5 reasons it will be hard for Microsoft "win" the future desktop/tablet/Win8 race

We had three great articles this week on BrianMadden.com and ConsumerizeIT.

We had three great articles this week on BrianMadden.com and ConsumerizeIT.com talking about Microsoft, tablets, and applications:

All three of these articles danced around a central theme which is (1) today's Windows apps are desktop apps that are meant to be used be computers with keyboards and mice, and (2) apps and OSes that run on tablets are not desktop apps or OSes.

A lot of the uncertainty around the future of this whole space is based on what Microsoft plans to do with applications in Windows 8, and how/if those applications will work across form factors. As luck would have it, CES 2012 is in Las Vegas next week, and Microsoft is expected to announce more details of their plans for Windows 8, tablets, and ARM-based processors. (Remember that it was at CES a year ago where we first learned that Microsoft would build a version of Windows 8 to run on ARM.)

We'll have full coverage from CES. Jack Madden will be there along with our video producer Justin Meisinger. They'll also be joined by Colin Steele (the guy who runs SearchConsumerization.com and new blogger on ConsumerizeIT.com). Jack will attend Microsoft's keynote Monday night and share his thoughts with us on Tuesday. In the meantime, here's what Microsoft is facing and what we're hoping to hear.

But before we get to CES, let's back up for a second. I know a lot of people have been talking about Microsoft, Windows 8, tablets, ARM processors, the end of packaged software, the future of the desktop, etc., but let's make one single consolidated list right now. Think of this as "All the shit that Microsoft is dealing with in our space right now."

Everything that Microsoft is dealing with in our space right now

If we look at all of Microsoft's challenges, we can boil them down to five core areas:

1. Microsoft's platform dominance is based on apps and OSes installed onto desktop computers

Everyone talks about how most of the money Microsoft makes is from Windows and Office. The problem with both of those is that (1) they're both sold, licensed, and installed locally into a traditional computer. We all know about the whole "SaaS versus packaged product" battle. (But while it's nothing new, we still have to list it here as something that Microsoft is dealing with.)

You see Microsoft trying to combat that a bit by moving to subscription-based offerings, but those offerings today are just different ways to buy their old locally-installed software. (Like did you know that Office 365 is meant to be used with a copy of Office running locally on your computer too? It's really not at all like Google Apps which are 100% web-based.)

2. Microsoft's core money making products are for devices with large screens, real keyboards, and precision pointing devices

Jack wrote a whole article for ConsumerizeIT talking about how just delivering an application (or OS desktop) to a tablet isn't an ideal solution. (Even with virtual or Bluetooth keyboards, it's just a bad user experience.)

The problem is that Windows & Office are big money makers because Microsoft is a monopoly and people are locked in. So people endure these because they have to, not because they want to. But when it comes to devices that don't have keyboards & mice, Microsoft is in third or fourth place.

So if Microsoft creates a new Windows environment for touch devices with no keyboards and mice, that means developers are going to have to rewrite their apps for the new UI. And even if you have an existing traditional Windows app, if you have to rewrite it, are you really going to choose the Windows platform? Probably not. You'd just go with Apple or Android.

And frankly even if you had an app that did require a real keyboard and mouse, you probably wouldn't rewrite from scratch. So you can keep it running with minimal effort. So that's a "win" for Microsoft in that when people do use devices with keyboards and mice, people can get their existing apps. But that doesn't really forward Microsoft's position at all. (See #1 above.)

By the way, remember that if Microsoft does announce some amazing super-fast low-power statistics that mean Windows 8 tablets could perform as well as an iPad for the same price, keep in mind that ARM apps will be written separately. So even though Microsoft is calling it Windows 8, it's not the same Windows ecosystem.

As a fun aside, watch Intel make all sorts of announcements about how their new Atom stuff is better than ARM because you get existing app compatibility combined with a low power system-on-a-chip. If they do this, remember that all your old existing apps don't magically have a new Metro UI, and if all you want to do is run existing apps on a tablet then that's something you could have done ten years ago. The real problem is that "real Windows" is just too bloated. Any tablet which can run existing apps with any decent performance will have to cost $1500 and have 90min of battery life. You want cheap and long-life? Yeah, think about how well that worked out for netbooks. (But hey! You can run all your existing apps!)

