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Q3 Results: How’s Microsoft doing in its cloud and mobile transition?

Following Microsoft's Q3 FY2014 earnings report from last night I thought we should take a look at the big picture behind the numbers and address some of the key themes from the company's analyst conference call (which you can find here)

Let's have a quick look at the numbers for Q3. Revenue was $20.4 billion, gross profit was $14.5 billion and operating income was $7.0 billion. While adjusted revenue grew 8%, earnings per share (which came in at $0.68) grew slightly less at 5%.

Clearly Microsoft is not in any kind of financial trouble. I say this despite not exactly being a Microsoft fan. I own and use exactly zero of their products so I'm simply looking at the business as a technology investor here. Microsoft is growing slowly. No, they're not even growing as fast as Apple and they certainly are not growing anywhere close to as fast as deeply mobile companies like Facebook. But they're growing and are on very strong financial footing.

Terry Myerson

What makes Microsoft unique is its deeply entrenched position into the market. They're also making progress shifting the business model to align with their new "cloud first, mobile first" mantra. Yeah, I know the phrase is already getting tiring, but I think it says a lot about what the PC giant is doing and what they've admitted to themselves.

What have they admitted? I think they know that Apple and Android have the mobile hardware and operating systems pretty well locked up at this point. It's a very tough uphill climb for anyone to compete, including Microsoft. And because the desktop / notebook market will be deeply affected by mobile trends, the Windows OS franchise is not as valuable as it once was.

Build 2014

The solution? Move business IT functions into the cloud and support them from any device whether it runs Windows, Android or iOS. Sell subscriptions to cloud-based software like Office 365 rather than old licenses for Microsoft Office installed on Windows boxes. Sell the infrastructure to build apps in the Azure cloud instead of selling server boxes. Allow corporate clients to downsize their IT departments and pay part of the old equipment and staffing bill to Microsoft instead.

The migration of Microsoft to this new cloud and mobile model is in its very early days, to be clear. The "Commercial Other" line, where all cloud revenue falls, amounted to $1.9 billion, or less than 10% of total company sales in the last quarter. But the big pieces (Azure and Office 365) both grew at least 100%, so by this time next year it's possible Microsoft could be significantly further along in its transformation.

One year ago I was very bearish on Microsoft. I felt they had no chance of being a #1 or #2 in the mobile platform wars, which would hurt them compared to theoretical world where Windows Mobile was the dominant operating system. But I neglected to consider just how powerful Microsoft is with its large enterprise customer base. These are businesses that (generally) move quite slowly when it comes to IT strategy. So Microsoft just needs to move faster than its customers need them to, which I think is happening.

Sataya Nadella

Microsoft is highly profitable and last night they reported $88 billion of cash offset partly by $21 billion of long term debt. They are well equipped, financially, to transform themselves over the next decade. At the end of that decade, it's possible many of its big customers may not use Windows anymore. But if they still use Office (in the cloud) and run enterprise apps via Azure, then Microsoft should make out like a bandit. However, I'm still keeping my eyes open to the possibility of Amazon, Google and others accelerating their competitive efforts against Microsoft.

What's your take? Do you think I'm too concerned about Windows market share erosion? Or maybe I'm not being aggressive enough in describing the risk? What do you think the likelihood is that Nadella's team can radically transform an old-world computing company into a cloud and mobile leader? Is it reasonable to pay 14x next year's earnings for Microsoft at this point in the turnaround when you consider the risks? Drop us a comment.

(Chris Umiastowski is a contributing financial writer to the Mobile Nations network. You can see the rest of his posts here at AndroidCentral, iMore and CrackBerry.)

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Comments

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abel920 says:

Really.  I'm proud of MS.

dhaval88 says:

Still missing large number of apps on windows phone,and the current app developers giving too much attention to their ios and android version than windows phone version,like WhatsApp and all that,they all interested in android and not giving that much importance to us,they quickly gives update to other platform version than us....y this?

hwangeruk says:

Large, I don't think so. Some yes, but not many left missing now. Certainly not enough I would care.

With 8.1, Universal Apps will have a profound effect on Windows Phone. Windows 8 store apps will gain momentum (8.1 update now makes Desktop and Metro so seemless) - Windows 8 sales will be much stronger, more apps, and if that leads to Universal Apps (see Laurence Gripper moving his app in just 2 days! from WIndows to Windows Phone) then Windows across all devices suddenly looks like a reality.

