Introduction and consumer products
The direction that Microsoft is taking as a company under the stewardship of Satya Nadella is just becoming visible. After almost a year and a half in the role, Nadella has changed the focus of one of the world's largest corporations from the ground up, altering its product lines and changing the corporate atmosphere from one of cautiousness and conformity to one that is starting to sound fearless in terms of bold changes, tearing up entire product ranges to focus on new areas.
Examples of this came early on in Nadella's tenure with Office for iPad which had been under development within Microsoft for many years under Steve Ballmer but was only released in 2014. While this may not seem significant, it signalled a shift from attempting to lock users into the Office ecosystem by exclusivity to an approach that fosters inclusivity, allowing millions more users of Office even though they were not using Windows specifically.
Onwards and upwards
But that was last year and it would seem the push is continuing as Microsoft moves to cut away various consumer-facing services, many of which are failing. Last week Microsoft announced that it has sold off some of the technology behind Bing Maps, along with 200 staff, to Uber, the taxi company.
On a micro scale the deal makes sense – Microsoft has never really been a serious player within mapping and Uber obviously has plans to expand; two birds, one stone – but when viewed on a macro scale it shows that under Nadella Microsoft is now willing to make the kind of cuts that would have been unthinkable only a few years ago, shedding technology that it no longer has a use for so that it can focus on other things.
On top of this Microsoft also struck a deal with AOL that relinquishes its display ads business on various platforms, an area where the company has traditionally lagged behind Google and Facebook. By handing over the services to AOL, Microsoft sheds 1,200 employees and no longer has to focus on an area in which they were not innovating to a level that Nadella expected. In simplistic terms, the war for Microsoft to compete with Google on all fronts is now over, symbolised by the departure of Mark Penn, the man responsible for the "Scroogled" adverts.
Curtains for the consumer?
Analyst Ben Thompson of the Stratechery blog succinctly noted that "this is the official end of Microsoft as a consumer company" as Redmond moves towards its new mission: "cloud first, mobile first".
This analysis is perhaps extreme, as Thompson himself admitted in a subsequent blog post, but broadly Microsoft has been making moves to leave the consumer space, at least in terms of non-operating system areas. Windows is still, and will likely remain for a long while, the most used consumer operating system around, especially on PCs, but the core missions of Microsoft have strayed to include such a broad array of consumer-focused areas that the company has become confused.
In an interview, Apple CEO Tim Cook described Apple's intense focus, highlighting the fact that the entire product portfolio of Apple can be laid on a single table. The two companies make different products but the theoretical perspective remains: Apple is focused while Microsoft tries to operate everywhere, hoping something sticks. By selling off various assets the company benefits hugely in terms of profit – both deals were of an undisclosed value but the figure was likely large – and in terms of focus, allowing Microsoft to realise its "cloud first, mobile first" aims.
Windows Phone and Xbox
Another point of consideration is Windows Phone, one of the only areas where Microsoft is primarily focused on consumer with very little enterprise influence or input. Thompson posits that Windows Phone, alongside the Surface line, is a sort of public research and development effort. "Windows Phone and Surface are little more than glorified R&D projects seeking to keep the company relevant in hardware while they pursue the next big thing," says Thompson.
The Next Big Thing, of course, will likely be HoloLens and Microsoft has been playing this up massively, dedicating the past three big events to the exposition of the product. It's unclear as yet what the final hardware of HoloLens will look like, especially with regard to the internals, but Redmond seems to finally be anticipating what a version of the future could look like.
One of the other pieces of the puzzle Nadella is trying to complete is Xbox, the wildly popular gaming division of the company that has, for years, been a target for analysts who claim it should be spun off into its own company. If this were to happen, and it may well, then both companies would likely see the benefits of independence as they would be able to focus on what they do best without the distraction of bureaucracy (for Xbox) and a niche consumer product (for Microsoft).
Of course, speculation about a breakup comes with caveats: Xbox has become far more integral to Windows 10 and Microsoft's recent purchase of Mojang, the developer behind Minecraft, shows that there is a commitment to gaming, even if it doesn't fit with the current wider picture.
Bold as brass
The new direction of Microsoft is, above all else, bold. Whether it is correct remains to be seen. Windows 10 hasn't been launched just yet but the previews, available to 'insiders,' appear to be taking criticism constructively.
It is refreshing to see Nadella moving in a new direction, decisively cutting areas that are no longer relevant to the company at large rather than persisting for little reward, examples of which are almost entirely focused around Microsoft's online efforts. Whether we are seeing the start of a move away from the consumer side of the company's product offerings remains to be seen, but this could also be a house-keeping episode designed to help Microsoft compete moving forward, focusing on what matters.