Microsoft opens door to a world beyond Windows; Tech group is finally ready to move beyond PC

March 27, 2014 7:12 pm

Microsoft opens door to a world beyond Windows

By Richard Waters

Tech group is finally ready to move beyond PC

Satya Nadella is ready to scrap the Windows tax.

This is the figurative ‘levy’ that other Microsoft businesses have had to suffer as the price of keeping Windows at the centre of the personal computing world. No new product or business idea saw the light of day unless it supported the greater good of Windows.

Microsoft veterans have often grumbled that this strategic imperative has acted as a tax on innovation at the company. Now, they will get the chance to show what they are made of.

Mr Nadella – who took over as chief executive nearly two months ago – badly needs to show that, on his watch, the world’s biggest software concern can turn itself into a mobile and cloud computing company. What better way to do that than by freeing Office – the package of applications familiar to white-collar workers the world over – to prove that it can fight for itself on smartphones and tablets?

In a calculated gesture, Mr Nadella timed his first public appearance on Thursday to coincide with the unveiling of a new version of Office. Revamped for touch-based computing, it will be available on Apple’s iOS and Google’s Android platforms at the same time that it appears on Windows.

To some extent, this is a simple question of maths. Limiting the new Office to Microsoft’s own, Windows-based tablet/PC hybrid, called Surface, would have helped to drum up sales for these devices. But the first Surfaces were a flop and the version 2.0 models, while winning better reviews, have sold only modestly.

The potential lost sales of Surface device should be more than made up for in higher revenues from Office on the dominant mobile platforms. Wall Street expects this to give a small revenue lift.

But the symbolic value is much greater – and symbolic gestures are important for recently appointed bosses who want to persuade their workers and customers that a new era has dawned.

The message it sends is an important one: Microsoft is finally ready to move beyond the PC. Of course, Windows will remain at the centre of its business for years to come. Corporate and government customers have made huge investments in PCs, along with the applications that run on them. However, in the smartphone and tablet world, the writ of the IT department extends only so far: Microsoft needs to win over mobile customers one user at a time.

Steve Jobs faced a similar decision in the early days of the iPod. By setting the iTunes music player software free to run on Windows, he gave up the chance to create a closed Mac-and-iPod world. But in place of that, he reached a mass market.

Having made a similar choice, Microsoft is now facing the hard part: winning over that mobile audience.

Office will have to fight for prominence alongside other “productivity” and collaboration services in Apple’s App Store (the thought of paying the old enemy a fee on every sale – normally set at 30 per cent – must have been a galling one.)

Both the iOS and Android app stores already have well-established services that include much of what Office has to offer. Others rushed to fill the vacuum left by Microsoft. They include Evernote, for capturing and storing information of various types, and Dropbox, a cloud storage company which has made a virtue of its ability to span the platforms of giants like Google, Apple and Microsoft.

To have a chance of winning, Microsoft will have to beat companies like these on their own terms.

One test will be whether it can come up with the right blend of functionality and ease of use to work for tablet users, who often consume content rather than create it. Another will be whether it can adapt to a more rapid development cycle that depends on frequent incremental enhancements. The fact that it took nearly 18 months from the launch of the touch-centric Windows 8 to come up with a version of Office suited to the platform is not an encouraging sign.

But, together with the One Drive cloud storage and Skype communication services, Microsoft will at least finally have a fuller set of apps to suit the new touch devices.

To judge by the share price rally that followed leaked reports of a touch-centric Office, Wall Street is optimistic about the signals coming from Mr Nadella. Although they are small relative to software sales, the services fees from Office are set to be a high-growth proposition that highlight the potential from the company’s wider set of products.

Symbolic actions, however, only get you so far. For the new Microsoft boss, the hard work is only just beginning.