Microsoft, Welcome Back, You're Doing Better Than They Think

On a walk up a remote hill in Ireland this morning my 13 year old son was talking about only one thing – well two. The first was Windows 8. He’d seen it, played with it and loved it, even though he’s an Apple user. The second was the iPod. How could the Touch cost more than the iPad Mini?

He’s also an X-Box user and has noticed some Windows 8-style features emerging there over recent months. It’s the first time in his life that he’s talked Windows and he does so as he holds an Apple product in his right hand.

When my 13 year old communicates with his friends it is through the X-Box. They play games against each other remotely, having dumped their Nintendos a couple of years back. He doesn’t see Nintendo making a comeback – their new 3D product sucks.Now, I admit that’s entirely personal and anecdotal but most kids in Ireland (and many other    European countries) get introduced to computing through Windows, and Windows 8 is making the Microsoft OS a talking point.

He doesn’t think “Microsoft” when he plays with his mates – not like he would think “Apple” when he shows them content on his Touch. But the truth is he spends at least as much time inside Microsoft interfaces as he does inside Apple’s.

In Windows 8 Microsoft seems finally to be showing their public that interfaces are the most important feature of a product. That’s important but not as important as what Windows 8 represents.

Now, like Adam Hartung I think Microsoft could and should make more of its relationship with the X-Box audience. It is still remote as an organization and lacks charismatic communicators that young people will identify with.

But I can’t see the case for criticizing Steve Ballmer to the point of calling for his head to roll. In the history of large successful enterprises in industries that grow and then peak, very few leading companies remain dynamic and innovative. Look at GM, and look around for the US Tire or TV industries.

Microsoft is an exception to a rule that says companies get large, acquire competition and then stagnate. But there is more to it than that.

Whereas Google paid $12 billion for Motorola and Apple’s enterprise software presence is slender, Microsoft has Nokia in its pocket without having to pay a bean, and it still controls controls much of the enterprise software space, where it is slowly adopting a more ecosystem-centric strategy, for example by opening SharePoint to apps developers.

In fact, using Office as a cash-cow while they play out a uniform interface, apps and content strategy across entertainment (as the gateway to the TV), mobile through Nokia, the tablet through Surface, and the dying PC through its traditional channels, looks like a strong play.

But even that is not the point.

Many US tech giants are trying to formulate the tech enterprise of the future (Amazon, Kindle, content; Google, Nexus, search, networks). They are writing a new playbook around content, device, and connectivity and that in turn places more and more importance on the interface and OS. But these elements are really about the broader development of a platform and ecosystem business model that Nick Vitalari and I describe in The Elastic Enterprise.

And along with that a strategic options portfolio – Microsoft keeps creating options for itself. Who will dominate the future of unified telephony? Will it be CISCO and WebEx? More likely Microsoft and Skype. MSFT is creeping into this space unnoticed by the outside world.

The real battle is what type of enterprise do you become? And American tech is inventing it. And in a highly congested area, Microsoft’s strategy looks on song and smart to me.

Forbes.com