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4/28/2014
10:46 AM
Michael Endler
Michael Endler
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Microsoft's Mobile First, Cloud First Strategy, Explained

Microsoft CEO Satya Nadella's plan to juggle Windows, cross-platform services, and the Internet of Things is coming into focus.

Microsoft Office For iPad: 7 Questions Answered
Microsoft Office For iPad: 7 Questions Answered
(Click image for larger view and slideshow.)

After laying low during the first seven weeks of his tenure, Microsoft CEO Satya Nadella made four high-profile appearances in April: the Office for iPad introduction, the company's Build conference; the launch of Microsoft's new data platform; and Thursday's earnings call.

Nadella quickly established pet phrases that include "ubiquitous computing," "ambient intelligence," and other broad references to a future in which almost all interactions are digitized and turned into useful insights. The comments were initially abstract but iteratively gained definition with each event. Bit by bit, Nadella's "mobile-first, cloud-first" strategy has come into focus.

Nadella's predecessor, Steve Ballmer, established a "devices and services" agenda. In a way, Nadella's goals aren't so different. "Mobile" replaces "devices" and refers not to smartphones or tablets, per se, but to a recognition that computers increasingly come in varied shapes and sizes.

[Planning to install the latest version of Windows? Read Windows 8.1 Update: 8 Tips to Avoid Headaches.]

Mobility is about "experiences spanning a variety of devices, not about any one form factor that has a certain share position today," Nadella said Thursday. "As we look to the future, what are the set of experiences across devices, some ours and some not ours, that we can power through experiences that we can create uniquely?"

Microsoft CEO Satya Nadella's strategies are coming into focus.
Microsoft CEO Satya Nadella's strategies are coming into focus.

"Cloud," meanwhile, replaces "services" and provides the infrastructure to keep the devices connected, and to support the services those devices consume.

Nadella isn't just reheating what Ballmer already cooked. The new CEO immediately struck his own tone as a public figure, replacing Ballmer's trademark salesmanship with allusions to TS Elliot and Nietzsche. Nadella's strategy is more nuanced than his predecessor's. But it's also more complex, built on tactics that could conflict as easily as cohere.

Take Windows. Microsoft announced this month that Windows licenses for smartphones and most tablets are now free. Some called the move Microsoft's concession that Windows cannot compete with Android for OEM loyalty. But to hear Nadella, this thinking is short-sighted.

Windows once targeted only PCs but now addresses a market that also includes tablets, smartphones, the Xbox, and the Internet of Things (IoT), the CEO pointed out Thursday. "In a world of ubiquitous computing, we want Windows to be ubiquitous," he said. "It's not one price or business model. It's actually a market expansion opportunity."

Free Windows licenses factor into Nadella's plan to make Windows 'ubiquitous.'
Free Windows licenses factor into Nadella's plan to make Windows "ubiquitous."

For user-facing devices, in other words, Windows boasts a familiar interface that translates across screen sizes, and on the back end, the OS is intimately tied to Microsoft's wealth of services and datacenter products. For developers, Nadella argued, this means Windows offers the largest addressable market, especially because so much code can now be re-used across apps for multiple device types.

But it's not that easy. Windows 8.1 adoption is still mediocre, and the research firm IDC expects Windows Phone 8.1 OEMs to ship only one device this year for every four iPhones and every 20 Android handsets. Microsoft is playing from far behind and has been for some time. That's why corrective measures such as free licenses became necessary.

As far as Nadella's concerned, the lost licensing revenue amounts to an investment in future ecosystem growth. If computers are everywhere, Windows needs to be everywhere. The company's mobile market share is what it is. If that means Microsoft needs to give away Windows, so be it. Because the Windows family will increasingly rely on its breadth across devices, Nadella believes holistic ecosystem health is more important than individual licensing policies.

Still, as much as Nadella's touted Windows, he's dedicated even more attention to cross-platform strategies, highlighted by Office apps for iPads and the concurrently announced Enterprise Mobility Suite. Ballmer resisted such strategies, ostensibly to protect Windows. Nadella's new direction has garnered praise, but it's also where would-be contradictions creep in.

Nadella wants Microsoft services such as Office 365 to run on as many devices as possible -- Windows machines, Macs, and iPads today; Android slates later; and then whatever else becomes popular. He also wants IT to use

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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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anon1668539496
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anon1668539496,
User Rank: Apprentice
4/28/2014 | 1:33:44 PM
I feel sorry for Nadela. Snake bit by Microsoft's greedy past.
That Guy is the fall guy for the end of Microsoft's aka Mafiasoft's monopoly whose roots came from a inside deal Billy's Mom at IBM helped him force onto IBM or should I say IBM fell for. Licensing a totally inferior, hurry find and buy some crappy OS quickly who happened to be from Seattle Computing called Dos. This garbage file system is still in Windows 8 haunting Microsoft after all these years. The biggest mistake Microsoft made was when they had the chance to dump DOS when WindoZe 3.0 came out, they didn't as they used it to incarcerate the world with backwards compatible barbed fish hooks.