Store apps are beautiful, 1 click install (with auto update) and 1 click uninstall. No more logn wait for Programs Features to enumerate, no more registry left overs.

I've rebuilt my PC several times and had many Windows Tablets come my way. I just enter my Microsoft credentials and my whole system just rebuilds itself. Its magical.

Things are looking very positive for MS. Much more so than the writer of this article understands.

dhaval88 says:

But on android their is many apps to hide WhatsApp status,and all that but heir on windows phone we don't have such apps and also their is large number of games on android and ios compare to us,now see WhatsApp ,it is most needed app in day to day life but it crashes alot and developers not giving update atall

This lets windows phone down a great deal and puts loads of potential customers off buting into the micrsoft eco system.

w8user says:

Who's this troll Chris Umiastowski who doesn't even use MS products and comes here to try to feed us his garbage about supporting a lot of OSs?

I have heard the same argument before thousands of times: MS should release Office for Linux, should release SQL server for Linux, Access for Mac OS X, and so on

MS is smart in just giving a watered down version of some of its products for inferior platforms like iOs and Android. 

So, Chris, why don't you go sell your snake oil somewhere else?

sundawg#WP says:

He's a financial writer.  His views pretty accurately represent the minds of many looking for investments.  However, investment decisions are partly about the business health and track record, but there is a part where you feel like there is some short or long-term value and you feel like taking some sort of risk.  Most of us here on this site have a biased opinion.  Just like he has a biased opinion because he doens't use any MS products...but that's probably technically not correct.  There is more MS infrastructure all around everyone that they use every day and don't realize it.  Think of the websites and cloud services one uses, heck iCloud and Siri use MS.

hwangeruk says:

Tedious MS bashing is for kids though. Any "serious" financial writer would not have this consumerist and childlike view of Microsoft. They are a very broad business, firmly entrenched in the enterprise.

If there is any long term risk, its Apple with no Steve Jobs and no recent innovation. They only have hardware and if that goes out of fashion, so does their business.

I sat with Gene Hodges, when he was CEO of Websense. He declared to the table at dinner that Microsoft was dead. That was about 3 years ago. I asked the assembled crowd, if they could have a tablet that had all day battery life, a mouse, a keyboard and Office - would they use it? (I was describing the Surface)
Everyone in the room said "yeah! I want that" And here we are years later, MS still piling billions into the bank and growning.

Will they ever be a hyper growth get rich quick investment opportunity? No. MS are like a utility company, stable steady growth, steady share dividends.  

 

VHMP01 says:

..."heck iCloud and Siri use MS"... Does this non MS user uses ATMs? Banks? Heck, does he pay taxes or use any goverment facility? He should guess what? MS behind them all, and he should read the news about all those goverments paying MS millions to keep XP alive. Would the World's finances and goverments rely on something else? Not for a while. And will all move to Google? I doubt it. To Apple? more of a risk, remember iMaps?

tofferne says:

I agree, why we need to listen this sleeping and not interesting Chris Umiastowski, he can write in another corner about his Appel or bad Android things. He manage his things like blind and deaf MS hater hater - good bye my (not) friend.He don't understands we have a totally new and strong MS world in front of us, okay after years of sleeping, but the bear woke up and are strongly alive, Nadella is the medicine.

BlackGoku says:

Lolz good pong one dude.I just read that I don't own any MS products and I stopped reading the article.

ZX9 says:

On the contrary, why would you complain about an unbiased assessment? The view of an outsider can be quite valuable.

blackprince says:

Believe me, I read alot of investor viewpoints about Microsoft and he hasn't said anything new or groundbreaking or even remotely helpful to a potential investor of Microsoft. This path we see Microsoft on is mostly Ballmer's doing, Microsoft just needed a new face at the top to say many of the same things.

x I'm tc says:

Turnaround? Was MS struggling at some point I missed.

I would say they're expanding into new markets, not turning anything around.

I'd say it's a turnaround. They did a re-organization for a reason, not for laughs. They also ousted Ballmer for a reason, not because they were bored. Yes, Microsoft was in danger of being sidelined, especially in consumer and the PC market, which is declining severely. And they're getting their ass kicked in mobile, which is pretty much the future.

Only those with the rosiest of glasses think Microsoft was doing awesome these last seven years.

I love Microsoft but we can't be naive and think we got this in the bag. I think we are heading in the right direction and releasing products that are on par or better than the competition.

