The New “One Microsoft” Is—Finally—Poised For The Future

Microsoft has completely overhauled its corporate kernel.

The stodgy old enterprise company whose former CEO once called open source Linux a “cancer” is gone. So is its notorious tendency to keep developers and consumers within its walled gardens. The “One Microsoft” goal that looked like more gaseous corporate rhetoric upon its debut last summer now is instead much closer to actual reality.

You can see the proof both in Microsoft’s technology and the way it talks about it. For instance, Microsoft spent the last couple of years reworking the core of Windows and turning it into one platform. No longer are there different kernels for Windows 8, Windows Phone or Windows RT … it’s now all just One Windows.

See also: Why Microsoft’s Universal Windows App Store Is Huge For Developers—And Consumers

As goes the Windows kernel, so goes the entire company. Microsoft finally appears to have aimed all its guns outside the company rather than at internal rivals. Now it needs to rebuild its empire upon this new reality.

Platforms And Pillars

Microsoft is defined by platforms and pillars. The platforms—Windows and its cloud service Azure—are what developers build on and customers use. The pillars—Office, Xbox, Surface, OneDrive, Nokia and enterprise—are what people buy and use every day. In the old Microsoft, the company wanted you on its products, in its cloud, on its machines. The new Microsoft is far more egalitarian, going to where the people are instead of trying to herd them into its corral.

New Microsoft CEO Satya Nadella described the transformation in his keynote address at the company’s Build developer conference last week:

We started out as a company that was focused on developers. We were a tools company before we were an Office company before we were a Windows company…. We have that proliferation of what I talk about as ubiquitous computing and ambient intelligence or this mobile-first, cloud-first world where Windows is prevalent.


Joe Belfiore

Ubiquitous computing and ambient intelligence is Nadella’s geek-speak for “devices and services,” the principle Microsoft has ostensibly been organized around for a few years—but which it has only recently started to deliver on.

If you are buying or building a Windows device, Microsoft has lowered the barriers of entry. If you’re building or buying an app for a Windows device, Microsoft has torn down the vertical barriers that locked you into (or out of) the system. If you want to use a Microsoft app, you can find it on whatever platform or device you are using, not just on Windows. Running behind everything is Microsoft’s Azure cloud and services.

“The computing facts have changed,” Joe Belfiore, VP of Windows Phone program management and design at Microsoft, said in an interview with ReadWrite. “Especially that we now have one cloud, that we expect to have great infrastructure that we hook all of our devices to and that we expect to have a series of devices that work well together through that cloud that have similar capabilities. So we have tried to evolve our organization and our technology to line up with that.”

Ubiquitous Computing: Microsoft’s New Device Strategy

Microsoft’s long-time devices strategy was to build its operating system—Windows—and then license it to manufacturing partners. Only rarely did Microsoft make its own hardware (the Xbox is the most significant example), and it made billions upon billions of dollars selling Windows for more than two decades.

That Windows cash cow may soon be dead—partly thanks to market changes (the decline of the PC) and partly by Microsoft’s own hand.

You can’t overstate the importance of the latter, even if the market has forced Microsoft’s hand. Microsoft will now give away licenses for Windows on devices less than 9-inches for free. That means that any manufacturer wanting to build Windows Phone smartphones or Windows RT tablets don’t have the pay the “Windows tax.” Microsoft still reserves the right to charge a fee for larger tablets and PCs.

Microsoft is doing two big things here. It’s eliminated the financial barrier of entry to its least popular (and least lucrative) platforms—Windows Phone and RT—while holding onto its PC revenue base. It’s a move designed to ease Microsoft’s transition away from PC-centrism to a mobile focus. Microsoft knows as well as anybody that PC growth is declining and will continue to do so forever.

“Our strategy was to build the most compelling user experience we could pretty vertically. So, we launched on just one mid-tier chip in a small number of countries with some success, user appreciation. Then we had to try and figure out how to scale it,” Belfiore said.

Microsoft has also made it easier to use its Windows on less-powerful devices. At Mobile World Congress in Barcelona earlier this year, Microsoft announced a new Qualcomm Reference Program that will help manufacturers build Windows Phone 8.1 smartphones on lower-end hardware. The company also announced lower requirements for Windows 8.1 so that it can run on hardware with as little as 1GB of RAM and 16GB of storage.