The irony of it all is MicroKlunk has snake bit itself too many times now. What they used to control their monopoly with, now is the very thing that is their demise. Locking down users into their highly inferior operating system and overpriced Office product. Those products for those who are not aware of the facts are the only cash cows Microsoft ever had and ever will have now that there is competition on all fronts. DOS is gone. Oops I guess it is officially called WindoZe. Offife is being peddled to iPad Users and anyone who will help make the monstrous Redmond payroll.

Live by the zing die by the zing.

The best Nadela can hope for is to die in his sleep. The consumer market is now history for Microsoft and next it will be the enterprise no matter what they try to do.

The reason this is all happening is the monopoly is gone thanks to Linux and Unix which is far superior to anything ever produced in Redmond since day one. The M$ lockdown is vaporizing as I write this. 

 

 

 
Lorna Garey
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Lorna Garey,
User Rank: Author
4/28/2014 | 3:32:30 PM
Re: I feel sorry for Nadela. Snake bit by Microsoft's greedy past.
I wouldn't be so quick to count Microsoft out. Millions of people are comfortable with Windows and Office, and the company has the $$ to tweak its OS for use across platforms and play the waiting game. Heck, it has the money to jettison Win8 altogether and try again. I suspect the market will like the story Nadella is telling.
Michael Endler
IW Pick
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Michael Endler,
User Rank: Author
4/28/2014 | 4:02:51 PM
Re: I feel sorry for Nadela. Snake bit by Microsoft's greedy past.
I'm with Lorna on this one. For at least some segment of customers, Ballmer's Microsoft clearly left a bad taste, both in terms of licensing policies, and his mostly late and ineffectual attempts to cash in on consumers. But I think the anti-Microsoft stuff is getting a bit mythologized. If the company is as allegedly doomed as some people seem to think, its financials are inexplicably sound-- not only because of long-term deals, customer lock-in and accrued wealth, but also because a lot of core assets have performed excellently. And Microsoft didn't force 12 million people to download Office for iPad during its first week. We don't know how many of those have translated into Office 365 subscriptions, but growth so far has been strong, and Microsoft seems satisfied with recent conversion rates.

Yeah, Windows 8.1 doesn't have many passionate defenders, Microsoft's licensing is byzantine, and so on—but it's just as easy to point to Microsoft's unequivocal success as it is Microsoft's most infamous failures. And a lot of people forget that Microsoft is more than Windows and Office. SQL Server hauls in something like $5 million per year, for example, and though I'm sure not everyone is thrilled about Microsoft's cloud-centricism, the company hasn't left the old world in the dark; they emphasize hybrid models as much as anybody because they realize most people need a bridge to cloud services, or will only use them in specific ways.

This isn't any kind of Windows fanboy-ism, just to be clear. Cost being no object, I'd choose an Apple product over a Windows product for most things I do (but cost is of course an object). I've also written more than a few critical words about Windows 8 and the Surface line's mass market appeal. But I think Nadella has handled the cards he was dealt as well as could be expected. He's also been relatively candid about Microsoft's challenges, and he's presented a much clearer vision for leveraging Microsoft's existing user base to launch new products, both for Windows and for other platforms. Nadella didn't build yesterday's Microsoft, and there's plenty of reason to think he'll build a different Microsoft for tomorrow. I think it's telling that so much criticism focuses on what happened before Nadella took over, rather than the numerous announcements Microsoft has made in the last month.

Tom bring up a point with "thinking about users." Apple cracked the UI question first, and has only gradually figured out supporting software and infrastructure. Microsoft has the infrastructure but is still figuring out the user-facing side, at least with Windows. This is one of many reasons that Microsoft isn't out of the woods. But I like said, I think Nadella knows that, and I think Myerson (the new OS boss) does too. I don't think Nadella is Steve Jobs, but he doesn't have to be. Microsoft isn't in nearly as bad a shape as Apple was before Jobs came back.
Shane M. O'Neill
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Shane M. O'Neill,
User Rank: Author
4/28/2014 | 5:41:38 PM
Re: I feel sorry for Nadela. Snake bit by Microsoft's greedy past.
This is a great bird's-eye view of the complex state of Microsoft. Nadella is doing a good job of creating a new narrative with what he's inherited. And he has Microsoft's deep pockets and no hard deadline in his favor (Microsoft doesn't really do deadlines). But it's becoming clear that the Nokia buy -- and the integration of 25,000 new employees -- is a big old snafu. It's a Ballmer decision that Nadella must figure out. Nokia's assimilation gets even more perplexing as Nadella further explains his vision of cross-platform software, "ubiquitous Windows", and cloud infrastructure and support with Azure. From all he's said, Microsoft future does not involve manufacturing mobile hardware.
shakeeb
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shakeeb,
User Rank: Black Belt
4/29/2014 | 7:31:40 PM
Re: I feel sorry for Nadela. Snake bit by Microsoft's greedy past.
@Lorna. I agree with you, companies around the world spend many dollars on Microsoft products and I wonder whether people will be happy about this concept. 
aaronAshfield
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aaronAshfield,
User Rank: Guru
4/28/2014 | 2:33:18 PM
Microsoft is struggling to find its place in the current world... Is lacking innovation...
I am afraid that changing "devices" to "mobile" is not going to cut it... 

