On April 4, local time, Microsoft quietly celebrated its 45th birthday. It’s easy to overlook Microsoft, the “old” technology company, because of the rapid growth of Google, Facebook and Netflix. Microsoft was once seen as another IBM, both former market monopolies, who had been caught up in the stagnation of strategic and technological innovation, like an elephant in place.
But from the back of the story, Microsoft did not hold the glory of the past, today’s 45th anniversary of Microsoft, in fact, is another company.
From the 1990s to the first decade of this century, PCs and Windows were the main portals of the Internet, and Microsoft, the monopolist, shined for two decades. But in the next mobile Internet age of “PC decline, mobile phone rise”, Microsoft has been unable to find a key breakthrough, and the failure of the Windows Phone system in 2014 has left Microsoft in doubt. And when Satya Nadella took office in 2014 to “refresh” Microsoft, the giant is no longer relying on Windows, but is focusing on cloud computing, one of the most important infrastructures of the mobile Internet age.
Now Microsoft, do not rely on the rest of the PC era to live, see in the mobile Internet era mistakes, timely turn the bow. Not only did the ship not get sunk by the waves of the times, it was completely installed and started the journey of another track.
Windows is no longer everything.
The 1990s were the days of PCs and Windows. Microsoft, then the monopolist, once had more than 90% of the PC’s market share with Windows. “Windows is everything” was an important argument within Microsoft at the time. Microsoft is said to have developed a touch-screen paper book in 1998, but then-CEO Bill Gates didn’t like it because it was “unlike Windows.”
“Windows is God, everything has to be compatible with Windows, ” revealed one former Microsoft executive.
Bill Gates and Mark Zuckerberg were seen as representatives of two generations of geeks . . .
Mr. Ballmer, Mr. Gates’s successor, is equally committed to Windows.
Asked at CES International in 2012, “What will Microsoft do next,” Ballmer replied, “At Microsoft in short, there’s nothing more important than Windows.” “But in 2011, there was a general consensus in the industry that desktops and PCs would no longer dominate, giving way to the emerging mobile connected devices.” That year, Microsoft’s revenue and profits were less than Apple’s, for the first time in 20 years.
It was only in 2010 that Microsoft launched the Windows Phone system in an attempt to capture the opportunity in the mobile operating system market, three years after iOS and Android developed. However, due to the disadvantage sifted by the disadvantage that Windows Phone must be bundled and upgraded in sync with PC-side Windows, the mobile system is “forced” to update as soon as it is updated, and each update is not down-compatible, so Windows Phone loses a number of developers and users every time it is updated across generations. Even Microsoft’s $7.17 billion acquisition of Nokia’s handset division would not save its flagging share of the mobile market, and the plan to make up for it failed.
“Windows-centric business models limit every part of the company to a declining overall market. Satya Nadella’s greatest success was to take off her ever-growing tights. Ben Thompson, a leading technology analyst, commented.
After taking office in 2014, Nadella released a public memo about his views and plans for Microsoft’s future. “In this article, Nadradi has done Windows 10 times, but by the time of paragraph 21, he’s already said 21 times for cloud services. Bloomberg said so.
That same year, Microsoft announced that it would rename Windows Azure as Microsoft Azure, stoic, and send a clear signal that Microsoft’s cloud business is not only about Windows, but also about Microsoft’s entire corporate business.
In June 2015, Nadella formally defined the business steps of the cloud strategy: Microsoft will aggressively develop its cloud business around Office and Azure, reshaping productivity and processes through the cloud platform, and building an ecosystem with cloud computing at its core, including a chain of synergies for end users, developers, AND IT management.
At the end of March 2018, Nadella made a major shake-up of the company’s organizational structure, saying that Windows’ WDG (Windows and Devices) would be spun off into the experience and devices and cloud computing and artificial intelligence platforms, respectively. This “restructuring” is seen as an internal Microsoft adjustment, and Windows is no longer unique.
Even if it’s no longer Microsoft’s focus, Windows and Office’s business revenue has been on the rise in recent years: the former climbed from $19.5 billion in fiscal 2018 to $20.4 billion in fiscal 2019, while the latter rose from $28.3 billion to $31.8 billion. This suggests that Windows and Office, which are “ignored”, are not in decline, but Microsoft’s business expansion is more “resilient”.
Microsoft’s Azure Cloud business was more than $7 billion in fiscal 2018 and more than $12 billion in fiscal 2019. According to Research Institute Canalys, Azure’s market share rose from 13.5% in 2017 to 16.8% in 2018, while Amazon AWS, the top in the cloud market, rose from 31.5% to 31.7%.
Nadella with an iPhone attending
In order to reach more potential customers, Microsoft embraces the open source world, starting from the bottom up, and moving from confrontation to cooperation in the relationship between the enemy and the united states.
Ballmer once said that “open source software is a cancer of intellectual property” and declared that “Linux is a cancer”.
