Why Steve Ballmer's Vision Is Right for Microsoft

Moves by Microsoft CEO Steve Ballmer to prepare for the coming head-to-head battle with Apple and Google have provoked a rash of media comment and industry analysis. Most of these have been very critical, of both Microsoft and of Ballmer personally.

Yet few of them show any signs of real strategic analysis of Microsoft’s position, or even of having gasped the nature of the coming battle. Some analysts have even preferred to ‘wait and see’, though they are paid to make market predictions.

Commentators such as Computer Weekly have reduced Microsoft’s problems to relatively trivial product issues. Others, like the Financial Times and Telegraph have emphasised what they see as Microsoft’s failure to adapt to changing market circumstances, such as the recent sharp drop in PC sales. What none of them has done is to evaluate how Microsoft’s current global dominance plays into the future evolution of smartphones, and how this will affect the desktop.

The events in Microsoft’s world are currently being determined by four key market forces. They are the impact of touchscreen technology; the takeup of free Cloud services such as Skydrive; the security issues around the emergence of Bring Your Own Device (BYOD) in the corporate world; and the impact of mobile working on office practices.

Touchscreen technology

Rob Epstein, Microsoft’s manager of Windows in the UK, recently told how his company ran a stand at The Gadget Show, showing a range of traditional PCs and some touchscreen devices. It was, he says, the kids who went straight for the touchscreen devices, and adults who picked up a mouse.

Picking up a mouse is a surprisingly easy habit to break – all it takes is a touchscreen smartphone. It was Apple who first broke the habit for us, followed by Google with Android. In doing this, they were seizing an early position of dominance in smartphones. But they were unwittingly doing something with even greater long-term impact – freeing us from the desktop altogether by making the classic start screen redundant.

Anyone who seriously uses a touch screen will ‘get’ Windows 8. Anyone who doesn’t (and this seems to include many of the commentators referred to earlier) doesn’t get it, and joins the howler monkey chorus of those describing Windows 8 as a technology failure, and Steve Ballmer as a leader lacking vision.

The crucial point here is that – whether they wish it or not – everyone who uses a digital device will, in the near future, find themselves using a touchscreen, simply because the next device they buy will be based on that interface technology. Trying to buy a PC-with-mouse is going to be like trying to buy a typewriter.

Everyone on the planet buying a smartphone or any other screen-based device in future will be taking the essential first step to wanting a more intelligent and responsive interface – like the one on their smartphone.

Crucially, too, they will all want the interface on their phone to be the same as the interface on their PC, or laptop, and their notebook or tablet. There is one and only one established technology that answers this demand and it is called Windows.

Cloud technology

Having discovered that they want the same interface on all their digital devices, users will take an inevitable second step in the same direction. They will want complete and immediate synchronisation of their apps and data files across all their devices.

We are currently emerging from a brief period when commercial providers tried to monetise cloud synchronisation and entering an era where cloud services are universally available for free. Microsoft’s Skydrive, for example, currently has 250 million users (and, incidentally, its Skype subsidiary has 633 million users, making it the second biggest social media network after Facebook.)

You don’t have to look very deeply to discover the reasons for this success. Skydrive and Skype are both free to Windows users and integrated with Windows devices. And, most important of all, you can set all Windows 8 devices to synchronise automatically via a single account login.

The moment I type these words, they are simultaneously available on my laptop, my Windows Phone and my Windows tablet. I can walk out my office door now, board a train and carry on writing where I left off on another device, without taking a single action. It’s not possible to do this on anything but Windows devices.

Bring Your Own Device

The third important market driver is the emerging practice of Bringing Your Own Device (BYOD). There are many issues for corporate IT departments surrounding BYOD practices but none more pressing than the security of corporate business data.

In the past, large corporates issued secure laptops to their senior staff, or provided secure software downloads for approved laptops. Now anyone can access their company email account on their own smartphone or tablet. The problem for corporates is that some of these devices have serious security problems.

There is however, one operating system that is already very familiar to corporate IT departments, that has been exposed to every kind of security threat and already formed defence in depth, and that is available on every kind of digital device from phone to PC – Windows.