Microsoft is running out of ideas... and when you are not creative, nothing works...

Remember what Steve Jobs said about Microsoft in his book?

Perhaps a model for Microsoft is SecureAccessTechnologies.com
Thomas Claburn
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Thomas Claburn,
User Rank: Author
4/28/2014 | 3:11:21 PM
Who's on first?
Cloud first? What ever happened to customer first?
Laurianne
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Laurianne,
User Rank: Author
4/28/2014 | 4:11:38 PM
Pet phrases
"Ambient intelligence" is not a phrase that makes me feel warm and fuzzy. Instead, it makes me think about security and privacy.
Michael Endler
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Michael Endler,
User Rank: Author
4/28/2014 | 4:22:15 PM
Re: Pet phrases
Good point. No doubt, Microsoft will have to tackle privacy concerns. A lot of people don't trust the cloud, and as envisioned by Nadella, the cloud is Microsoft's future.

Cortana will be a sort of test case. It knows as much about you as you care to share. If people find it useful, they'll entrust it with more info, and Microsoft might begin to allay some concerns. If people find it to be mostly a gimmick, they'll use it for fewer things, and Microsoft's reputation for privacy won't necessarily benefit. Cortana alone won't fully address this problem by itself, of course-- but like I said, it's a test case, a sort of litmus test. If average people won't share details with a smartphone assistant, how on earth will they allow sensor-embedded, data-slurping objects to surround them?
SaneIT
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SaneIT,
User Rank: Ninja
4/29/2014 | 7:34:49 AM
Re: Pet phrases
People may not trust the cloud but look at the direction every other company is going.  Microsoft isn't unique with their push to the cloud they are just a little more transparent about it.  I don't remember hearing much "cloud" talk when Apple pushed Mobile.Me accounts but that was exactly what the push was.  Google doesn't have one application that isn't in the cloud and that's not hurting them.  I think when we say people are afraid of the cloud we are saying that people are used to Microsoft doing business as usual and any change is unsettling.  
Michael Endler
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Michael Endler,
User Rank: Author
4/28/2014 | 4:28:55 PM
Re: Pet phrases
"'Ambient intelligence' is not a phrase that makes me feel warm and fuzzy. Instead, it makes me think about security and privacy."

In addition to my other comment, I should add that even if "ambient intelligence" has a bit of a 1984 vibe, it's not that different from what a lot of other companies are saying. At a high level, Cisco paints basically the same vision for the future, for example, though Cisco has learned to emphasize that the user is in control, that services must be opt-in, and so forth. But even if the messaging is a bit different, the point is-- most huge tech companies are hanging future strategies on some version of this "ambient intelligence" concept. Apple, Google, IBM, and on and on. "Ambient intelligence" is basically the intersection of the Internet of Things, and big data, and few experts believes this basic formula isn't worth trillions. We might not call it "ambient intelligence" in the future, but whether our sense of privacy is ready for it or not, the concept is coming. The question, for Nadella, is whether things like SQL Server, Windows and Excel will be at the center of it.

 

 
dlampe328
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dlampe328,
User Rank: Apprentice
5/27/2014 | 4:43:26 PM
I think I get it
I might not be Microsoft's target demo, but I like what I have seen from Nadella. If the CEO’s job is to be the face of the company to The Street, then Ballmer wasn’t hacking it. I never really understood what he was doing other than trying to fix an organization that was attacking itself from within. I don’t think there is much new in Nadella’s strategy but there seems to be more focus and clearer communication. One key positive I see is in looking at the OS as a vehicle to deliver content that generates revenue instead of a source of revenue in itself. MS doesn’t have the same luxury Apple has with their closed ecosystem so they can’t build big profits into the hardware (i.e. Surface or Nokia phone). They can however generate a huge revenue stream through licensing apps like Apple does and they have a similar advantage to Google due to the number of white box vendors ready to sell Windows devices. Add that to a very active developer ecosystem which has already become WAY more open-source friendly and I like what I am hearing. I think Nadella “gets it”.
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