While it might be an overstatement to claim that Microsoft news dominated 2012, the company’s drumbeat of publicity around the launch of Windows 8 gave it a disproportionate significance.
And Microsoft did gear up and execute on a series of milestones: Windows 8, the Surface tablet, Windows RT, Windows Phone 8, Windows Server 2012, and Office 2013 (at least within Surface). But what are the big trends behind those headlines? What's really shaping Microsoft right now?
1. The Headline: Windows 8
Beginning in February 2012, Microsoft launched the Consumer Preview of Windows 8, followed by the Release Preview of Windows 8 on May 31. Microsoft was out in front of reporters and analysts, explaining via blog posts how it built Windows 8 and what its goals were. The company touted how Windows 8 was built for a variety of screen sizes and delved into the touch keyboard through discussions of the new apps. But Microsoft has been surprisingly cagey about Windows 8’s success so far: We won’t really find out the final results until January, when Microsoft reveals its sales numbers as part of its first-quarter results.
1a. The Real Trend: Metro
If there was one word that summed up Microsoft during 2012, it’s this: Unity. The Consumer Preview of Windows 8 ushered in the “Metro” interface that will define this generation of Microsoft’s products. Flat, but bright, iconic and ambitious, with a reliance on typography rather than icons, the Metro interface (now referred to, unofficially, as the “Microsoft design language”) was quickly adopted across Microsoft’s other product lines, most notably within Windows Phone, Microsoft’s Web Apps, and sites like MSN.
2. The Headline: Surface
Microsoft’s big reveal of the Surface tablet in the summer was a masterpiece of temptation: a slick demo, a quick hands-on with the product, then out the door, appetites whetted. Microsoft’s refusal to discuss pricing or even allow a hands-on until days before the product was actually released forced many buyers to pre-order a Surface sight unseen. That, combined with the uncertainty around the Windows RT operating system used on the base model Surface (how close was it to Windows 8? How did Metro apps work? Was Office RT really Office?) probably added too many questions to Surface to make it a real success, although it “sold out” soon after launch. Still, like Google’s Nexus line, the Surface launch taught us that consumers prefer the hardware that the ecosystem builder “owns.” So far, third-party Windows 8 tablets seem to have gained even less traction.
2a. The Real Trend: Owning Your Own Platform
As ReadWrite noted in July, a key lament of ecosystem control is designing the hardware, software and services so that all three work together in a unified whole. Apple does this with the iPhone, iOS and iCloud; with Google’s purchase of Motorola, it can do the same. Until Microsoft decided to build Surface, however, it lacked the hardware component. Time will tell how Surface fares (the price still seems a bit high) but Microsoft has all the pieces of the puzzle in place to control its destiny.
3. The Headline: Windows Phone 8
Living with the HTC Windows Phone 8X for a month after its October launch taught me two things: Windows Phone 8 is a bright, beautiful mobile operating system, and that it deserves more traction. Yes, there was the “smoked by Windows Phone” viral efforts. But almost more than Windows 8, Windows Phone feels modern and connected, and Live Tile integration makes it fast and easy to use. So far, the general perception is that from a quality perspective, at least, Windows Phone 8 belongs in the same category as Google’s Android and iOS. But from a sales perspective, Windows Phone 8 isn't really close to competing with the market leaders.
3a. The Real Trend: Apps And The Web
Unfortunately, apps still remain the Achilles heel of Windows Phone 8 - and, if you consider Windows RT or Metro apps in the same category - of Windows 8 on PCs and tablets as well. Microsoft has made a valiant effort to convince users and developers that optimized apps like “Contre Jour” are the wave of the future, even as detractors sniff that Microsoft’s Web browsers are the least standards-compliant of all. If Microsoft can convince users that Web apps fill the bill, then it can whitewash any apps deficiency. But critics have also loudly begged for Facebook to build an app, rather than an HTML5 mobile page. So far, Microsoft is on the losing side of this trend.
4. The Headline: Office 2013
As the name suggests, Office 2013 is a 2013 product, at least for consumers. Microsoft began making its versions of Office 2013 available to businesses in early December. But when Windows RT launched with Surface, one of its more potent features was the inclusion of a “preview” of Office 2013 Home and Student, that quickly morphed into a final version. ReadWrite has complained about the inadequacy of Microsoft’s Office Web Apps, but Office 2013 has been well-reviewed; it just costs more. The year ended with rumors that Microsoft would begin selling Office for the iPad and iPhone, a development that looks increasingly more likely as time goes by.
4a. The Real Trend: Office 365 Subscriptions
Subscriptions. The cloud. They go hand in hand. By pricing Office 365 subscriptions more cheaply than the standalone editions, Microsoft has encouraged consumers to bury their Office payments as a recurring charge on their credit card, rather than as a major purchasing decision to agonize over. Google’s cloud services have made save-all-the-time, run-anywhere cloud office suites indispensible, and Microsoft, no dummy, has embraced the concept whole-heartedly.
5. The Headline: Windows Server 2012
Unless you’re an IT geek, chances are that Windows Server was one of the least interesting Microsoft announcements this year. But for IT administrators, the release of Windows Server 2012 on Sept. 4 was an important milestone. Boasting improved virtualization (Hyper-V) capabilities, the new ReFS file system, and improvements to Active Directory, Windows Server also simplified the number of versions, consolidating them to essentially three: Foundation, Standard and Datacenter.
5a. The Real Trend: Enterprise Is The Place To Be
From IBM ditching its ThinkPad and computer hardware business in favor of enterprise services to Dell’s transition away from “Dude, you’re getting a Dell,” the fact is that tech vendors are increasingly looking to stable, high-value, recurring contract services. Microsoft’s Server and Tools business isn’t Microsoft’s most profitable - that’s the Business Division, with about twice the profits of the server business - but both share high-margin subscription business models. And with more and more users turning to tablets, the emphasis is shifting to the datacenters powering the cloud services that connect these portable devices. Microsoft certainly isn’t alone here, but it's making a big effort to be a significant player.
Say what you will about the quality, utility and pricing of the products and services Microsoft launched in 2012. But recognize that those launches pretty much all went smoothly, without major availability issues, bugs or other glitches. We’ll learn the final results - revenues and profits - in the quarters to come. Microsoft has talked optimistically about its successes all year. Come January 2012, we’ll see how well all of Microsoft's hard work really paid off.