All this shows that Microsoft is serious about being a devices company. Microsoft has learned from the way that Google dominated the world with Android; its executives understand that to win these days, a platform needs to run on commodity hardware and has to be effectively free. Windows Phone may not be open source the way the Android Open Source Project is, but Microsoft has cleared the barriers it had put around Windows to make it easier to spread everywhere. Combined with the manufacturing arm of Nokia, Microsoft’s device strategy is now fully developed.

“There is this virtuous cycle that we are looking to create where volume increases where more partners sign on, more apps and in more countries so now you can access more customers,” Belfiore said. “The process has been about scripting from how you get from Point A to Point B. The timing of bringing on the Qualcomm Reference Design and getting compatibility with Android apps and going with all of these other partners has been in combination with our technology getting to all of these price points.”

Crossing Platforms And Climbing Out Of The Walled Garden

Perhaps the final great act of outgoing long-time Microsoft CEO Steve Ballmer was to make the call to open the company’s other cash cow—Office—to the iPad. While Office for iPad is basically just another product introduction by Microsoft, the fact that it is decoupling Office from Windows 8 touchscreen machines represents a significant change for the company.

Office for iPad also speaks to Microsoft’s desire to really have a robust “services” division with a suite of products that can be used on any device and anywhere. If Microsoft owns and builds an app, it wants the audience for that app to be as large as possible. If that means bringing Office to the iPad and Android, Skype to every gadget imaginable, the same logic presumably holds for OneNote and One Drive and Bing and Internet Explorer and Outlook and so forth.

In other words, Microsoft has adapted to the smartphone and tablet industry with new hardware requirements and OS licensing. Now it’s time to do the same with its app ecosystem. The biggest example of this new desire to provide a robust cross-platform services suite is the Nokia X, the Android-based smartphone Nokia released at Mobile World Congress this year.

See also: Why The Nokia X Makes Sense For Both Nokia And Microsoft

“Essentially the story is that Microsoft wants to connect the next billion people to the cloud,” Jussi Nevanlinna, the VP of product marketing for mobile phones at Nokia, said in an interview with ReadWrite in February. “What we bring is very wide reach. We have access to these consumers…. We are a volume platform to connect the next billion people to Microsoft’s cloud and services.”

Conversations with both Nokia and Microsoft employees since the release of the Nokia X strongly suggest that Microsoft will keep the Nokia X around even after it finalizes its acquisition of Nokia. This could all be a bunch of hot air and good public relations training, but I’ve heard the same thing from the number of unrelated executives. The general thought is that Microsoft wants people using its services and if Android or iOS can help be that vehicle, then so be it. 

Asked if the Nokia X Android line running Microsoft services would continue, Hans Henrik Lund, VP of product marketing for smart devices at Nokia, told me at Build that it would. “Of course there will. Because again it makes sense in the fact that we can get users on to Microsoft services instead of Google services,” Lund said.

Microsoft has come to realize that keeping people tied up into its own walled garden has become counterproductive in a world where people have multiple devices running different operating systems. Google has long had that same ethos, building its search engine and core apps for the Web on any device. For instance, Google Chrome and Gmail are both extremely popular on iOS devices like the iPad. Microsoft is behind, but it is making the same type of move toward “ubiquity” of its services.

“Consumers hate ecosystems,” Lund said. “Ecosystems are not created for consumers, per se. They would love to be able to mix and match as long as their content goes with them on any device. The minimum that we can provide is to do that for our own ecosystem.”

Ambient Intelligence: The Azure Backbone


Microsoft's EVP of Cloud & Enterprise Scott Guthrie

When talking about “services” at Microsoft, what that actually entails is two-fold: the front-facing consumer apps like Office and the cloud-based backend represented by Azure and Microsoft’s server business.

Of course, these are not mutually exclusive. These apps are supported by Microsoft’s Azure-based cloud just like Google’s core apps are supported by Google’s cloud and Apple’s apps are supported by iCloud. 

See also: Azure Is Helping Microsoft Catch Up In The Cloud

Microsoft Azure has certainly grown up in the last two years. Now, the company wants to make Azure a core tool for cross-platform development of websites, apps and games. At Build, Microsoft closely tied the integration of Azure to its Visual Studio integrated developer environment and wants to help developers automate everything on the backend of their systems. 

