Executive Insights: Microsoft Retrenches in Mobile – Enterprises Can’t Wait Aragon Research

Executive Insights: Microsoft Retrenches in Mobile – Enterprises Can’t Wait

The bottom line is that Microsoft will do very well with its current core focus: Cloud, Office and Windows.

About three weeks ago, Microsoft CEO Satya Nadella announced the layoff of 7600 employees in the Microsoft Phone Division so that Microsoft could focus on ‘near term opportunities.’  I would note that the ink was barely dry on Microsoft’s purchase of Nokia’s Mobile Division that was announced 23 months ago in September 2013 (see Aragon First Cut).

That acquisition was executed by former CEO Steve Ballmer and the current challenge for Satya was that the division was not making money because sales of Windows Phones were just not happening. Regarding Satya’s comments about focusing on near term, to us, near term opportunities do not seem to include mobile, since most of the Mobile Phones that runs Windows Phone Software were offered by Microsoft.  This Blog post is about Microsoft’s collapse in Mobile and the fact that Enterprises cannot afford to wait for Microsoft to figure out what its next step in Mobile will be.

Microsoft Mobile Write Down

Financially for Microsoft, the $3.2 Billion dollar loss for its fourth quarter due to the write down of the Nokia Phone Division is its largest loss ever. However, given that the phones were not selling, one could argue that it was a prudent move. However, Windows 10 is only a week away from shipping and with it the promise of Universal apps. With the near elimination of the Phone division, near term hopes of Microsoft making a comeback in Mobile are gone.

Let’s be honest, Satya Nadella is now the CEO of Microsoft because Steve Ballmer missed the mobile revolution (see Ballmer Watched as Apple Grew). He was not responsible for the Nokia acquisition and now he is making an early call to dump it.

Windows 10 is a Laptop Play

With the move by Microsoft, this leaves them essentially focused on Windows 10 for PCs,  a category that is not growing as it is for Mobile Devices. Put aside all of the hype that will be part of the Windows 10 Launch, with a marginalized Mobile Platform, Microsoft cannot expect enterprises to blindly follow them down the aisle of mobile promises again, since that was what they have tried to do for the last few years with Windows Phone 8.

Enterprises and Mobile – The Two Horse Race

With all of the focus on digital transformation and all of the current Apple and Google based mobile devices in the market, enterprises will need to focus on those two Mobile OS Platforms for the next five years. Microsoft is now an also ran in Mobile. Windows 10 will not help them.

Enterprises need to look at the other two key platforms in Mobile – Apple and Google and place their bets. Microsoft Office will certainly run on both platforms, but when it comes to innovation and devices, it is Apple and Google that now are at the head of the pack. Both Apple and Google have announced their next versions of their respective Mobile Operating Systems and Apple iOS 9 is well into its beta with the expected ship date in October.

IOT – More than Mobile

Both firms are very focused on Wearables and are now beginning the not so quiet shift to the Internet of Things. Part of the battle for IOT will come down to the apps to access all of the connected devices and today, more enterprises are developing on Google and Apple than any other platform. Given where both firms are with their Core OS, they appear to be ready to take on the consumer part of IOT and much more over the next three years.

So the bottom line is that Microsoft will do very well with its current core focus: Cloud, Office and Windows. So while it is still a major player in software and it will offer Mobile apps for Google and Apple based devices, Microsoft has just made a major retrenchment in Mobile.

Note: I’ll be discussing all of this and more in my 2020 Mobile Scenario at IT Dev Connections, September 15-16th at the Aria Resort. Don’t wait – sign-up now….

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