But in 2015, Microsoft contributed 16,419 open source projects, making it the most exposed code organization on GitHub. This surprised the open source world a bit. Because Microsoft only started setting up an account on GitHub in 2014. In 2015, Microsoft also announced open source .NET. In 2018, Microsoft acquired GitHub for $7.5 billion, the largest acquisition by Microsoft in 2018 after a restructuring. The code on GitHub is mostly used by programmers, but almost all programmers have jobs and a company stands behind them. When these programmers use which algorithmic framework, it largely determines which follow-up services, such as which cloud service, are better suited to.
In 2014, Nadella said a surprising phrase at an event in San Francisco: “Microsoft loves Linux.” For the reason, it’s not hard to see why Linux and its open source features are the foundation of Amazon AWS, which is about to become one of the fundamental elements of Microsoft’s new growth engine, cloud computing.
“Move first, cloud first” is Nadella’s strategic focus after taking office. But for the mobile market, he has his own thinking.
In March 2014, Microsoft announced that it was bringing the Office Suite to the iOS platform. A few days later, Microsoft released another version of Office on the iPad. Nadella took to the stage with an iPhone at Salesforce’s annual marketing conference in 2015, prompting “unkind” laughter from the live audience. Until then, no one had ever seen the Microsoft CEO show the iPhone in public. In response, he responded with a smile, “It’s an iPhone, but it’s got all of Microsoft’s software and apps installed.”
“What we need to enter the mobile computing space is a new strategy that is separated from our competitors, and our innovation revolves around the needs of our users rather than their devices, and our priority is to meet the needs of billions of customers, regardless of the phone or platform they choose,” says Nadella. If Ballmer’s philosophy is “to make everything work on Windows,” Nadera “wants everything to be done on Windows.”
In addition, Nadella has announced partnerships with competitors including Red Hat, Salesforce and even Amazon to drive the growth of Azure cloud computing, office applications, and Cortana voice assistants. Take Amazon, Microsoft’s biggest rival in the cloud computing market. In August 2017, Microsoft’s Cortana teamed up with Amazon’s voice digital assistant, Alexa, which means Cortana can be called inside Amazon’s smart speaker Echo.
How did Apple, Amazon, Google and Microsoft do it in “Becoming a Trillion Dollar Giant?” In the article, the author proposes the concept of ISC, which means shortcuts designed to simplify business decisions and eliminate complexity, allowing businesses to operate to reduce transaction costs.
Nadella told the world at the Dreamforce conference that Microsoft’s customers are “short-circuiting” by working with everyone, not confrontation. Last year, for example, it formed a cloud alliance with Sony, the number one console rival. As Salesforce CEO Marc Benioff puts it, “Before, we just couldn’t work with Microsoft.” Nadella reopened a closed door and removed the locks and obstacles along the way. “
Not so cool company
In his book, Refresh, Nadella recalls the situation in which Ballmer and his conversation sat, “You think about it, this may be your last job at Microsoft, and if you fail, there’s no parachute, and you might crash with it.” “
Judging from the story behind, Nadella is not as much as expected. During Mr. Ballmer’s tenure, Microsoft’s revenue scored 3.8 times and its market value hovered around $300 billion; by fiscal 2019, Mr. Nadella had just 1.4 times his revenue, but tripled its market value, surpassing Apple by $1 trillion on April 25, 2019, to become the world’s most valuable company.
Ben Thompson found what Microsoft and IBM have in common: both companies are victims of their monopoly success. “The good thing about a monopoly is that the company can do anything because there is no competition: the bad thing is that when the monopoly ends, the company can still do anything at a mediocre level, and nothing is high, because the company has become bloated and lazy.” “The only value of a company like this may be just large enough.”
But Microsoft has taken its elephant out of the deep ditch by shifting its focus to cloud services. On another level, though, it seems to mean that it is farther away from the average consumer.
At a media event in January, Nadella asked attendees, “What do you think is Microsoft’s biggest hardware business?” “A reporter replied that it was Xbox. “No,” Nadella said, “our biggest hardware business is cloud computing Azure.” He went on to explain how Microsoft built infrastructure such as data centers, servers, and network stacks. He believes the company’s future is far from being defined by the 1 billion or so Windows users.
Not easy to perceive the “cloud”, as if to make Microsoft “incognito”. “One of the hallmarks of Nadella’s success in 2019 is that his company rarely makes headlines,” the Financial Times says. The company’s focus is on selling technology to businesses rather than consumers, and while it does reach consumers through Bing search engines and email services, Xbox consoles and customized versions of personal computer software, it is largely behind the scenes. “
For 45 years, from Bill Gates”s “letting every table, every family has a personal computer” to Satya Nadella’s “Empowering EveryPerson and Organization, Doing AmazingThing,” Microsoft has succeeded in putting aside its obsessions and changing itself, and moving beyond the times.
Now that he no longer shouts “Windows is everything,” he has his own positions and his own borders, and he seems more willing to hide behind his back, empowering other “cool companies” to partner with other young companies.
Microsoft, 45, has not become the stubborn and utilitarian, grumpy middle-aged man who is about to be abandoned by the times. This may be as flashy as his trillion-dollar market value.