I do not like to make predictions about what might happen in the technology world in an upcoming year, because I do not see any real purpose.
Instead, I want to put one company into the spotlight that I have especially high expectations in for 2015: Microsoft.
Microsoft has been struggling for years to stay relevant in an fast changing environment. Unlike some other old giants that were caught by the innovator’s dilemma and missed their chance to adapt and change, the lack of consumer interest has not caused the Redmond-based company too much headache yet. Thanks to its diverse product portfolio, its massive reach in the slow-moving, conservative enterprise and b2b market, Window’s still huge share of the PC market (91.48 %) and some new hardware and cloud products, the company generated a recent quarterly revenue of $23.20 billion and an operating profit of $5.84 billion. So the money is still flowing.
However, what Microsoft has been lacking for a long time now is coolness. Ask younger generations about the devices and services they desire and passionately spend time with – there will be hardly any mentioning of a Microsoft product (with the likely exception of the Xbox). In the long run, that poses a big risk to Microsoft’s overall market potential. Because at one point, the aging IT buyers in companies and homes will be replaced by people who do not necessarily see Microsoft, Windows and Office as essentials if work needs to be done and tasks accomplished. In addition, having the choice, still very few people would prefer a high-end smartphone or tablet by Microsoft/Nokia over one by Apple or an Android-manufacturer.
Thus despite the billions of profit, Microsoft really needed a change. In February 2014, that happened: Satya Nadella, until that point Microsoft’s head of the cloud computing division and enterprise business, replaced Steve Ballmer as CEO. Ballmer had been failing over and over again in getting the company fit for the mobile, connected, consumerized future. India-born Nadella does not follow Ballmer’s patterns of crazy on-stage performances and bold, sometimes way too confident quotes. I am not familiar enough with Nadella to comprehensively being able to describe his personality, but from his public appearances he seems to be more of a calm, well-reflected technology guy, not the Ballmer-type aggressive sales dude.
But what makes me really curious about the next months of Microsoft is not the leadership change itself (which more often than not does not bring any significant improvements to complacent technology companies), but the numerous moves that the company has made following Nadella’s appointment. Here is a list of some of minor and major actions that Microsoft announced under Nadella:
- Acquiring Mojang, the company behind the massive game hit Minecraft for $2.5 billion. Minecraft is something like the digital version of Lego and extremely popular especially (but not only) with younger people.
- Release of a cross-platform fitness and activity tracker called Band. Reviews were mixed. Anyway, it is currenty sold out (which could have to do with very limited supply). The launch of such a product itself was seen as a surprise.
- Open-sourcing of the .Net core
- Partnership with Dropbox that enables Dropbox users to edit office files from mobile devices.
- Making major parts of the Office app for iPad, iPhone and Android free.
- Giving away music albums for free as MP3.
- Launching a beta of Skype Translator, a real-time translation add-on for Skype. It’s quite a sophisticated piece of software.
- Accepting Bitcoin payments for some content in the Windows Store as well as in stores that house Xbox Games, Xbox Music or Xbox Video. No other tech company of similar size has made such a move yet.
- Announcing plans of a new browser that will be released with the next version of Windows, Windows 10. Even though the newly created browser might turn out to be Internet Explorer 12 in disguise, a rebranding makes a lot of sense. Nowadays most conscious end consumers do not associate the IE with desirable attributes.
- Acquiring Germany-based startup Hockeyapp. Its service lets developers beta test their apps on iOS, Android, and Windows.
- Bringing a number of MSN apps on iOS and Android.
- Buying the email startup Accompli for $200 million, provider of mobile email apps for iOS and Android, but not for Windows Phone.
- Offering many Microsoft consumer services in one discounted subscription bundle for $199 (US only).
- Partnering with fast-growing Swedish startup Truecaller, bringing Truecaller’s Live Caller ID to Windows Phone.
- Announcing the official presentation of Windows 10 for January 2015, which is designed to work on PCs, phones, tablets and the Xbox One.
Now, obviously, this is just a list of at best loosely connected, sometimes isolated moves. However, while some of these initiatives are pretty conventional, my overall impression is that this is not the Microsoft we have seen before. It seems as if the prioritization is shifting, away from the heavy marketing talk as the sole focus, towards more actual product advancements, cross platform support, openness and an aspiration for reaching lost user groups (e.g. young people, geeks, multiplicators).
I have no idea if the plan will work out. Changing a company from old thinking to new thinking means changing everything – strategy, processeses, organization, culture. Whether Nadella can pull that off or not remains to be seen. But looking at the list from above I find it safe to conclude that the Microsoft of the end of 2014 already acts and feels different compared to the Microsoft of the beginning of 2014. For a 40-year old company with more than 100.000 employees, that already is quite an achievement.