"Turnaround" as in they're headed in a new direction, not that they've reached the mountain top. That's far from being decided.

Huh? I was agreeing with you or at least I thought I was. Lol

My bad, misunderstood ;) I can just see at least two ways 'turnaround' can be interpreted so I wanted to be clear.

Np Dan, we're good.

x I'm tc says:

Still not a turnaround, though.  That's just reorganization.

MS financials have only been getting stronger.  What they have not been doing is getting stronger fast enough relative to competitors (mostly Google) who are getting bigger much, much faster and represent an existential threat to MS.

What they are doing is trying to remain competitive in a changing landscape.  That is absolutely not a turnaround.

wizzackr says:

With regards to getting their asses kicked in mobile you speak from a very American perspective :)

Worldwide market share is like, what 4-5% for Microsoft after 3 years? I can't see how that means anything else.

Black Lumia says:

So, if we are getting whipped, why do you use our care about Windows phone

That's an odd thing to ask. Because I like it? Because I'm a fan? Because I've been involved with the Windows Mobile/Phone community since 2004?

Are you implying I should only choose products based on positive market share and not my preference? Or that due to my liking of a product line, I should ignore market trends?

salazka says:

Very Good Question!  But i guess it is because he is a realist! ;)

rodneyej says:

What are you asking???... Really?

Wael Hasno says:

He wasn't complaining, you know..

paulheu says:

The worldwide number are severely impacted by two huge markets where specifically iOS is very strong. In general WP is (well) within reach of iOS being less then 50% behind in general and has surpassed it in quite a number of markets.

 

The US and Japan are really the only markets where iOS is doing very well while Android is completely out of reach for either WP or iOS. That said, WP is IMO on a fast track to catch iOS sooner rather then later but we'll have to see what happens now that the WP motor has been driven into the manufacturers garage. WIll it keep going or will MSFT manage (again) to water things down to a point where not much is left to compete with. On that front WP 8.1 is really not looking too good IMO with most any differentiating feature (all but) gone. Of the Nokia team gets shackeled and forced to submit to the MSFT ways instead of being allowed to do what they do best it will not be pretty as far as mobile goes.

KelvBlue says:

Microsoft does get profit from Android though.

VHMP01 says:

You do not want to "Turnaround" that Android cashing cow for MS!

Mark Wright1 says:

Daniel

I guess I see it a bit different...

4-5 years ago what was the smartphone market share and sales?

given apple/ android drove the market and had all the focus on them is it actually a low figure? I would say that the majority of their growth was platform improvement and not the global growth of the market as apple and android fed on. The rapid expansion and a largely first time consumers (ie  first time buyers) really is not a good measure or yardstick of anything. I think the next 2-3 years will be more informed choices by consumers. The US and japan are like two different planets to the rest of earth (95%). The funny thing is nokia at its best sold nothing in the US but was the undisputed king of phones.... Unfortunately too many look at the US and its just a completely foriegn system to how the rest of the world operates. many of those cherished apps are not worldwide, android in china is basically a non-google thing so is this so important on a global scale? eventually I think 50% of people will end up making calls/emails and a couple of social networks 2-3 gamesand thats it... not much more than a feature phone does....I think wp8.1 will be the version that blurs the lines of features and can deliver quality phones at good prices.

paulxxwall says:

Yes.....yes we are getting our " asses kicked" ! Thanks for pointing that out! Makes me wonder about the future of WP...sucks

Apple ran at what,2-5% market share for how long? And now look at them. There will always be a 'new best thing' and I don't doubt that Microsoft can work that into their strategy at some point.

rockstarzzz says:

If they are so awesome while turning around, I can't wait to see how awesome they will be once totally transformed and turned around in the right direction!

salazka says:

Daniel, they did all that indeed. But such results are by changes planned months back a year or more even. By Ballmer. We will start seeing the effects of the new CEO and organization next year.

OMG55 says:

So you think Satya did all this in give weeks? This was all orchestrated by Ballmer prior to his departure. While I like Satya, he didn't do all of this, this had been Microsoft strategy and it took more than five weeks! Ballmer was a sells guy and selling services is no different than what he's been doing his whole tenure at Microsoft.

