Quick Thoughts: The New Microsoft – Taking Care of Business

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–          Microsoft has a big 4Q12 ahead with the launch of smartphones, tablets and computers featuring Windows 8 and Windows Phone 8 (WP8) sure to draw critical scrutiny from the media and investors.

–          Device announcements from Nokia, HTC and Microsoft itself are intriguing – well spec’ed and differentiated, with the potential of establishing Microsoft’s viability as a new paradigm platform

–          Details on the new OS versions have been tightly held ahead of the expected Oct. availability, with WP8 a particular mystery, suggesting real surprises, positive and/or negative, for the eventual reveal.

–          Despite press commentary, this is NOT make or break for Microsoft – penetration will take years under any scenario, with MSFT’s enterprise stronghold slow to adopt the new paradigm.

 

Steve Ballmer has kept an unusually high profile this year, announcing a consumer preview of the pending Windows 8 OS during his annual Las Vegas CES keynote, headlining Microsoft’s Surface tablet dog and pony show in Hollywood this past June, and popping in on recent Nokia and HTC WP8 device announcements to hype his new smartphone platform.  Curiously, the device announcements have been long on hardware specifications and short on details about Microsoft’s software.  In particular, Windows Phone 8 remains a mystery.  Until last week, only a short list of invited 3rd party developers under strict non-disclosure agreements had been given access to the pre-release OS, and the just opened developer preview program offers a limited SDK without access to an unidentified set of new features.  With ship dates for WP8 smartphones just 6 weeks away, speculation is building for one more big Ballmer presentation to open the curtains.

What we do know about Windows8, Windows RT (for consumer tablets) and WP8 is intriguing.  The Metro interface, which has been with us since WP7, will be common across all three platforms, with its scalable and active application tiles functionally superior to Apple’s rows of standard sized App icons and an aesthetic improvement to the unruly widgets in Android.  All of Microsoft’s new platforms will synch to its SkyDrive cloud service, with data and many apps available across devices.  Familiar touch screen controls will be consistent across all platforms and integrated into Microsoft applications.  With varying degrees of compatibility, the platforms will be able to support legacy Windows applications – a key factor for enterprise customers.

The devices that have been announced to date – the Surface tablets, the Nokia Lumia smartphones, the HTC Signature smartphones, the ultrabooks and tablets from the traditional PC makers – offer competitive specifications, although in many cases the prices are still a secret.  I wrote about the Surface tablets when they were announced and, assuming that they will be priced in line with the market, they appear to offer a set of work productivity advantages that set them apart from the iPad juggernaut.  Nokia is leading with its camera, asserting image stabilization and light capture advantages over all other smartphones, along with distinctive bright colored styling that breaks from the Bauhaus inspired black glass rectangle of the iPhone.  HTC was announced as Microsoft’s “Signature” WP8 launch partner, suggesting an integrated marketing and promotion program – a slap in the face to Nokia, which is the only WP8 partner that is exclusive to the platform.  The flagship model, the 8X, leads with a “retina” dense 4.3” display and integrates audio from Beats.  Between the differentiated interface, the colorful styling, the price point options, and leading edge hardware specs, both Nokia and HTC appear to have horses to ride in the race.

Of course, that is IF Microsoft is ready with its platform software.  Windows 8 has followed a more or less normal Microsoft launch pattern, with a final developers’ kit available in mid August for the October 29th release date.  WP8?  Not so much.  Microsoft has justified its game of keep away with its developers by referring to unannounced features that it intends to hold secret until the last moment to fan the flames of anticipation and excitement.  Those that take the company at its word speculate that Microsoft may announce streaming music with advertising funded and subscription options integrated with Xbox, a scan-and-match cloud locker for music on SkyDrive, a tight implementation of Skype, and/or an innovative implantation of Nokia’s mapping technology integrated with Microsoft’s Bing search.  Whether keeping any of these features secret would be sufficient reason to frustrate the very developers needed to fill the WP8 app store is a serious question so perhaps it is something new and great beyond the imagination of the blogosphere.

To the cynics, the secrecy could be an excuse to cover for delays in completing the final version of the software, which Microsoft supposedly just provided to manufacturers earlier this week.  Meanwhile, most developers have been left with their WP7 apps, which, while supported by WP8, do not make use of any new functionality in the platform.  Just what this new functionality will be, exactly, will have to wait until Mr. Ballmer’s next gig.

All of this uncertainty adds more drama to a piece of the TMT sector that already has plenty of it.  Do a search on “Windows Phone 8” and “make or break” and peruse some of the 690,000 results that come up, including stories from most every technology site on the web.  While this fall is obviously an important opportunity for Microsoft and its partners to establish the Windows 8 family as a viable consumer platform, Microsoft’s biggest play is in the enterprise.  IT departments have approached portable device platforms cautiously, as grass roots agitation for smart phones and tablets in the work place has grown.  Neither Apple or Google has focused on the needs of the enterprise with their platforms and neither has a relationship with IT managers either.  Apple’s iOS is closed and expensive, two adjectives that typically make CIOs bristle.  Android is fragmented and insecure, adjectives that may be even worse.  Microsoft touches every IT department on earth, dominates email and personal productivity software, and provides the operating environment for the majority of enterprise applications.  Microsoft gets security, virtualization, backward compatibility, and multi-vendor support.  Microsoft is a leader in cloud services that are the future of enterprise IT and the Windows PCs that are its past.  All of this gives Microsoft a huge advantage as enterprises trudge into the portable device era.  A fast start for Windows 8 and WP8 with consumers this Christmas would be a huge leg up, and a weak reception would be disheartening, but the real “make or break” will be with the long term reception of Microsoft’s platforms with its core enterprise customers.  That will not be apparent for quite a while.

For our full research notes, please visit our published research site.

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