Posted by: Stuart Johnston
Cloud Computing, windows server 2012
By Stuart J. Johnston, Senior News Writer
It’s not as though it wasn’t already apparent, but Microsoft CEO Steve Ballmer has made it official: Microsoft’s future lies beyond Windows in the realms of devices and services.
That was the message Tuesday when Ballmer published his annual letter to shareholders, customers, partners, and employees in the run up to the company’s annual meeting at the end of the month.
“It’s important to recognize a fundamental shift underway in our business and the areas of technology that we believe will drive the greatest opportunity in the future,” Ballmer said. “This is a significant shift, both in what we do and how we see ourselves — as a devices and services company.”
The soon-to-be-released Surface tablets as well as cloud computing spring to mind when devices and services are mentioned, of course. The question is how will this shift play over time with the letter’s constituencies?
To those who question the wisdom of seemingly changing businesses — even business models — in mid-flight, Ballmer had some answers. Microsoft isn’t in the device business? Take a look at Xbox and Kinect, and don’t forget mice and keyboards. He didn’t mention the KIN phone disaster, but it’s hard to argue that the Xbox hasn’t helped bring computing and connectivity into the family room.
What’s so notable is that the company has so much at stake in this shift, and yet has the conviction that without moving in such new directions the company may not survive — like The Innovator’s Dilemma. The world is changing by the millisecond and unless the company tears down its own foundation and rebuilds itself, faster competitors will eventually eclipse its dominance.
Here’s the $74 billion question: Can Microsoft’s corporate culture make the switch, along with changing the whole product orientation, and do it in a manner so as to not tear the company apart in the process?
Besides devices, Ballmer is betting that cloud services — for both businesses and consumers — will produce larger, more stable revenue streams over time, and change the way users compute, although the company hasn’t reported any figures for its cloud offerings so far.
Microsoft implies that these new business models will not compete with partners or shatter the well-developed third-party ecosystem. Of course, given the letter’s audience, Ballmer is aggressively optimistic.
Like campaign promises, however, there are a lot of holes to fall into, not the least of which is Windows 8, which some observers criticize as trying to be all things to all users. A failure in Windows sales could unravel two and a half decades of work, as could sluggish sales of cloud services.
With the launch of Windows 8, Windows Phone 8, and the Surface, Ballmer is taking perhaps the biggest bet-the-farm move the company has ever made.
“Apple has proven that hardware and software must go together in this new world … and you have this whole services thing happening,” said one source close to the company. “[this] implies we are abandoning the old stuff. Legacy is a bad word,” the source said.