3. Microsoft has to make money selling the OS and apps, and their device makers have to make money selling devices

If we think about how Microsoft could evolve their play beyond the traditional PC or laptop, we quickly run into a world where they'd have to compete with the Kindle Fire, iPad, potential Google tablet, Chromebook, etc. And as commenter Gary Schare pointed out on BrianMadden.com yesterday, most of these competitors can sell their devices at a loss because they can make up the money in content sales. (Ok, so maybe the iPad isn't sold at a loss, but that's easier to do when you sell 30 million units. And even so, Apple is still making a ton of cash from the content sales.)

This is something Microsoft has done with Xbox, which they can do, because "Hey! They make the Xbox hardware!" But if they just release Windows 8 as an OS that will go on other peoples' tablets, I mean what's the real opportunity here? Five bucks a unit? We're talking less than $1bn / year business. Tiny.

Or Microsoft could buy Nokia and build their own iPad-like tablet, but then they screw their OEM partners.

Or they could build out their own content licensing and compete head-to-head with Amazon, Google, and Apple. (Yeah, good luck with that!)

4. Microsoft is not a "tech titan" anymore

Ashlee Vance had a great story in BusinessWeek a few weeks ago where he talked about how the four leading tech companies were all encroaching into each others' areas and how they're going full-out against each other. The four big tech giants mentioned were Amazon, Google, Apple, and Facebook. (i.e. no Microsoft).

It's war(click to enlarge)

Yikes! But it's true. Is there any room in this drawing for Microsoft?

5. Microsoft is way behind

Let's imagine that Microsoft blows us away with an amazing strategy and that people are actually excited about it. By the time they actually roll it out, another 10 million iPads will have sold. We already have huge leaders in the tablet space. People writing new desktop apps are going to make them platform-neutral, web-based, or just keep patching their old stuff.

Where will this all end up? Will Microsoft get it together? Who knows? I'm really curious as to your thoughts. They have a lot stacked against them right now. I'll definitely be watching Jack, Colin, & Justin for the news from CES next week.

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Reasons #4 and #5 reflect the sort of pessimism usually associated with a bottom and an impending trend reversal. Therefore, I expect MS to emerge from here, much like it did in the post-Netscape era. I'll take the other side of Ashlee Vance's bet.


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Brian , I don't know why you think  why MS needs a good or winning strategy... or why you are questioning what they are thinking.


Microsoft generally works like this.


Observe what works in the marketplace, then make adjustments to product to allow for maximum profit.  - repeat to infinity


This seems to have work for them reasonably well.


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How many desktops in the world ? 100's of millions...


How many tablets ? millions ?


How much time before it arrive to a 50/50 world ?


Then you know what is the standard for enterprise application today and for the near future... I don't judge if it right or not... It just is !


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Yeah, this probably isn't the place for it but... the tablet is NOT the future of computing.  The "death of the PC" is largely over stated.  Let this not be confused as a support argument for Microsoft because that isn't something I do.  I'm a Linux person.


The tablet, particularly the Apple models are selling well.  Yes.  Netbooks were selling well too at one point.  Now Dell no longer makes netbooks.  Why?  Well, to stray from the tablet discussion for a second, medium and full-sized laptops came down in price and became competitive... and people decided they like a larger laptop if the price difference isn't much. The initial appeal of the netbook was the reduced price with some reduced capabilities.  That argument just didn't hold out as traditional laptop prices dropped.


Apple wasn't really "right" about netbooks sucking... they just didn't want to get into the lowball pricepoint area and have to compete wtih netbooks so they decided rather than do a netbook, they'd create a new catagory instead.  Please note that the tablet is a new catagory... nor really a replacement catagory.  While a small percentage of consumers will completely replace a PC with an iPad, most people don't.  Either the iPad is the only device they have (a computer for someone who doesn't want a computer and not counting a smartphone) or it is an ALSO device.  I don't think the iPad has really impacted the sales of other devices... but I don't really have any data to back up that statement.


If tablets truely are going to replace PCs, again which I don't see happening, then additional companies have to get into tablets and be successful with them.  Apple CAN NOT be the single supplier.  No single company is big enough.  Yes Apple could expand and increase their capasity but it definitely would be a new area for Apple... and something they have not done before.  So to me, the logistics of a tablet revolution just are not in place.  Of couse Apple could license out iOS to other manufacturers but I don't see that happening either.


iPad sales will probably increase for some time to come, especially if Apple introduces an iPad 3, etc... but it will eventually reach a point of semi-saturation and the sales figures will drop off.  When that will happen and at what sales levels, I have no idea.