Android in particular has experienced some very public failures in the security department. Bluebox Security CTO Jeff Forristal, has recently said, ‘This vulnerability… could affect any Android phone released in the last four years – or nearly 900 million devices.’ This is 99 per cent of the Android phones in use.

Apple has largely relied so far on the fact that so few people use Apple machines that it’s scarcely worth the hackers’ trouble to devise malware.

Remote working and office practices

Journalists like me have been writing about remote working for many years and there have been encouraging signs of early adoption with many different kinds of benefits both for companies and their staff. But now all the elements for this remote working to become a universal reality have finally been fully integrated.

At least, they have been fully integrated for users of Windows devices. The overwhelming majority of corporate users share most of their data through Microsoft Office products like Word, Excel spreadsheets, Powerpoint presentations and so on. Office Documents can be directly read and edited on all Windows 8 devices, including smartphones, because Office is an integral part of these devices. For many (perhaps most) corporates, this will be a no-brainer – once they have thought it through.

Windows’ legacy market

The market in which these changes are taking place is one that is already dominated by Windows.

There are 1,200 million Windows users- around one sixth of the population of the world. Most of them also use Office apps. Around 60 per cent of corporate users have already upgraded from Windows XP to Windows 7. The remainder are strolling around PC World, scratching their heads and wondering what to do next. 100 million of them have bought Windows 8 licences. Windows Phone 8 has already overtaken Windows Phone 7 in global market share.

The next phase of corporate Windows migration will also be an organic process, just like the last two, taking perhaps five years. But it is almost incredible that anyone could seriously think that mainstream corporate computer users could even consider Android or iOS as an operating system around which to base any part of their commercial operations. Try to imagine Exxon or Walmart or Barclays or Volkswagen running their companies on Android screens and it quickly becomes obvious that to think of anything but Windows is bonkers.

The big picture

None of these important market indicators is concealed or difficult to find, prompting the question; why exactly have so many media pundits and market analysts either missed the mark, or closed their eyes to the obvious?

One explanation is that many who have written on this issue are (literally) out of touch with the technologies they describe. Unless you use touchscreen technology on a routine day to day business, you are unlikely to ‘get’ Windows 8. Another is that many don’t actually do their jobs using mobile technology and so experience little impact from not having Office apps available on the move.

When they are faced with the need to edit their presentation on the way to the conference or to edit and email a PDF, they simply shrug their shoulders in resignation, and console themselves with the thought that it’s always been impossible. This, of course, is the classic default position of individuals and companies about to be consigned to market oblivion by smarter, nimbler competitors.

One way to get a direct appreciation of the way things are changing (as I did myself recently) is to make a personal Skype video call on a Windows Phone to a friend or family member, phone to phone, in a distant country. When you’ve sat on a train and talking face to face with your partner standing outside the White House, you ‘get’ what it is that the Windows world is transforming into. The video telephone beloved of SF has become a reality by an unexpected route – it’s range is global and it’s free of charge.

Another reason for the failure to see what even the medium term future holds is the inability of many western critics, especially in Europe, to appreciate the enormous productive capacity and rapid response of eastern manufacturers, such as Samsung, HTC, LG and especially Huawei – the world’s biggest telecoms manufacturer. All have licensed Windows 8 and all have dipped a toe in the water with low end devices, or expressed interest in doing so.

Nokia is propping up the Windows phone market practically single-handed at present, for the same strategic reasons as Microsoft. When the sales figures demonstrate Windows Phone taking off, these manufacturers will simply engage the ‘Push’ button on their awesome manufacturing resources – just as they did with Windows PCs and laptops when the market was there. Just when this will be depends on whether you are a pessimist or an optimist. Canalys says Windows Phone will catch up with iPhone by 2017. Other analysts think Windows Phone will achieve parity with Apple sooner.

Steve Ballmer's
Steve Ballmer’s

In many respects, there is not much difference between Microsoft, Google and Apple. But there is one. All of them are selling technology-related stuff to make a profit. All of them have identified smartphones as the most lucrative consumer toy. All of them have formidable powers of design and manufacture. But only Microsoft has a strategy that integrates what it makes with what companies and individuals need for business, as distinct from what they want for Christmas.