Why I Still Think Microsoft Will Win With Windows 8

Last February, when I wrote that Windows 8 will put Microsoft back on top, a lot of people thought I was nuts. Nobody could touch Apple and Google’s Android had too big of a head start.  Microsoft was toast and anybody who denied it was just ignoring the obvious.

Well, Microsoft launched Windows 8 last week to mixed reviews.  None were glowing, a few were negative and almost all expressed some kind of reservation.  So how do I feel now?  I’m doubling down.

Given that Windows 8 is an almost completely reimagined product, from the interface to the basic technology, the reviews are surprisingly positive.  Combined with the rest of Microsoft’s assets, is strategically brilliant (and amazingly interoperable).  From a business perspective this is one of the most important products in history.  Here’s why:

Mobile First

Microsoft rose to power as the king of the desktop.  Controlling the operating system for 95% of the world’s computers, they largely ruled the tech world.  So much so, that they were hit with an antitrust suit to curb their enormous power.  However, the world has changed and now Windows runs on less than 50% of connected devices.

Rather than try to defend a bad position, Microsoft has organized its new operating system around mobile.  Tellingly, much of the criticism of Windows 8 is about the frustration that desktop users will feel about being dumped.  This is the kind of bold, ruthless move that built the company we learned to both hate and depend on.

Notably, it is a move that Apple still hasn’t had the guts to attempt.  Their laptops and desktops run OS X, while iPhones and iPads run iOS, which are both perfectly good operating systems, but the experience between the two is not always as seamless as it could or should be. (For instance, it kills me that I can’t watch HBO GO on my Apple TV).

Whatever the charms of Google and Apple (and they have many), neither has attempted the kind of fearless, shoot for the moon move that Microsoft has just pulled off.  Ballmer and company should be commended for not only their vision, but for executing it well.

Microsoft’s Continued Dominance in Productivity

Despite what many think, Windows isn’t Microsoft’s biggest or most profitable business. In fact it ranks third on both counts.

The most profitable division by far is the Business Division (largely made up of the Office software suite), which accounts for more than half of Microsoft’s earnings, followed by “Servers and Tools” that provides back-end software for many large enterprises.

As tablets become more important in the workplace, Office will be a major mobile asset for Microsoft.  It is the one remaining area where Microsoft retains its monopoly and, though often overlooked in tech circles, programs like Word and PowerPoint are absolutely essential for business people.

Getting Office software to work on iPad is a nightmare.  This is a major oversight on Apple’s part. The iPad is great as a media device, but for productivity it leaves a lot to be desired and that has left a large opening for Microsoft.  It looks like they are walking right through.

The Subtle Genius of Surface

Of all of the aspects of the Windows 8 strategy, producing the Surface tablet is probably the most brilliant strategically.  On the face of it, they are introducing a business-based tablet that is a logical successor to the net book:  All the computing power that you need for daily use as well as a touch interface and a keyboard.

However, look a little bit more closely and there are a few nuances that make the Surface a really smart move.  First, Android has a much weaker position in tablets than in phones and therefore manufacturers are not nearly as invested in Android there.  Second, tablets have a much greater need to run Microsoft Office software than smartphones do.

Most of all, Microsoft will pay no penalty for manufacturing their own hardware.  Apple is already fully integrated and Google, with their purchase of Motorola, is heading that way. So however much manufacturers might protest the crossing of this particular line, Microsoft is still the best friend that they have.

So we should see the Surface tablet for what it is, a virtual guarantee that manufacturers will support Windows 8 for tablet computing.  The product itself can live or die, but the business is almost sure to thrive.

The New Digital Battlefield

As I’ve written before, while social and mobile have driven technology for the past few years, the new digital battlefield is at home, in the car and in-store.  Microsoft is leading the pack here.

Their Xbox platform, with tens of millions of subscribers, is miles ahead of Apple TV and Google TV in terms of consumer base and seem to be winning the race to ink up cable deals.  They’ve also been successful with their smart car initiative, which includes Ford Sync, Kia Uvo and Fiat Blue & Me.  Google and Apple aren’t even active in the category.

Perhaps not surprisingly, Microsoft is making headway in retail solutions and have built a joint retail innovation lab with Razorfish, the digital agency.  Again, neither Apple nor Google has any offering to speak of in this area.

So Windows 8 is not only the first operating system to unify mobile and the desktop onto one platform, through SkyDrive and SmartGlass it will also unify your TV and (possibly) your car and your shopping experience onto one voice, touch and motion interface.  That’s bold and impressive.

Competence

While I don’t think anyone would argue that Microsoft has always been the world’s greatest technology company, they have consistently been a great technology business.  No other enterprise has been so successful for so long through so many technological cycles.

When the rise of the Internet threatened their business, they turned on a dime and met the threat.  Now that mobile has imperiled it again, they have again reacted with vision, competence and good business sense.  While their franchise will never be as hip as Apple’s or as technologically forward as Google’s, they manage to get the job done.

For all of the nit picking, one thing everybody agrees on is that Windows 8 offers good user experience and interoperability across a variety of platforms while improving basic performance.  That’s quite an achievement by any standard.  If it were easy, certainly somebody else would have done it by now.

As much as I’ve become invested in the Apple ecosystem over the past few years, I have a feeling that, as my business computing continues to entwine itself with my personal computing and entertainment, I’m going to become increasingly ingrained in Microsoft’s.

– Greg