For over 30 years, Microsoft has relied on its operating systems to be the backbone of its businesses. Without Windows, there would be no Office, no OneDrive, no Internet Explorer, and certainly no Microsoft as we know it today.
Windows has been Microsoft’s most important product sold over the last 20 years.
But with a new sheriff in town in Redmond, one thing is becoming abundantly clear: Windows is no longer the sacred operating system that must be fed before all others.
Under the new regime of CEO Satya Nadella, Windows looks to be just another in a long line of operating systems that Microsoft will need to capitalize on if it wants to be successful over the long-term.
Look no further than Microsoft’s media event on March 27, where the company is expected to show off Office for iPad. That Microsoft is bringing Office to another platform beyond its own is no surprise – the company’s software has been running on Macs for a long time, after all, in fact Excel first launched on the Mac – but the fact that the iPad Office version will be available before a Windows 8, touch-optimized option is telling (assuming the rumors that this is what Microsoft has planned are true).
Much has been made about Microsoft’s decision to go to the iPad with Office before developing a solution that’s optimized for its own platform. Some say that it’s simply a financial move, while others argue that it’s Microsoft acknowledging that the times are a-changing and it needs to adapt.
But I think those arguments are too simple in their perspective. This tells a much bigger story about who Satya Nadella is and what he has planned for the company.
If you examine Microsoft’s financials, you discover quite quickly that while Windows is extremely important to the company’s bottom line, Office is the cornerstone of its profits.
Throughout the years, regardless of whether Windows was wildly popular or on the ropes, Office always kept Microsoft steady and financially sound. Office has historically generated more revenue for Microsoft than Windows, and it contributes boatloads to its bottom line.
Realizing that, Nadella ostensibly sees Office as an opportunity for his broader strategy to improve Microsoft’s standing in mobile and the cloud and make the software giant a bit more agile than it is today. If Office is the platform getting consumers and the enterprise to invest in Microsoft products, it should be the flag bearer going forward.
The halo effect
In marketing there’s a concept known as the Halo Effect. It describes a phenomenon in which customers buy a single product from a company, find that they love it, and waste no time investing in the company’s other products.
An example of it can be seen with Apple’s Mac sales, which jumped after the iPod launched and after Apple got into the smartphone market with the iPhone. Customers saw something they liked, realized they could get more out of the products with other Apple devices, and started buying them.
For Microsoft, the product that has the best chance of delivering the Halo Effect is Office. The platform is a staple in the enterprise and a standard in the consumer market. By making Office the company’s standout platform in mobile, Nadella can satisfy his desire to capitalize on that market. What’s more, as OneDrive continues to be integrated into Office, there’s a good chance Microsoft’s cloud ambitions could be met.
But let’s take a step back: what about Windows? Right now, Windows can’t compete in the cloud and it’s been a mess on mobile. For Nadella to bring Office to Windows first wouldn’t serve a purpose; it would just push customers to Office lookalikes on all the tablets (e.g. iPad) that they’re already using, which is what’s happening now.
It’s actually quite refreshing to see Nadella realize that in the grand scheme of things, Windows doesn’t matter nearly as much as Bill Gates or Steve Ballmer would have us believe.
Windows 8 was a disaster, and there’s no telling if Microsoft can get Windows 9 to the place where it will appeal broadly to customers. So, why should Nadella serve the needs of his Windows 8 customers when a much larger installed base on iOS is waiting on a new Office suite?
Now, this isn’t all to say that Windows is dead in the water or should be ignored. Quite the contrary, one of Nadella’s duties as chief executive will be to revive Windows and make it both more mobile friendly and cloud friendly.
But until then, it doesn’t make sense for Nadella to play the old Microsoft game of bringing its best products to its own services first. Windows is not the best product in the mobile space where it has a relatively small following.
So, don’t be surprised by Microsoft’s decision to go iPad-first with Office. For once, Microsoft has a chief executive in Redmond that realizes Windows isn’t the be-all, end-all and doesn’t deserve special treatment.
Perhaps Microsoft has finally realized that Windows is, well, just another operating system.
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