You need to specify. A turnaround only in the consumer segment. Microsoft is still on top where it matters in the enterprise. Microsoft could abandon phones and still be one of the most successful companies in the world and in the US. I believe that is what the OP was referring to and i wouldn't call that a turnaround either.

n m says:

Agreed, when it comes to Enterprise MS is pretty much untouchable, so many years of quality, service and reliability have forged huge bonds of trust and respect that wont be easily broken.

scdkad says:

Well the new guy hasn't made any earth-shattering decisions yet, has he? MS right now now is still pretty much a reflection of Ballmer..

daguila29 says:

For all the negativity surrounding Ballmer, He deserves more credit than anyone gives him. Todays success is a result of his decisions made in the past. Nadella just happens to be CEO today.

duk3togo says:

IMO the biggest problem MS has is that there teams work independently. I feel Apple and Google have coherent teams working in the same goal as well as putting unfinished products out the moment they announce it. This ways bugs get found faster and therefore improving the software. For MS it's a double edged sword if they put out a product that has even a minor glitch the whole tech industry points out out and its headline news everywhere. Which is a bit unfair for MS.

If Satya has all the teams working synergistically chances are it would catch up and overtake the competing OSs. Look at Cortana for example over a year later to show yet they showed a Siri like tellme about 6 months before Siri was even in the picture, this is one example of many. You are profiting 5 billion in a quarter, hire about taking 1 billion from that and investing it in grabbing new talent to speed up your updates.

afnan_mc says:

The anonymous employee on reddit did point or that reorgs would improve the situation and mentioned that the tabs would be working together. Here's to the future. :D

VHMP01 says:

"Google have coherent teams working in the same goal " maybe, but Apple? Come on, they have not really innovated since 2007 with iOS, OXS is and old brick. Apple sells fashion, but they "coherent teams" could not put out iMaps and several products correctly.

x I'm tc says:

You'd say it.  But you'd be wrong.  That's called a reorganization.  The term turnaround applies to the company's financials.  If they're getting worse and then start getting better, that's a turnaround.

grking1234 says:

I think you are a typical tech writer who thinks the only market is the consumer market, and that nothing else really matters. You admitted this yourself when you said that you neglected the enterprise market. What google and apple may be to consumers, MS is to enterprise. Phones and tablets as byod maybe one thing, but MS running the backend, Office and the rest is something different. You will be surprised that in a couple of years, Apple sells iPads, and guess what, they run MS services.

Apples growth is problematic. Mac sales are flat, iPad sales are down, and as was admitted in the earnings call later, a large percentage of the iPhones sold were the 4s. The ASP for the iPhone was down $40. So, in spite of Apples numbers, they have issues to deal with.

"I think you are a typical tech writer..."

Just FYI, as noted at the end of the article, Chris is not a tech writer, he's a financial investor and adviser, which is where he makes his living.

PureView says:

Grking1234 is the lord of finances. His word is final.

Jas00555 says:

Why do you almost always just quote the first part of what someone says, then just throw out the rest of someone's legitimate point?

You need a lesson in logic. I wasn't contesting the rest of what he said, I was contesting his referring to Chris as a "typical tech writer", which is not even relevant to the discussion (though the implication was Chris is unversed in financials, since he's 'just a dumb tech writer', which is wrong).

That should have been fairly obvious, but I'm more than glad to point that out to you.

Hope that helps.

Jas00555 says:

I think you're still missing my point (and it sounds like the OP's point too). Grking1234's point wasn't that Chris is a bad tech writer or something like that, but regardless if he was a tech writer or a financial writer, he stilled focuses on the consumer when Microsoft's bread and butter is the enterprise. I realize that Chris isn't a tech guy, but mistaking Chris's profession shouldn't make his post invalid. Hope you understand what we mean now.

Please point out where I criticized his post, a point or even raised objections to his main argument? All I said was "FYI, Chris is not a tech writer", yet you're jumping down my throat here.

It was a valid correction to the single point. I have said nothing more on the rest of matter, so I'm not sure where you are going with this...

Jas00555 says:

Did you miss the part where I said "almost always" as in, you do that a lot? I'm not asking you about this post in particular, but a lot of times someone will take the time to write a long, thought out post with valid points and you'll quote a small line and go "yup, that's wrong". Not even an acknowledgement of the rest of the post, just "that one line is wrong". I'm not jumping down your throat, I'm just asking why you can't at least acknowledge someone's other points (and no, I'm not saying you did exactly that on this particular post, but you do it a lot)

This is way off topic. Why should I acknowledge someone's other points if I'm not trying to prove them wrong or I have nothing else to say on the matter? How is pointing out an error someone has said, anything more than that?

