Microsoft Is Sporting a New Attitude – It’s Called Innovation – Forbes
I try not to drink any company’s particular brand of Kool-Aid but it was tough not to be impressed by the direction underfoot at Microsoft as I watched its Build 2015 Keynote. Satya Nadella, Microsoft’s CEO, is clearly bringing some new magic to the way the company thinks, a renewed innovative spirit, and a broader vision toward the evolution of the digital economy.
At the same time, I think Microsoft also accomplished three more important unspoken objectives during its Build 2015 keynote. First it relegated Apple to a bit hardware player in media and content distribution facing the same declining economic metrics Apple disrupted in the first place. Second it put Google back into the declining metrics of the search and advertisement economies. And third Microsoft hedged its bet that future successes that come out of iOS and Android can still be leveraged by its Windows and Azure developers.
As Peter Theil writes in his book “Zero to One”, “rivalry causes us to over emphasize old opportunities and slavishly copy what has worked in the past”. Under Steve Balmer’s last seven years as the CEO of Microsoft, that statement described Microsoft’s DNA. Consider that in 2007 Microsoft market cap was four times that of Apple and 25% larger than Google. By January 2014, just before Nadella became CEO, Microsoft was 37% smaller than Apple and 44% smaller than Google. As Theil writes, “War is costly business.”
The Microsoft CEO may not be waging a war, but he is looking to woo his own army of developers. And Nadella isn’t focusing on trivial differentiators; instead he is making some big bets. At once he democratized developer tools and neutralized trivial platform schemes across Windows, Android, and iOS, and opened up Office as a Platform service. Microsoft killed any residual value in the Mobile Enterprise Application Platform (MEAP) market with its native code demo of iOS and Android.
At the same time, Nadella is building new moats upon which to generate new revenue streams. Microsoft’s Azure regional buildouts and new features are impressive, he showed that the new HoloLens Virtual Reality product is no gimmick, and introduced a new Office Graph API – a machine learning fabric.
As I watched the HoloLens demos, I kept wondering if I was watching a Microsoft keynote or Minority Report. Microsoft is rightly focusing HoloLens on professional use cases like architecture and healthcare –big misses for Google’s approach with Google Glass. Microsofts’ HoloLens may well set off a birth of innovation similar to the technology breakthrough Fleming’s vacuum tube did in 1904.
Another key takeaway for me is Microsoft’s surprising acumen to get technology out of the way of the user experience. Microsoft’s new Continuum product allows your phone to be at the center of your information core while adapting to a user’s desired experience to other screens, machines or applications. Microsoft’s approach with Continuum contrasts with Apple’s Continuity feature where connectivity between devices and content become the portable element.
Microsoft isn’t out of the woods yet – Nadella still has more to cleanup including a possible $6 Billion write-down on the Nokia device acquisition. But I can’t help but think that Microsoft is thinking bigger and signaling that it is willing to take more risk that I would normally give it credit. One thing is for sure; Nadella is building a new Microsoft sporting a new attitude. It’s called Innovation.
Bob Egan is a veteran market analyst, executive advisor and founder of the Sepharim Group. Bob can be contacted directly at firstname.lastname@example.org or by calling 508-444-2600.