Microsoft’s Future?

Windows 8 is battling to get traction. And it’s not surprising. Microsoft is a bit behind the curve of Blackberry’s catastrophic decline, but the underlying causes are the same.

I remain unconvinced of touch screens for the desktop. On a recent plane trip, I tried a game on the entertainment system that used touch, and reaching the distance comfortable for viewing the screen was uncomfortable after a while, and touching the screen obscures your vision of the detail in a way that using a touch pad or mouse doesn’t.

Just because tablets are outselling desktops it doesn’t mean desktops should work like tablets. In some parts of the world bicycles outsell cars: should we replace the steering wheel by handlebars?

Microsoft is in an unenviable position. When you hold 95% of a market and it tips away from you, what do you do? Try to tip it back, or go the new direction and lose your status as a leader? Think US auto makers when the Japanese first started to make inroads. They’ve never recovered.

British-style interior

US-style interior

British-style exterior

US-style exterior

At the time, I wondered why the US car manufacturers did not simply adopt their own European designs, some of which were quite good, to US conditions – with minimal changes. For example, putting them through additional ruggedness testing for higher distances and worse roads typical of US driving would really have been enough. To the extent that they tried this, they made the wrong changes. Instead of focussing on reliability, they changed the exteriors to look more American (fatter) and interiors so they looked like folded cardboard, in keeping with domestic designs. The Japanese, meanwhile, forged ahead, keeping their designs consistent across all markets and working on reliability – useful in all markets.

Source: WikiPedia (retrieved 5 July 2013: RIM=Blackberry)

So what is Microsoft to do? Their position is inenviable. Almost anything they do is going to be wrong. If they break away from Windows compatibility in mobile devices, they have no edge to grab attention from the dominant players, Android and iOS. Ask Blackberry how well it works to be late in a market that you used to dominate, then let others redefine the user experience before you end up playing catch up. If they stick with Windows as their starting point, no one wants their devices – except hard-core fans. I tried playing with Microsoft’s Surface range on a recent overseas trip, where I finally found some set up for demo in a shop. They keyboard covers are not brilliant to type on, and one I tried was unreliable in its connection to the device. Putting them on a counter-top to demo illustrates exactly the point I’ve made earlier, that it’s a portable device that you can only use comfortably in a fixed environment – a laptop you can’t use on your lap. If an iPad or Android tablet is set up for demo, you naturally pick it up – the way you would usually use it. I saw no one pick up a Surface and if you did, the keyboard cover and kickstand arrangement would make it awkward to hold.

Apple had it relatively easy. At the time they launched the iPod, the start of their current trajectory, the Mac wasn’t doing particularly well, so launching into a whole new niche that had the potential to leave the Mac behind wasn’t a huge risk. The fact that the iPad ultimately has had the momentum to outsell the Mac by a huge margin wasn’t planned, but it also wasn’t hindered by a desire to bring along the Mac base. That indicates where Microsoft is going wrong: they are obsessed with bringing their base along with any major new platform. As long as Windows dominates the desktop, you can see why. But the desktop is fast shrinking to a minority market – even if it remains large in absolute terms.

The real paradigm shift that could eventually be the killer blow is the shift from corporate-defined equipment purchase to consumer-defined choice. Apple failed in the business market not because the IBM PC was superior, but because business buyers wanted to buy from a trusted source. IBM remains one of the most trusted players because they look after their customers – no one ever got fired for buying IBM, as the saying goes. Microsoft rode in on IBM’s coattails. The problem is, in the consumer space, that sort of preference doesn’t apply, and now that devices have become so cheap that anyone (on a salary) can afford one, they have the same purchase status as buying a pen of a watch. With that paradigm shift, Blackberry and Microsoft, to survive, have to appeal directly to the consumer not to the corporate buyer.

Microsoft has demonstrated that capability to some extent with Xbox, and Blackberry with selling to consumers in lower-income countries on the basis of providing cheap Internet access – but both have yet to show that they can leverage those successes in the broader consumer space. As long as they primarily see themselves as owning the corporate space in their respective segments, they will have a block against shifting to the consumer space. And the fear of losing their major advantage over outsiders in the corporate space further exacerbates that block.

Tablet Wars

No, not anything to do with the war on drugs.

One thing Apple does well is secret. The 23 October iPad mini launch was widely leaked, though the originally rumoured date earlier in October passed uneventfully. What did take everyone by surprise was a major overhaul of the full-sized iPad. There had been some rumours of an iMac update; I don’t recall seeing any rumours of a Mac mini update.

All of this of course was designed to upstage the Windows 8 and Microsoft Surface launch scheduled for 26 October.

It remains to be seen whether people really want something closer to a full computer in this form factor. Once you add a mouse or trackpad, you can’t hold it in your hand any more, and stylus-based devices have been around more than 10 years and never sold in big numbers. The kick stand is not a great design feature, because it implies the need for a firm surface, reducing again the scenarios when you can use it comfortably. Currently this space is owned by Apple and Android variants (Kindle Fire, Samsung) and Microsoft does not have the app base to take them on. If you are going to buy one of these as a notebook alternative, why not get a notebook?

I bought an iPad mainly because it gave me the option to take something much lighter to a conference, where I need to read email and give a presentation. When I have that option, it works pretty well for me. If I need a real computer, I bring that instead, so I don’t need to compromise on issues like keyboard quality and a poor alternative to a mouse or track pad.

It will be great if Microsoft can bring new competition to this space, but I have my doubts (and an early review is not too promising). An important thing to understand what business a company is really in. Although most people focus on Apple’s hardware and the question of what value it really represents, Apple’s real competitive edge is in a huge bank of credit card numbers. If they wanted to switch their business model tomorrow to slim margins on hardware and making most of their money from their app and iTunes stores, they could. Microsoft on the other hand has built a business out of high-margin software. How can they turn that around overnight?

Check this out: current total app count in Windows 8 RTM Store = 4,284 (mostly free); compare with iOS total available apps: 694,566 and current number of Android apps in the market: 548,200.

The real big killer number is Apple has (at last count I’ve found) 435-million credit card numbers. Only Amazon is in likely to be in this league: a much higher fraction of of Android customers only download free stuff.

As for the new Windows look of huge fat, flat icons, if it works as badly as the Ubuntu Unity interface (some say worse), meh.

Back to Apple’s announcements: I’ll hold off judgment on whether the iPad mini is too expensive for the market (vs. more expensive than I’d like it to be). The overhaul of the bigger iPad is unexpected, and an indication that Apple is not willing to let Microsoft steal any territory back from them. The Surface RT (ARM processor, not able to run most Windows software) is the target. The Surface Pro will have to take its chances selling against Ultrabooks that are a little heavier and work better as a full computer. The ultra-thin iMac is an engineering marvel; my 2009 27" iMac has just had to go in for repairs because of a recall on its 1TB drive; had Apple designed it to be easy to repair as well as to look good, they could have couriered the drive to me rather than requiring that I send the whole machine in to repair.

Looking great is important, but if you end up with a Lamborghini that needs a specialist technician with special tools to service, even if it only costs as much to buy as a BMW, you have a practicality problem. So I am genuinely disappointed that no one is seriously competitive with Apple in the things it does best: providing a seamless end-to-end experience centred on the user.

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This article lists Microsoft's lessons from the Zune fiasco. Did they learn? I have my doubts. Microsoft's development model, cemented by the success of Windows 95 at a time when Apple was floundering, is to get at least two iterations wrong: design refinement on the back of customers. With Apple on top form, I'm not placing any bets on the once good old strategy.