If I said WW2 started in 1940, and then went on to make a point about the war, someone correcting me on the date is nothing more than that: a correction. It says nothing on the rest of the argument, nor should it have to.

I'm sorry, but these are odd criticisms. I have said nothing on grking1234 post, because I have nothing else to say. If I'm forbidden to correct people in comments on single points, please let me know and I'll adjust my behavior.

Jas00555 says:

It's not way off topic when I'm pointing out something that I disagree with that happens over multiple articles. By that logic, there would never be a good time to bring it up. I'm not saying its forbidden, but generally people at least acknowledge what other people say if they take the time to write out a long post with valid points. Like, to me, it would be kind of rude of me for someone to send me a long, thought out text, then have me reply with "ok", but if you just don't want to, that's fine. We can agree to disagree.

Kasey Pierce says:

Since we are so far off topic. Please Please tell me that neon green case on the Nokia Lumia Icon! I want it! :P

Laura Knotek says:

I didn't see any focus on only the consumer market. Office 365 and Azure are enterprise products.

I don't agree with you on that account.

Recently, they released Office 365 personal.

Azure has consumer packages, especially the Azure websites with prices drop and now supporting many programming environments OOTB such as; ROR, PHP, NODEJS and since so forth.. all for the indie web developers. They have also cut down prices for cloud storage space, to compete with Amazon S3, in efforts of targeting small business and freelancers (honestly, they have excellent features, especially their stock interface is much USABLE than that of S3).

One drive is bringing tons of new features for consumers. Currently, you can interface it implicitly to use it as a source-control (and even a webhosting), in near future you might be able to do it explicitly (OOTB)! Who knows...

So yeah they are definitely geared towards consumer market as well as their niche; the enterprise.

Laura Knotek says:

I should have said "enterprise and small business". Indie developers would still be business users, not consumers.

I have an Office 365 subscription. However, it isn't something I use frequently. There aren't many uses for Office other than for work or school. Consumers would not really need Office unless working at home or doing schoolwork.

HotJava says:

My 2cents: I think u Daniel should write an editorial when/if you want to vent. It is not likely a wise move to tell your readers that they need a lesson in logic. I read the site religiously and I do notice that you can be a tad harsh in some of your feedback. Maybe just kick Sam when you feel the need to school a reader. Just sayin...

Let's not make this about me. If someone criticizes my integrity, or accuses me of behavior for which I have no engaged, then yes, the gloves come off, though I generally maintain a level of decorum. I am certainly blunt with people in comments at times, but that is just how I debate, it's to the point and never personal.

andrewb65 says:

No, you're far too easily wound up and as editor in chief perhaps you should try harder to button it instead of hurling thinly veiled insults at your critics. If this was your personal blog then fair enough, but as far as I can see this site appears to be a well respected professional operation.

For what it's worth, I wouldn't be able to resist the urge to defend myself, but then, I don't have to because I don't have a position and reputation to preserve.

We're all entitled to opinions, that's what makes this fun!

DVELOPinc says:

Not sounding like I am defending you but, personally, I like your uncandid nature. I was a writer for a popular Windows Enthusiast site and too many times I was told to just let it go and it drove me nuts not being able to be who I am. I am not saying anyone should just go bat nuts on someone if they disagree with someone but, I don't think it's fair to anyone, on both sides, to have to take the abuse that some dish out. 

Just because you're a writer doesn't mean you're not human.

cspkcats says:

I guess the Windows enthusiast crowd is where the Mac enthusiast crowd used to be a few years ago - small, but involved. There's a feelling that there is a lot of hate for Microsoft products in the mainstream tech crowd and they don't want to hear criticism from enthusiast sites.

blackprince says:

You do know the Windows enthusiast crowd is far from small or new. Over thirty years strong my friend and vocal ever since.

cribbcaleb says:

Exactly, IMO you are just doing your job. Well done at that, I might add.

tofferne says:

I agrre with you, often he responds and jump out here like a child. Often I don't agree with him, this Daniel Rubino.

grking1234 says:

No, you misunderstood my point. Not that he was unversed in finances, but that he was unversed in MS, which, as I said, he tacitly admitted when he said he under estimated MS position in Enterprise. He seemed to write from the typical blogger view that the ONLY market that mattered was the consumer market. If that point wasn't clear that was my fault, and for that i apologize.

cspkcats says:

Well, enterprise growth is going to be much slower and makes things boring. People don't get excited about anything IBM does anymore. Microsoft is struggling in the consumer space. They have to get it right.

grking1234 says:

Oh I admit that Enterprise is less sexy than the consumer market. That said, IMHO, sexiness has little to do with an analysis of a companies financials.

