Updating Windows 8, Microsoft's New Direction, and Windows Phone's Worst Enemy

Updating Windows 8, Microsoft's New Direction, and Windows Phone's Worst Enemy

This month, we look at some major changes in how Microsoft perceives itself and how that affects the products and services we’ll see in the coming year. It all starts with Windows 8, which isn’t your grandfather’s Windows.

New Windows Update Schedule

I’ve written in the past about Microsoft’s plans to update Windows 8 quite a bit differently than it has with previous Windows versions. This is in keeping with the notion that Window 8 is itself quite a bit different than its predecessors—that is, it's a new mobile platform and not a further evolution of desktop-based systems such as Windows 7. But now, suddenly, we have a clue as to how this updating will take place.

My Windows Weekly cohost, Mary Jo Foley, has previously written about the new Windows 8 updating scheme as a project code-named Blue, a collection of rollup of fixes and updates akin to what Microsoft previously called a service pack or feature pack. My own sources have told me that Microsoft would update Windows on an ongoing basis, and that it might do away with version numbers completely. The next Windows RT, for example, will be called Windows RT, not Windows RT 2 or whatever.

With all this as a backdrop, consider what’s already happened. Microsoft has delivered what it calls a cumulative update for Windows 8 (and, as it turns out, Windows Server 2012). But this is no simple rollup: This update includes “fundamental” improvements to Windows 8 in the areas of increased power efficiency to extend battery life, performance improvements in Metro-style apps and the Start screen, improved audio and video playback, and improved application and driver compatibility. This is, in other words, a pretty serious change.

The timing is pretty interesting. As Microsoft’s Steven Sinofsky explained in a blog post, the firm would have previously delivered this kind of update as part of a service pack, some 9 to 12 months after the general availability of that Windows version. But this is arriving, incredibly, before Windows 8 is released, during the 3-month lag between RTM (August 1, 2012) and general availability (October 26, 2012).

This rate of change is also not an exception. Confirming my previous reports that Windows 8 would be updated on an ongoing basis, Mr. Sinofsky referred to a “new pace of delivering high quality updates to Windows.” This is the way things will be going forward, and this isn’t a one-off update.

Amazingly, it’s also not the only change Microsoft is making to Windows 8 prior to the public release of the OS. Just days before the cumulative update was announced, Microsoft also revealed that it would be updating virtually every single Metro-style app that ships with Windows 8, often in meaningful ways. This includes the SkyDrive, Mail, Calendar, People, Messaging, Photos, Maps, Bing, Finance, Travel, Sports, News, Weather, Video, Music, and Games apps. Since then, the firm has been busy pumping out the updates, and I expect the changes to continue well after Windows 8 is out in the world.

Microsoft Drops Software from Company Description

When Apple dropped the word “computer” from its corporate name in 2007, it was sending an explicit message to the world that it was moving from being primarily a provider of personal computers to being a consumer electronics company. Microsoft in early October 2012 announced a similar directional change via an open letter to shareholders, customers, partners, and employees. In this letter, ostensibly written by CEO Steve Ballmer, the firm revealed it was no longer in the software business. Instead, Microsoft’s business is now devices and services.

This sounds ludicrous on the face of things, and yes, of course, creating software will still be the primary activity at Microsoft for some time to come. But this move, like the suddenly swift-moving Windows software updating process, mirrors a change that’s been brewing at Microsoft for years now. Even its traditional software products are increasingly being delivered as services now. Here’s how Ballmer explained it.

“This is a significant shift, both in what we do and how we see ourselves—as a devices and services company,” he wrote. “It impacts how we run the company, how we develop new experiences, and how we take products to market for both consumers and businesses. The work we have accomplished in the past year and the roadmap in front of us brings this to life.”

Aside from some predictable angst from those customers who are having trouble seeing beyond their locally installed copies of Office and on-premises Exchange servers, the big questions here are, of course, somewhat profound. As Microsoft explains in the letter, it currently has about 1.3 billion customers, 640,000 partners, and 8 million developers that use, support, or otherwise interact with its products in one way or another. A change of this magnitude doesn’t just affect Microsoft--it affects the entire ecosystem.

We’ve seen early hints of these changes, and the negative effects of even small changes. For example, as Microsoft began backing away from the traditional Windows Small Business Server (SBS) product line and toward a Windows Essentials product that dispensed with on-premises servers in favor of online services, partners complained: The traditional SBS product provided them with an ongoing revenue stream and customer relationships whereas Essentials was basically just a one-time setup with occasional consulting, even though one might logically argue that Essentials more correctly addresses the market realities of the day.

Microsoft responded to the SBS kerfuffle by explaining that its products always changed and that partners would need to adapt to new opportunities and, hopefully, new revenue streams. But it’s not hard to extrapolate from this one example and see how Microsoft’s broader move to devices and services will affect far more companies.

