Microsoft Tries to Find Its Niche in the Mobile First, Cloud First World

Microsoft Tries to Find Its Niche in the Mobile First, Cloud First World

Productivity is job one

One might define Satya Nadella's first year as Microsoft CEO as the firm's mid-life crisis, with the software giant trying to find itself—or at least redefine itself—in a world that is evolving with or without it. So while Mr. Nadella has championed a "mobile first, cloud first" vision, the key strength he's identified for the company is productivity.

Speaking to "a small international group of journalists" this past week—it appears to have involved such publications as The New York Times and the UK's Telegraph, among others—Mr. Nadella attempted to differentiate Microsoft from the companies with which so many compare it.

"Apple's very, very clear," he said. "I think Tim Cook did a great job of even describing that very recently where he said they sell devices, and that's what Apple is all about."

"And Google is about being ... you know, it's about data, or it's about advertising," he continued. "It is about serving you ads in a tasteful way, and they've done a great job [with] that business."

So what's Microsoft? Maker of Windows? Builder of Windows Phones and Surface computers? Seller of Office?

"Our identity is really about empowering others to build products," he said. "It's not really about us and our products."

Wait, what?

"The place where Microsoft can be distinct and where it comes naturally to us is from the creator of a document to a developer writing an app, and for anyone else who is in the business of producing their own creation, we want to be the tools provider, platform provider. That's the core identity."

It's about "getting stuff done," Mr. Nadella said, words that were echoed this morning in a post to the Official Microsoft Blog. Microsoft will be the "productivity engine" for anyone—or any company—that is trying to get stuff done.

But what is Microsoft?

We still tend to define the firm by its traditional products, and that ever-so-simple business model it rode to great success over several decades. But with much of the world moving from PCs to a more diverse group of highly-connected mobile devices, the firm has become introspective. It has spent much of this year under Mr. Nadella explaining itself, and its vision for the future.

Microsoft will target successful mobile platforms without discrimination, we're told, though the company's most ardent fans roil whenever it releases products and services for rival platforms first as it did last week with the Office apps for Android and iPhone. Similar apps for Windows and Windows Phone won't appear until late 2015, as their release is arbitrarily tied to whenever Windows 10 ships.

Specifics notwithstanding, more general strategy questions remain. Microsoft made its billions by selling enterprises on software contracts and PC makers on bundled software. Can it make a comparable fortune by convincing consumers and businesses to pay for (or subscribe to) an ever-expanding suite of mobile offerings?

The problem with these devices isn't just that most of them aren't running Windows or other Microsoft software, it's that the owners of those devices are used to paying little or nothing for the software and services they use. Microsoft isn't really battling a rival company or platform, it's battling a mindset. And that's a problem that will trigger much more introspection—not to mention evolving strategies—in the months and years ahead, I bet.

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