With the recent updates to Azure (there were 44 different product feature updates at Build), Microsoft has fully entered the cloud platform wars. Azure will be popular with enterprise vendors and app developers that have long trusted Microsoft services, but it remains to be seen if the vast majority of consumer developers will follow suit.

Amazon is—by far—the runaway leader in cloud services. At a recent informal survey at a developer event, 10 out of 10 developers asked about what cloud they use said Amazon Web Services. 

A More Open Microsoft

One of the more common misconceptions about Microsoft over the years has been that it is anti-open source. This has not exactly been true. Microsoft has long donated tools and developer resources and employee hours to open source projects (like HTML5, for instance).

Still, much of Microsoft’s bad reputation among open source enthusiasts comes from its battle with the Netscape browser in the late 1990s, its battle with Sun Microsystems in the early 2000s and Ballmer’s remarks on the open source “cancer” of Linux. Over its history, Microsoft has opposed some of the biggest creators and advocates and products of open source software ever created. That is a reputation that may be hard to live down.

Microsoft is not going to open source the Windows or Windows Phone source code, the way that Google does with the Android Open Source Project or Chromium. But Microsoft’s stance on Linux softened and it started contributing to the platform in 2012.

See also: WinJS: 5 Things You Need To Know About Microsoft’s New Open-Source JavaScript Library

As part of Microsoft’s shift, the company has started providing more open source tools to the software development community. It signed an agreement with Novell to help keep non-commercial free software developers from being sued, for instance. Microsoft took a step further at Build when it open sourced its WinJS library and tools, created the .Net Foundation and opened its .Net Compiler Platform Roslyn to developers. The Roslyn announcement, in particular, garnered what was perhaps the biggest cheer from the audience at Build.

The new .Net Foundation and open sourcing WinJS and Rosyln are positive moves for Microsoft. But that doesn’t mean that developers inherently trust Redmond because of a few new open source projects. Developers rightly see the new .Net Foundation as a way to get people into its development ecosystem and then sell them Azure licenses.

To be fair to Microsoft, though, that’s how the cloud business works these days: provide free software and tools while charging for the cloud. Microsoft is far from the only company to take this tack.

“I’m not trying to tell you that Microsoft is suddenly our warm, fuzzy friend. As even Scott Hanselman would gladly admit, they’re ultimately trying to sell you software licenses or Azure services,” said a commenter that goes by the name John Booty on developer forum Hacker News after the announcement. “But it seems to me that they’re using open source the right way in order to achieve that goal, as opposed to the bad old ‘embrace and extend / embrace and extinguish’ days at Microsoft.”

Another commenter named David Gerard summed up developers’ caution of Microsoft succinctly, “I think one would be exceedingly foolish not to exercise the very greatest of caution. This is Microsoft we’re talking about—they have a track record of profound fuckery.”

Time will tell if Microsoft’s overtures to the open source community are a real and altruistic form of doing business or are more of the same from Redmond, like putting lipstick on a pig. But Microsoft’s words and actions over the last couple of years, culminating at Build, are very different from its historic fight against the open source movement. However you view it, it’s a big change and a measure of the new Microsoft.

Now It’s Time For Microsoft To Build

It’s difficult to understate the cumulative effect of all these changes at Microsoft. After years of confusion, false starts, falling behind and frustration, Microsoft has finally gotten itself on the right track. It’s reorganized itself and its products for modern computing, the mobile world and the cloud.

Of course, finally aligning itself in the proper direction doesn’t mean that Microsoft will automatically be successful. Consumer and developer choice can be fickle. Right now, people prefer Google and Android, Apple and iOS. The hub-and-tile “Metro” interface of Windows 8 hasn’t struck a chord with consumers across the world, and developers are reticent to embrace a platform that hasn’t shown much beyond marginal growth. Microsoft can do and say all the right things and still fail.

At the same time, you have to give Microsoft credit for realizing that its ship was headed for the iceberg and correcting its course. It has the platforms, it has the tools, it has the devices and portals. Now it just needs to build upon the new foundation it worked so hard to create.

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