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Michael Endler
Michael Endler
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Does Microsoft Have Its Mojo Back?

Will free Windows licenses, the Internet of Things, Cortana, and other announcements put Microsoft back on the right track?

Has Microsoft regained its mojo?

When new CEO Satya Nadella introduced Office apps for iPads on March 27, it was his first public appearance after 52 days on the job. Commentators praised Microsoft's firm, arguably overdue embrace of cross-platform tactics. But by his 60th day, Nadella had gone much further, repositioning Azure as the clear center of the Microsoft universe, with Windows shifted to a supporting role.

Between the Wednesday and Thursday keynotes at Microsoft's Build conference, company execs spoke for more than six hours. At face value, the presentations fleshed out Nadella's "cloud-first, mobile-first" strategy -- from Cortana and other attempts to become relevant in mobile, to dozens of new Azure tools aimed at developers of all stripes, including those who develop for iOS and Android but not Windows.

But, on a deeper level, the keynotes also explored the diminution of Windows licenses as a revenue source and their replacement by software, services, and virtual infrastructure. These are not minor shifts, but they are necessary. Among mainstream users, Windows' stature isn't what it used to be.

Microsoft CEO Satya Nadella
Microsoft CEO Satya Nadella

[Wondering about your best option to replace WinXP? See Windows XP Game Over: 9 Upgrade Options.]

Under Nadella, Microsoft has implemented the changes while somehow projecting both confidence about its future and candor about its challenges -- a tricky balance. Given this context, yes, Microsoft has its mojo back.

But can Microsoft reclaim its former glory? Steve Ballmer's Windows 8 strategies created media scorn, investor derision, and relatively few happy customers. Nadella didn't create this mess, but he's inherited it. His ideas are comparatively fresh and different, but they don't make existing dilemmas disappear, at least not overnight. For starters, last we heard, Surface tablets still aren't profitable. Windows XP users, who will lose official support Tuesday, also outnumber Win 8 users by more than two to one, according to Net Applications.

But I'll come back to all that. Nadella didn't control the hand he was dealt, but he did control the agenda at Build -- and he made the most of the opportunity. Here are some of the ways Microsoft impressed.

1. Free Windows licenses for smartphones and tablets with smaller screens.
Arguably a long time coming, this move could help Microsoft tap into the vast network of global manufacturers who have pushed Android to prominence. It should also result in lower device prices. Most important, it indicates Microsoft sees more growth potential in its apps and online services than in Windows itself. In Nadella's Microsoft, Windows is the conduit through which these profit streams flow, but not the source of profit itself.

2. The Start menu is coming back and the desktop isn't going away.
On both functional and symbolic levels, Microsoft's new Start menu could restore faith among the longtime users repelled by the Modern UI. The same goes for Microsoft OS chief Terry Myerson's assurance that the company isn't abandoning the desktop.

At Build, Microsoft previewed an early version of the new Start menu
At Build, Microsoft previewed an early version of the new Start menu

3. Windows has a future in the Internet of Things (IoT).
Former Microsoft CEO Steve Ballmer famously missed the mobile boom, but by playing up IoT, Microsoft showed its determination to catch the next big wave. At both the iPad event and again at Build, Nadella championed IoT-centric themes, describing a future defined by machines that perceive their environments, digitize the information, and turn the data into useful insights. Microsoft also showed off a new "Windows in the car" prototype during a Build session, suggesting the company isn't going to simply roll over in response in to Apple's CarPlay.

4. Cortana looks competitive from day one.
Cortana got more attention than any single topic during Build's opening keynote -- and for good reason. Windows Phone's lack of a digital assistant

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Michael Endler joined InformationWeek as an associate editor in 2012. He previously worked in talent representation in the entertainment industry, as a freelance copywriter and photojournalist, and as a teacher. Michael earned a BA in English from Stanford University in 2005 ... View Full Bio

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Michael Endler
Michael Endler,
User Rank: Author
4/7/2014 | 1:58:09 PM
Re: Optimistic
"It's been a great run for Microsoft on the consumer front. But let's be realistic: Other than the Xbox, what has the company done in the past ten years as a hit in retail? Time to concede to focus on servers, tools, virtualization, etc."

