Will the real Microsoft please stand up?

Wednesday 17 July 2013 10.37
Steve Ballmer must make it attractive for customers to stick with Microsoft across all their devices
Steve Ballmer must make it attractive for customers to stick with Microsoft across all their devices

Steve Ballmer's new internal strategy is logical and his plans for the market are a leap of faith, says Niall Kitson.

"We need to move forward as one Microsoft, with one strategy and one set of goals."

So now we know the direction Microsoft CEO Steve Ballmer wants his company to go in.

No longer will we have subsections of subsections assigned to different parts of the company; no longer will we have products without champions. If you work on Windows software, you work on Windows, Windows Phone and Xbox. If you work on devices, you look after Surface, Xbox and whatever else is coming down the line.

No one want to see software like Windows Mobile again or devices like the Courier or Kin that never make it to market. Nor will we have to put up with expensive failures like the Zune media player - which wasn’t a bad piece of kit, it just never seemed to have any kind of push behind it.

All of those problems will – in theory - be a thing of the past now that we have a reorganised management team working to fulfill Ballmer’s ‘three screen’ vision, where users stick to Microsoft products across smartphones, tablets and PCs.

The game of musical chairs breaks down as follows:

Terry Myerson has been appointed head of the OS Engineering Group, putting him in charge of ensuring Microsoft's OS products work together. This implies that a tighter relationship between Windows Phone and Windows is on the cards.

Rick Rashid will be responsible for "OS innovation" research.

Qi Lu will lead the Applications and Services Engineering Group, making him the face of Office, Skype, and other key non-Windows software.

Tony Bates will lead the Business Development and Evangelism Group.

Perhaps the most controversial move has been Julie Larson-Green reassignment from Windows to the Devices and Studios Engineering Group, putting her in charge of Surface, Xbox and any games from first party developers. Needless to say, the gamers have taken to the forums to share their displeasure.

Other key players include Eric Rudder, who will lead the Advanced Strategy and Research Group, while Tami Reller will be responsible for all of Microsoft's marketing. Craig Mundie will be running a "special project" before taking on a consultancy role in 2014. The current Office chief Kurt Del Bene has served his notice and will leave on 31 December.

Analysts have been predictably divided on the merits of the reorganisation.

Tom Austin of Gartner was unconvinced that the new division of labour would inspire customer confidence. "The business of business is business,” he said. “Companies should be organised by major business units, not by functional units."

IDC analyst Al Gillen was more optimistic, arguing that developments like the consumerisation of IT demands a similarly radical rethink of corporate structure.

"Microsoft's core business is being undermined by changes in the market and the company needs to be more responsive and think about things differently than it has in the past," he said.

One of the key messages Ballmer emphasised at the recent Build conference was the need for rapid product iteration and customer response. Dividing the workload by function is his formula to achieve this, while simultaneously pushing for that three-screen model.

And how do you create a demand for ‘three-screen’ when consumers are already swamped with Android and iOS devices?

Microsoft current product slate of Windows 8 and Windows Phone 8 have a less than 10% market share.

Windows 8 is particularly embarrassing as it has only recently surpassed Vista, putting it a distant third to XP. Windows 7 is a deserving market leader in a declining PC market (down almost 12% in the second quarter of 2013) that doesn’t see touch control as a selling point.

The only way Ballmer can sell ‘three-screen’ is to emphasise interoperability and a consistent user experience. The question is how amenable would this experience be to party crashers like, say, an iPhone.

If the product roadmap is to be something like using a Lumia smartphone to a Surface tablet to a Lenovo touch screen PC there needs to be some killer app to bind the Windows ecosystem together. Apple managed it by forcing consumers to manage their iPhones and iPads from iTunes but it was in a fledgling market.

What can Microsoft do to promote that kind of brand loyalty to go beyond iOS devices’ position in the market to go a step further and include the PC? (Apple only accounts for less than 8% of PCs worldwide.)

Ballmer’s challenge starts with management structures but it ends in the hearts and minds of users with a consumer mindset. As users increasingly get to choose their preferred devices for work and play, how does Microsoft convince people to stick with them through every step of their digital lives?

Steve Jobs’ answer to that problem was to go for exclusivity and it had remarkable success. Ballmer doesn’t have that luxury; he needs something functional, cool and cost-effective. No pressure, so.

Niall Kitson is editor of TechCentral.ie