For example, though the Ballmer letter claims that no one company can adequately serve the 1.3 billion people who use Windows PCs (i.e., Microsoft isn't Apple), one has to wonder what the affect will be on the firm’s PC-maker partners if the Surface devices are truly successful. Indeed, Microsoft has explicitly stated that the first two Surface devices—one based on Windows 8, one on Windows RT—are simply the start of a family of Surface-branded products. What’s next? Desktop PCs? Ultrabooks? Phones?

What would the impact be if Microsoft suddenly decided that the only way to save Windows Phone from irrelevancy was to take control of the platform and release its own Surface phone? Aside from the obvious harm to supposedly favored partner Nokia—already treading a fine line, solvency-wise—as well as Samsung, HTC, and others, Microsoft would also be sending a message that its strategy of the past few years has been a complete bust. With Android and iOS already owning about 90 percent of the smartphone market between them, it’s unclear how the platform could ever recover.

The trouble with the DIY (do-it-yourself) path that Microsoft has apparently set itself down is that the end game is obvious: You will literally be doing it yourself. And it’s thus perhaps no coincidence that Microsoft now has dozens of retail stores across North America with hundreds of “pop-up” stores planned for the holidays. Just a thought.

Office 2013 Complete, Headed for General Availability

Office 2013 is a good example of Microsoft’s focus on services; this traditionally delivered software suite will be distributed primarily as a subscription service, one that Microsoft feels will dramatically outsell the old-fashioned versions. (Disks? Ugh.) In early October, Microsoft announced that it had completed development of Office 2013, and it delivered a vague schedule for general availability, which it says will occur by the first quarter of 2013.

But I have a more specific schedule. I also have news about Office 2013 for iOS (iPad/iPhone) and Android.

First, the Microsoft announcement: All of Office 2013 has been released to manufacturing. This includes Office 365, the Office 2013 applications, Exchange 2013, Lync 2013, SharePoint 2013, Project 2013 and Visio 2013.

According to the schedule Microsoft provided, customers who purchase Office 2010 at retail from October 19 on will receive Office 2013 for free when that latter product is made generally available. Office 2013 Home and Student RT will ship with new Windows RT-based devices starting October 26. Office 365 will be updated via a service update that will go live in early November 2012. Then, Volume Licensing customers with Software Assurance will be able to download the Office 2013 applications as well as other Office products, including SharePoint 2013, Lync 2013, and Exchange 2013, through the Volume Licensing Service Center by mid-November. Those products will all hit the Volume Licensing price list on December 1. And IT professionals and developers will be able to download Office 2013 via active TechNet and MSDN subscriptions by mid-November.

Microsoft says that general availability of Office 2013 is planned for the first quarter of 2013. But my sources are more precise: It will happen in the last week of January or early February, I’m told.

More exciting, perhaps, is confirmation that Office 2013 is heading to iOS (iPhone, iPad) and Android devices. That won’t happen until April 2013, and availability of those apps will be tied to the Office 365 subscriptions, where subscribers will be able to install Office 2013 on up to five PCs (and/or Macs) and five devices.

Windows Phone’s Last Stand?

While we’re speaking of recently completed Microsoft products, it’s hard not to escape the fact that Microsoft’s smartphone platform hasn’t taken off in any meaningful way in the market. Windows Phone 8, which is based on Windows 8 internally, and not Windows CE as with previous versions, certainly has the technical and usability chops to differentiate itself from the competition. But customer apathy about Windows Phone is hard to ignore.

It’s not that customers dislike Windows Phone. They just don’t seem to care. And there’s no sign that will change any time soon.

Recent missteps by Apple—replacing Google Maps in iOS 6 with a broken Apple app, for example—don’t seem to have served to change the dynamics of the smartphone market. According to IDC, Google’s Android OS controls about 70 percent of the smartphone market, with Apple’s iOS taking second place with 17 percent. Microsoft places fifth with Windows Phone, behind RIM BlackBerry and even Symbian, with just 3.5 percent of the market.

Now, even that 3.5 percent represents a jump over the same quarter in the previous year, when Windows Phone accounted for just 2.3 percent. But single digits are single digits.

Aside from the aforementioned “Surface phone” Hail Mary pass, Microsoft does have a few options open to it should Windows Phone continue to tank. It could always adapt full-blown Windows to handsets, which isn’t such a huge leap considering that Windows 8 (the ARM-based versions of Windows 8) can already run just fine on tablets with screens as small as 7".

But maybe there’s another way. And maybe Microsoft’s open letter shows the way.

Remember, Microsoft is recasting itself as a devices and services company. But who says that it needs to actually make those devices. The Microsoft letter says, “...the full value of [Microsoft’s] software will be seen and felt in how people use devices and services at work and in their personal lives.” That software could run on any device.

And in the enterprise, the path is even clearer: Microsoft’s customers “count on [its] world-class business applications … rely on [its] technology to manage employee corporate identity and to protect their corporate data … and look to Microsoft to realize the benefits of the cloud.” Nothing about that vision requires Microsoft devices.

That said, I suspect Microsoft will push Windows Phone far beyond the point where it even makes sense anymore. But a future Microsoft that's closer to its roots—a more agnostic supplier of platforms and services, if you will—has a certain logic to it as well.

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