The iPad was successful for two reasons... 1) It is a good quality product / device... which doesn't usually guarantee success, and 2) Apple had high quality advertising and spent a fortune ads and continues to do so.  Anyone who can make a device that doesn't suck and who can be picky about their advertising until they get a winning campaign... and who can spend a fortune on advertising... has just as much chance as Apple.  It really is that simple.


To me the next game changer is when Intel does better in the mobile market by releasing competitive mobile chips.


I also do not necessarily agree with the idea that a desktop OS and apps can't be retrofitted to a touch-based system.  Yes touch based and keyboard/mouse systems are very different... but not that different.  It can be done.  Of course I'm sure it is something that is easy to screw up so yes failure is possible... but so is success.


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Good points Scott,


When people hear things like "the death of the PC," that does not mean "the death of the keyboard and mouse." (i.e. the death of the PC does not mean they will be replaced by tablets.) The death of the PC is really the death of buying a device with lots of locally installed apps that is managed as a device. I still might have a laptop in my bag for the next 20 years that is my primary user device. It's just not the same old laptop it's been for the previous 20 years.


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I think you are getting this wrong Mr. Madden. Microsoft works as McKinley says above here. Microsoft is never first into new markets. They were not first with dos (CPM), not with grapical user interface (Apple), WordPerfect was dominant before Word, Lotus123 before Excel, Lotus Notes before Sharepoint, on and on. And very often fheir first version of things is crap (like first version of Exchange and SQL) but they keep at it and get it right in the end. Microsoft produces and sells ok software for mass marked and is also going to do that on mobile devices and tabs. The match with Nokia is perfect for MS as Nokia is making ok devices for mass marked.


The marked position for Windows and Office have never been stronger than it is today. There is now real competition in the Enterprise marked. If you are an organizationn with for example 10000 users you have no choice but to run Windows on your PCs. And Windows is also so cheap that it is impossible for anyone to make a product that can compete on a grand scale. Some have tried (IBM with OS/2 and Smartsuite for example) but given up.


You have also written earlier that MS dont like VDI. This also is wrong. Citrix, VMWare, ect is alll competing on how to run Windows so MS dont care. They sell their licenses anyway.


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Brian, thanks for the interesting article.


I don't agree with some of the things Scott mentioned.


First, the term is the "Post PC Era" not necessarily the "Death of PC's"


I still think that Laptops will be around for awhile, but they'll be like buying a pickup truck. Trucks have been around for years, but they aren't the big rage they once were.


Second, Brian is correct. Microsoft is not in the minds of most people when talking about tech leaders.


I believe they will always have a presence in the tech world, but not the dominating presence they once had.


It is because technology entered it's Silver age, and Apple/Google/FaceBook/Amazon have capitalized on providing the consumer a user experience that is simple, straightforward, and relatively easy to use.


Microsoft is still stuck in the Golden Age, where tech was much harder for joe consumer to use and complicated.


The iPad was a success because it showed the shortcomings and flaws of Netbooks and ultraportables. A full OS should not be run on a tablet. The form factor is just not conducive for running standard apps you'd find on Windows today. Again, why the iPad works is because the OS is tailored and designed for touch use. Every Windows tablet has failed because they don't get this concept. Microsoft felt they wanted no compromises; but in fact this decision is the biggest compromise of all: they compromised usability for legacy.


You see, Microsoft missed the boat when they decided to ignore consumers for enterprise and business customers.


Apple capitalized on that fact, and created products that people find easy to use at home.


Now we're seeing more iPads iPhones and Macs being brought into the corporate workplace. Why? Because the consumer was familiar with using it at home, and wants the convenience of using it at work to be most efficient.


The direct opposite of how Microsoft got a foothold with Windows.


I think in order for Microsoft to "jump in the pool" again, they have to do some things:


* Recognize that their best interface is the Xbox/Zune interface, and create a tablet OS around that. Windows Phone has some of it, but the Zune was actually one of the smartest products they made. It was just too late.


* Keep the Desktop/Laptop OS and tablet/smartphone OS separate.


* Bite the bullet and redesign Windows from the ground up, stripping the legacy shackles of backwards compatibility with what they know now. Apple did this, and was able to turn it around.


*Grasp that tech needs to be clean, simple, straightforward, and less complicated, and that the consumer space is important.


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What you don't realize is that Microsoft doesn't need to make a penny off Windows 8 tablets or phones to profit.


