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12/26/2013
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Michael Endler
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Microsoft In 2013: 7 Lessons Learned

If a key to success is learning from your mistakes, Microsoft should be well positioned for 2014.
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This was an up and down year for Microsoft.

January opened with Microsoft still licking wounds suffered the previous fall, when Windows 8 arrived with a thud and the much ballyhooed Surface RT somehow managed to fare even worse. After holiday sales failed to lift sagging computer shipments, many critics rang in the new year by blaming Microsoft for the PC industry's woes.

In retrospect, this criticism was somewhat overblown. Windows 8 didn't do any favors for Microsoft and its partners, but falling PC sales have had more to do with consumer preference for tablets than with desktop users' disdain for Win 8's Live Tiles. Even so, Windows 8 and its struggles remained the dominant Microsoft narrative for most of the year.

In fact, the OS overshadowed the fact that certain Microsoft ventures were having one hell of a year. Windows Azure not only grew into a formidable and fairly open cloud platform, but also matured as the backbone for a variety of successful ventures, including Office 365 and Xbox Live. It's no coincidence that Satya Nadella, the executive who oversees Microsoft's cloud business, is frequently named as a leading candidate to be its next CEO.

Investors began to take notice as Microsoft's cloud divisions continued to accrue business from enterprises and governments. The company's stock began to inch higher as winter turned to spring, and when CEO Steve Ballmer announced a companywide reorganization, most commentaries emphasized the upside. But then Windows 8 reared its head again.

Even though investors became optimistically cautious, Windows 8 adoption remained weak. The poor performance didn't show up in Microsoft's bottom line until July, when, a week after confirming the reorganization, the company missed Wall Street estimates and took a nearly $900 million writedown on unsold Surface inventory.

Microsoft had positioned the Surface line as the Windows 8 standard bearer, and critics called the tablets' failures an indictment of both Microsoft's device strategy and Win 8 in general. Goodwill among investors disappeared overnight. "We built a few more [Surface] devices than we could sell," Ballmer would later concede.

Ballmer caused the next big wave when he announced in August that he would retire within the next 12 months. Investors immediately signaled their approval, sending the stock up.

Since then, the ups and downs have continued. Windows 8.1 garnered better reviews than its predecessor and restored faith among some longtime Windows users. Still, Win 8.1 adoption hasn't exactly soared, and the Start button still doesn't have a real Start menu. The Surface 2 and Surface Pro 2 appear to be performing better than Microsoft's first-generation tablets, but it's still obvious they're getting killed by iPads. If this weren't the case, Microsoft surely would have trumpeted a few Surface sales figures, like it has for recent Xbox One milestones.

Most commentators have agreed that the company needs fresh leadership, but should it be someone who can facilitate Ballmer's vision or someone who will focus on enterprise customers? Was the Nokia device business acquisition a mistake or a sign that Microsoft is finally getting serious about mobility? The Microsoft board has indicated that the next CEO will follow Ballmer's One Microsoft blueprint, but some influential shareholders are reportedly wary of the company's strategy. At least a few allegedly have called Bill Gates a corrupting influence in the CEO selection process.

Luckily for Microsoft, it's a very rich company, and that lets it weather storms that would bankrupt lesser companies. How much the company has learned from the aforementioned missteps will become clear in coming months and years. Will it beat Amazon in the cloud? Will it be able to build an ecosystem that competes with Apple or Google? Will Office remain the dominant productivity platform? What are Microsoft's plans for wearable devices? Will Microsoft unleash disruptive advances in voice-controlled natural language technology? What about Cortana, Windows Phone's rumored answer to iOS's Siri and Android's Google Now?

For all the uncertainty, though, some of the lessons are clear. Click the image above for a slideshow of seven things Microsoft learned in 2013.

Michael Endler joined InformationWeek as an associate editor in 2012. He graduated from Stanford in 2005 and previously worked in talent representation, as a freelance copywriter and photojournalist, and as a teacher.