While I'm not really sure how to solve Microsoft's hardware dilemma (price cuts would help), I don't think they should ignore consumers altogether. I won't be surprised if we see a cross-platform Cortana release before the end of the year, for example. By 2016, maybe Microsoft will only have 10% of the global smartphone market. But maybe it will have 30% of 40% of the digital assistant market, and all the spoils that come with it.

For example, if Cortana becomes available on iPhones, it will surely have hooks for a Skype app. But will Cortana also be able to initiate FaceTime chats? If Microsoft finds the right balance between openness and internal synergy, it could be a software and cloud force to be reckoned with, both in and out of the office. In Microsoft's ideal world, cross-platform software/services success could still feed demand for Windows devices; if iPhone users come to love Cortana and OneDrive, for example, some of them might drift to Windows Phone, which should be able to integrate the services more organically. I think Microsoft faces tougher prospects on the device front than the software/services front, but I can see why Nadella is still talking about both as opportunities.

All of that is speculative, of course, but I think it shows Microsoft still has reason to pursue consumers, at least with software/services.
User Rank: Author
4/7/2014 | 12:58:11 PM
Re: Optimistic
What might change your opinion on Surface? Price point? More apps? Weigh in and tell us what you think, readers.
IW Pick
User Rank: Ninja
4/7/2014 | 12:45:09 PM
Re: Optimistic
Ever walked into a Microsoft retail store? It's usually vacant. The problem has been that Microsoft has not built an ecosystem that can compare to Apple. There's nothing wrong with that, but understanding that perhaps a consumer-centric world is not Microsoft's strength should be a concession that the company should pursue. 

It's been a great run for Microsoft on the consumer front. But let's be realistic: Other than the Xbox, what has the company done in the past ten years as a hit in retail? Time to concede to focus on servers, tools, virtualization, etc. 
IW Pick
User Rank: Strategist
4/7/2014 | 12:23:16 PM
Re: Implying that MSFT ever had any Mojo
That's pretty much what I was thinking as well. You have to have mojo to get it back. Microsoft never really had it. Their popularity was due to a combination of savvy and dishonest business moves, not mojo, innovation, etc. There is a lot of talent at Microsoft, I just keep hoping it can one day be allowed to shine through. With Ballmer out of the way, I'm guessing that might be a possibility, so hopefully their future is now brighter - but not in simple terms of sales and people feeling like they are forced to use the stuff - but in their producing great products people want to use.
User Rank: Apprentice
4/7/2014 | 11:53:52 AM
Implying that MSFT ever had any Mojo
Whom are we kidding? MSFT is kind of the US government of the computing world. Huge, bloated, inefficient. Windows  XP remains popular and STABLE, yet MSFT is abandoning it -- dumb. Some of MSFT's offering are like leafing through a 1975 Sear's catalog and gawking at the fashions. Hideous polyester knockoffs of what kids might have been wearing five years earlier. They still make the Windows phone? Talk about an excruciating miss. And the "Surface" tablet? Was that meant to kill off the iPad? That's just sad. MSFT seems to distill or concentrate the most aggravating and willfully boneheaded behavior of the PC set, then wonder why nothing is selling. Mojo? Microsoft? Are you high?
User Rank: Ninja
4/7/2014 | 11:40:47 AM
I'm quite optimistic about the immediate future of Microsoft, something that just a short while ago I was quite soured on. In my mind Windows 9 was going to be even more of a closed ecosystem than 8 and instead of opening itself up - like it has done now - Micrsoft would follow Apple's way of thinking and circle the wagons further and further as its relevance shrunk.

Now though it has potential. It will at the very least be interesting to watch. 
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