Just as Amazon can afford to lose money on every Kindle sale only to recoup it many times over with media sales, Microsoft can use Windows 8 tablets to protect the core moneymaking parts of the operation, simply by limiting the encroachment of other solutions into its core business. In the same way it can synchronize its strategy across its desktop, data center, cloud, search, and gaming operations to the benefits of the entire organization, something that none of its competitors can do.


Simon


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Nobody is saying that Microsoft is dying but that they have become less than relevant.


- MS don't have the hearts and minds of the developers anymore (see android and apple stores)


- MS isn't the only user-friendly option out there anymore


- MS doesn't have a competitive device or device-OS yet and will have to play serious catch-up to some very mature competition.


- MS doesn't have the dynamic leadership it once had.  


- The new breed of consumers are more device-savvy than PC-savvy.


Things might change but currently it doesn't look very good for MS.  


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Mr. Pretoris you are almost totally incorrect :)


Microsoft has sold over 700 companies patent rights... Which in return makes them money on almost every new tablet and smart phone sold regardless of brand. This is control and infulence on a large scale. They don't need to make a MS branded phone or tablet.  They also do not need to capture the hearts and minds, have they ever had that ability?  


They are not even tied totally to one platform or device type because branded hardware is not a focus or long term requirement.


As far as management goes they have some really strong people making record revenue.


How you could conclude that they are some how bad off in any respect I don't understand.. Could they improve in many areas , sure and most likely will enough to set more revenue records yet again next year.


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Seems this is an old argument which has been doing the rounds for the past fifteen years at various intervals.  MS have always been intent on trying to force all form factors into Windows.  This is probably the fifth time they have been set to revolutionise the world of IT with a one-size-fits -all O/S that can run the same apps on a Phone, PDA, Tablet, netbook, laptop, all-in-one, PC and server (the device categories change with time).  It failed before and it will fail again because these devices are simply too different.


"This time it will work", no dount they claim, because they have actually split Windows into four different varieties (Server, Desktop, Tablet and Phone).  But this really means that there are four seperate ecosystems that have a name and some functionality in common, and some app overlap.  At what point does this complexity start to overwhelme both MS and the customer?  Wheat happens when we try to run an app on our phone and tablet, only to find the two are subtly different, or that a platform specific version does not exist for that particular app?  The confusion can only grow.


I don't dount MS will continue to make huge amounts of money, but their ultimate aim, to create a unified ecosystem which dominates all the device platforms is doomed.  They keep trying and keep failing because it is trying to hit a continually moving and evolving target.


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To Mr. Pretorius. Comments regarding your points


- MS has the largest partner network in the Software world


- MS has never been the only user friendly option. Mac has been around a while


- MS has Windows Phone and Windows 8 will be a very good device OS


- The top leadership in MS is Gates and Balmer. Same as always been


-   ?


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Brian, you make some good points (although I don't agree with all of them), but I wanted to correct one thing. You said "keep in mind that ARM apps will be written separately". This is not true - it is correct that traditional Win32 Windows apps won't run on ARM, but Metro Apps written in .Net will have a single binary that runs on both ARM and x86 and Metro Apps written in C++ will be able to be compiled into two binaries easily from the same source code.


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Zojo...


The windows brand is considered a crown jewel, therefore why Microsoft keeps doing what they do, as you say "forcing all form factors to windows"  Branding is big driver at Microsoft. What isn't always a driver there is clean elegant solutions that can turn into a whole new way of doing things. It's obvious to everyone now that things can be simple as Apple strives for. What's funny is that this approach doesn't always produce the most money. In Apples case the consumer market has sucked up all that goodness and in turn help them be major players again.


I hate Brian for saying ecosystem . I send him bad juju


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Brian,


There seems to ba a fairly constant view running accross journo's and bloggers that the iPad is at the pinnacle of tablets and cannot be challenged. i aggree of course that it is currently top dog but find the assumption Windows 8 will have to produce a tablet variant to compete difficult to understand.


Technology continues to move forward and by the time Windows 8 surfaces the ability to run a full OS on a tablet will be inplace, if not at launch soon after. Why would I want to cripple my tablet by not taking advantage of the extra features of a full OS that allows me to do everthing I want.


Surely the real threat to the iPad will be that it is locked into a time warp with it's limited OS and apps, where Windows starts where iOS finishes.


The iPad could look very limited in a years time unless they move to the full Apple OS and all that entails. I am surprised that more bloggers don't embrace the more open opportunities of the Windows programs.


Who is behind who here Brian?


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