold on tight to its enterprise software prowess because the rest of its portfolio is dangling in the wind, especially mobile. Windows RT and Windows Phone merging into a phablet? Would anyone even notice? I don't see how Microsoft gains any ground in mobile, even with Nokia hardware. No company is supposed to do this much and something's got to give. Ballmer isn't leaving until next summer but after that things will get interesting. What moves do you think the new CEO will make to shake things up?
Faye Kane, homeless brain
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Faye Kane, homeless brain,
User Rank: Strategist
9/27/2013 | 11:42:52 PM
re: Microsoft's Next Moves: 11 Takeaways
==-
> Microsoft will do this in the way the best serves the company's financial interests

They think that's different than serving their customers' interests. This is why MS has become almost irrelevant. It's a psychosis that only infects large, arrogant corporations.

When do you see a small bakery say "Well, we COULD make a more delicious pastry, but we'd rather do what will make the customers buy more of our pastries instead."
Larryalobo
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Larryalobo,
User Rank: Apprentice
9/29/2013 | 5:59:54 PM
re: Microsoft's Next Moves: 11 Takeaways
Microsoft recognizes that the paradigm has changed from - enterprise tells staff what they should be using (hardware and software) to - staff wanting to use what they want and enterprise adapting to it (hardware and software). Though its not a complete change (staff in the driver's seat) it has happened much more often so MS is changing its approach to make sure it stays relevant in how enterprise is reacting. There is a lot more to enterprise than big corporations - medium and smaller businesses, start ups, home based, freelancers, consultants, etc.
If you want to talk proportion, then its good to know how many companies Microsoft lost to Google originally but 440 companies or entities who have returned to Microsoft and its products/services is a large shift and may indicate a trend as more businesses realize what they need to be able to operate globally and professionally. It may not matter to the small business type who is operating on a shoestring and its fine for kids in school but at the larger level you need what will work well and be positioned for the future, not just work well enough today. We'll see how Microsoft meets this challenge.
Ballmer may have been the best man at the time for the job, considering all the things that Microsoft had just gone thru with the Justice Dept before Ballmer took over. How well he's done we'll see when we get some distance and evaluate what was done with what he set up and how he left things. Microsoft is in a good position for the future but it all depends on the reorg and who the next CEO is and how well they can integrate what they have and how they can read the future. Working closely with Oracle is a good move and having Nokia may have been necessary but it can fit well with future possibilities. Execution makes the difference - will they execute well or be executed (shoot themselves in the foot or others knock them off) - there in lies the question
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