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AshleyJ483
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AshleyJ483,
User Rank: Apprentice
12/30/2013 | 8:36:30 AM
MSFT
Lesson microsoft should have learned: Dont loose you core competency by resturcturing yourself, dont go mobile if you dont have a strategy, dont work without a CEO

 

http://bit.ly/MSFTInfo
virsingh211
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virsingh211,
User Rank: Strategist
12/30/2013 | 3:48:05 AM
Re: Microsoft suffering from Apple envy?
I don't want to compare Apple and MS, Apple is doing good in iPad and iPhone infact i agree transition is on the way which will continue iPad growth but MS is not only about phones and tablets they do have other wings as well. I agree they have been going through tough times but with the same they are also doing good in the cloud, I am eagerly waiting for Alan Mulally to take over at Microsoft.
samicksha
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samicksha,
User Rank: Strategist
12/30/2013 | 2:58:27 AM
Re: Microsoft suffering from Apple envy?
I regard this as transformation period, i mean from computers to iPads, Apple is moving into the enterprise and it's due to employees who feel more productive using Apple products, but parallel to this MS still keeps good relevance in the enterprise market as i don't find people comforfable in typing meeting notes in their iPad.
The_NPP
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The_NPP,
User Rank: Apprentice
12/29/2013 | 6:52:16 PM
Re: Linux, I am coming to ya!
Oddly enough, I agree with you for the most part.  But, as I see it, a major contributing factor was also that Windows worked and did what was needed.  You could be productive with it.
More than anything this reminds me of when they took away the menus in Office 7.
My boss was all gung-ho about converting the entire office to cutting edge O7 but I convinced him to test it on his machine first.  Within two weeks he stormed into my office demanding I remove that $*%&# Office 7 because he couldn't get any work done.
Same with Windows 8.x.  Designed to look pretty and not to be fuctional for a person needing to be functional.
This also reminds me of chicklet keyboards.  Remember those?  Yeah, chicklet keyboard (I hope I'm getting the name right), IBM Jr., Vista, Windows 8.x, Office 7.  See the trend?  Made to "look nice" instead of realizing that people using keyboards need to work (for example).
Sidebar:  This is one of the reasons I chuckle when I see hackers in movies or on TV coding super fast.  What do they do it in?  A fancy Winodws IDE?  Nope.  Shift into TTY because they need to be productive FAST! And Windows 8.x ain't the way to do it.
In the movies and on TV, high productivity is implied by shufting into TTY.  What does that tell you?  Heh.
Chuckle!
Here's another funny for you:  When I need to intensive file interactions YES I still write batch files that run on the command prompt.  Why?  Because they run 200% to 500% faster and with better control.
Sadly, college grads are appearing without the CMD controls they need and while they wait for Windows to respond, my work is getting done and I'm out on the greens getting in a quick 9.
The_NPP
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The_NPP,
User Rank: Apprentice
12/29/2013 | 6:43:52 PM
Re: Linux, I am coming to ya!
Well, let's see:  I have eight applications where the first six letters are the same.  huh.  I can either group shortcuts, click the group to open it and then click the specific app I want, OR I can click start, type 7 letters and hope I didn't type anything wrong.
Now, that was one group of apps.  We won't even mention the reports which begin with the same basic lead, sometimes of up to 15 letters, but the suffix was the thing that seperated them.  Huh.  Click folder then click specific report OR type fifteen letters.
Yeah, I can see what you mean.  Typing fifteen letters is WAY easier than clicking three of four times.
Tell you what:  You got back to video chatting with people in other bars and I'll continue to make sure your world keeps running.
Sheesh!  No wonder all the programming functions are going to India, et. al.  And all we'd have to do to bring them down to our level is force them into Windows 8.1.
As noted before, I need to be productive, not make videos of cats dancing.
melgross
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melgross,
User Rank: Ninja
12/29/2013 | 12:03:00 PM
Re: Microsoft suffering from Apple envy?
I can't completely agree with that. Microsoft a consumer company? Seriously? No, they are a business oriented company, and that's what they have always done best. Their problem is that they think they need to also be a consumer company, but they have never shown any understanding of the consumer market. People bought Microsoft OS machines because that's what they used at work, could get free software from their employers (or otherwise), and knew how to use it (again, from work). Those days are over. The entertainment division has now lost an accumulated $12 billion, or more, since the first XBox went on sale, despite Microsoft's attempts to conceal those losses over the years with mergers with profitable divisions, and now, the licensing fees from Android. Bing has also lost billions. First, Windows Mobile failed, and now Win Phone is doing poorly. Even though a few small EU countries are finding some success with it, worldwide marketshare is still just around 3.5%, about what it is in its home market here. Microsoft is losing money on this too. It's questionable as to whether the acquiring of Nokia's phone division will work out. How many of those customers are buying Win Phone because it is a Nokia product, and they have loyalty to Nokia, and how many are buying them them purely because they are a Win Phone product? This is something we may not know for at least 18 months, when Microsoft loses the right to use the Nokia brand name. Unless, of course, sales drop before that. In fact, every area that could be said to cater to consumers has lost vast amounts of money, and continue to do so. Despite what some "analysts" say, Microsoft should rid themselves of this despoiled vision of being a consumer powerhouse, and concentrate on their successful areas in business. Yes, they will be a smaller company. But they will also be a much more focussed and therefor, profitable one.
melgross
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melgross,
User Rank: Ninja
12/29/2013 | 11:51:40 AM
Re: Linux, I am coming to ya!
For most people, moving to Linux is going from the frying pan to the fire. Linux is more complex, even though it works very hard to look and act like Windows. Most of the software is much worse, and confusing to use. Support is non existent. There are good reasons why there has never been more than a 1.5% marketshare in Linux desktops.
moonwatcher
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moonwatcher,
User Rank: Strategist
12/28/2013 | 11:25:39 AM
Microsoft's refusal to listen to customers was the downfall of Windows 8
I used to work a bit in IT back in the days of Novell. I'm not an "expert" by any means, I'm an aerospace engineer in my "real" job. Over the last year I've installed Classic Shell or Stardock's Start8 on at least 25 of my friends and business associates desktops or lap tops, and after showing some of them how to do it, they have in turn done the same for several of their friends. Why? Because they were FORCED to buy a machine with Windows 8 on it before the manufacturers finally wised up and started letting consumers choose Windows 7. (Heck, Dell now even touts that as a "feature" to try getting you to buy a desktop.)

