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BLOG: Microsoft: Will the empire strike back?

Andrew Milroy | April 23, 2013
Will the trend towards consumerisation, BYOD and cloud computing destroy Microsoft’s business model and allow others such as Google and Apple to take over within the enterprise? The answer is no.

To some, the omens look bleak for Microsoft. PC shipments are in decline, and an increasing proportion of IT activity bypasses Microsoft technology entirely. Google and Apple continue to make massive inroads into, what was once, Microsoft territory, forcing Microsoft to react.

Will the trend towards consumerization and ‘Bring Your Own Device’ (BYOD) combined with the move to cloud computing marginalize Microsoft and undermine the fabric of its business model? Indeed, will cloud computing destroy Microsoft’s business model and allow others such as Google and Apple to replace Microsoft within the enterprise?

The answer is no, if Microsoft can develop a coherent marketing strategy that can be understood by its clients. BYOD, cloud computing and the vulnerabilities of Google and Apple’s business models give Microsoft the opportunity to consolidate its dominance in the enterprise.

Windows 8 is an operating environment that can provide a common experience across multiple devices. It can transform tablets into devices that can be used for enterprise activities in addition to consumer activities. Windows 8 smartphones can also be easily integrated with corporate Windows environments and offer management and security features that enterprises are vigorously demanding.

Apple’s presence in the enterprise is driven organically and is not planned. This may benefit it in the short term, as it rides the consumerization trend. But, the company does not have a coherent enterprise strategy, choosing to remain focused on the consumer experience.

Google is developing an enterprise strategy with some success. However, it does continue to generate the vast majority of its revenues from advertising, not by addressing the technology needs of enterprises. It does not have a suite of products that can compete with Microsoft in the enterprise.

To the enterprise, Microsoft represents much of what is deemed to be important such as stability, long term product support, flexibility and standards. It offers upgrade paths and a wide variety of support options to name a few benefits that enterprises attribute to it.

So why is Microsoft not seeing more success? Why is Windows 8 adoption so slow? Perhaps this can be explained by Microsoft’s marketing. Microsoft’s marketing activity does not reflect the strength of its position. Its message seems disjointed and uncoordinated. For example, why did Microsoft not present the separate launches of Windows 8 and the Surface as part of the same overall strategy? Its pricing strategy is muddled. It should aim to make Office 365 ubiquitous in the enterprise and then focus on pricing. So far, it has managed to upset a lot of customers with its Office 365 pricing and made alternatives more attractive.

Microsoft will not beat Apple, Google or Samsung on their territories, by launching devices to compete with them. Its advantage over these firms will be enhanced by leveraging its strength in the enterprise market. In other words, it will succeed by practicing the inverse of consumerization. Until the mid 1990s, mobile phones were primarily used as enterprise devices. They moved from the enterprise, into the consumer market. Similarly, PCs were first popularized in the enterprise and thereafter became commonly used by consumers. Consumerization is a blip in the technology adoption timeline. Are Apple’s recent challenges an indication that it is struggling to manage a slowdown in the trend towards consumerization?

Microsoft can galavanise a shift away from consumerization by promoting the benefits of Windows 8 as an operating environment that can be used on any device. The Surface should be primarily targeted at the enterprise not at the consumer. Once established within the enterprise, workers will also use it for consumer activities and its popularity as a consumer device will grow. Microsoft can create a new market for an operating environment that straddles both enterprise and consumer domains.

If Microsoft cannot wait to strengthen its hand in the consumer market, it could use its vast resources to make some acquisitions of firms that are pioneering new ways of consuming content. For example, acquiring Spotify or Netflix would instantly position Microsoft as a leader in the consumer market.

Microsoft is in a very strong position. It needs to capitalize on this strength in order to re-enforce its position. It must consolidate its enterprise position by focusing on the needs of this huge market. It can then attack the consumer market. It has some great products. It needs to market them more effectively. It needs to be seen by enterprise IT buyers as the IT supplier that can offer one unified, secure, and manageable experience across any device and that these devices can be used for both work and play. To date, it has failed to do this. With a revamped marketing strategy, the Microsoft empire can strike back.

Andrew Milroy is vice president, ICT Practice, Asia Pacific, Frost & Sullivan.

 

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