No one except the Windows 8 guru kid at Staples seemed to much like Windows 8's Metro interface. It was a confusing jumble of different sized LARGE crayola colored icons that did not work intuitively. (While most consumers were just getting used to and comfortable with the beautiful Aero interface in Windows 7). And then, there was no Start button that consumers had become so used to using since the ancient days of Windows XP (which many consumers are STILL running). Note that a kid could have gone from 1st grade through high school and the only OS he has ever touched was XP. Wow, talk about having an OS ingrained into your consciousness!)

I actually had frenzied phone calls from friends who had turned their new PC on but could not for the life of them figure out how to turn the dang thing off. Jeez.

All Microsoft had to do was a bit of easy H1-B visa programming to bring back the Start button, add in an easy to find boot to desktop check box, and then lap top and desk top users would have been HAPPY with Windows 8. It has many advantages over Windows 7: a faster, more secure operating system that takes better advantage of new hardware.


But Microsoft was adamant about FORCING customers into dealing with their unwanted tablet interface, in their faces every boot up, even if it was just one extra click to the desk top.

All I know is Microsoft made a lot of money for Stardock in the first 6 months of the year.

If they want to make consumers happy, how about just adding back in the good old (real) START button with menu in 8.2 and be done with it, after licking their wounds. Metro will be there for the FEW that want to mess with it in a desktop setting or those who might eventually upgrade to a touch screen one day.

I believe the verdict is in. Consumers do NOT want an all encompassing OS that works on phones, tablets, lap tops, and desktops or at least don't want to be FORCED into learning an inferal tablet interface they have no intention of buying into with the purchase of a device running that OS.

As a final note, maybe consumers really only want TWO choices in most things. Maybe we are If, then, else type creatures. (Just try being a third party political candidate in this country.) For tablets, Android or iOS are two choices enough. How many people go into a 31 flavors ice cream joint, spend 20 minutes trying to figure out what they want and end up getting vanilla or strawberry?
cpmcgrath
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cpmcgrath,
User Rank: Apprentice
12/28/2013 | 8:26:45 AM
Re: Linux, I am coming to ya!
OR you could learn that you are no longer using windows 3.1, and instead of looking through a giant list, or wasting your time sorting shortcuts into folders, navigating through the heiracy trying to figure out which folder contains the shortcut you want, you could simply...

HIT THE START KEY ON YOUR KEYBOARD TYPE THE FIRST FEW LETTERS OF WHAT YOU'RE AFTER AND THEN PRESS ENTER.

Seriously, I'm so sick and tired of hearing about so called 'Power users' who switch to their mouse and scroll through a heap of information to find the one item they care about instead of just typing a few letters. This functionality has been in windows for the last 8 years. If you haven't embraced it, stop calling yourself a power user.
StevenJ13
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StevenJ13,
User Rank: Strategist
12/28/2013 | 8:00:05 AM
Re: Lots of Lessons
"People are ONLY buying less PCs/Laptops because the OS and hardware improvements have extended longevity of their current hardware."

This.  I use to get new PC every year.  I have not bought one in over 2 years.  The last PC (laptop) I got still has more RAM then some of the servers I use.
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