@grking1234, No need to apologize. Mind you, my issue wasn't with your points, partially because I agree with some of them, I just wanted to be clear that Chris does come from a financial background, so his view(s) tend be different than the regular staff on this site (which I appreciate).

grking1234 says:

Yes, I saw his financial background, but I also saw you listed 3 mobile tech sites as sources for his posts, hence my confusion and statement. Sorry.

I said I don't use any MSFT products. I have used them. A lot. I've done more Powerpoint, Outlook, and complex Excel stuff than most white collar professionals, while I have very little background using the server side tools (I'm not an IT person, I'm an engineer / finance person).

As I explained in the comments, I abandoned MSFT products, which is very different from having no experience with them. You are doing something we call "mind reading", which most people seem to be guilty of without even realizing it. It is a useful skill (for everyone, not directing this at you) to learn how to separate what someone said from what you suspect it might mean.

If I thought only the consumer market mattered, I clearly would not have said, "What makes Microsoft unique is its deeply entrenched position into the market" and other related comments :)

Food for thought.

grking1234 says:

O understand what you are saying, but it all is a bit odd. You said you were bearish on MS last year because of their position in mobile, but underestimated their position in Enterprise. Maybe I am mind reading, but that sounds like an analyst who didn't do a lot of research, and only looked at MS from a popular trendy (consumerist) position. MS is first and foremost an Enterprise company trying to become more consumer oriented. It would be trying to analyze Apple as an enterprise company, and having them come up short. Or questioning Apple because they only sell 4 million Macs a year and ignore the iPhone. Heck, Apple could stop making Macs, and it would not have a huge impact on the bottom line. Heck, an argument could be made for them to ditch the PC market, and make a Super iPad, geared toward the middle ground of tablets and PCs.

grking1234 says:

pardon my mistake, but the end says one can find his posts at Androidcentral, iMore, and Crackberry (all great sotes).  he may be a financial analyst, but if he posts regularly at the sites, he is at least in part a tech writer.  a Rose by any other name, so to speak.

I amnot a lord of finance, but if one visits the tech sites, MS is routinely dismissed because they are not the king of social or the king of consumer.  this view reflects a misunderstanding of what and who MS  is. to many people simply look at apples numbers with an uncritical.  50 million iphones, and they assume they are all or mostly 5s.  sorry, but that was not the case.  one also has to wonder how many of the ipads were older models.

Mobile maybe a large part of the future, but mobile does not necssarily mean selling phones, advertising, or making cute little angry bird flinging game.  the fact that there were 12 million ipad office downloads should dispel that notion.  the fact that craploads of keyboards and pens are sold for the ipad also show some of the limitations of Jobs' vision, and the potential for MS to make in roads.

 

for all you youngsters, ms was supposed to die many times before, the early mac, netscape, google, Apple again, and guess what. they are still here and still adapting.

 

 

cspkcats says:

Microsoft has a Chris problem. More and more people, like Chris, dislike the company and are giving up MS products to use alternatives. Everytime I walk into a Starbucks, I notice that Macs outnumber PCs and Windows Phones are non-existant. Microsoft used to have a monopoly on the lower end of the market, but Android is already dominating in the mobile and tablets space and Chromebooks are posing a challenge for PCs. The solution is for Microsoft to keep making superior products and providing a superior customer experience. They will succeed one day in the consumer space.

grking1234 says:

I don't think Chris dislikes MS. I think that he is unfamiliar with them, which is understandable. I don't think most tech bloggers hate MS either. I just think they have a world view that does not extend much beyond Cupertino, and the consumer market. Hence the dismissal of companies like MS or IBM.

Editguy1900 says:

I think Starbucks skews your viewpoint. When you look at sales, most people aren't using Macs. I don't disagree about the phones, but I am beginning to see other people with Windows phones. If they become a big player, it won't happen overnight. But that's not to say that it can't happen.

I like to think of myself as the perfect blend of a technology / finance writer :)

I'm either accused of being a tech geek or a finance geek.  I consider them both compliments.  For those curious, yes, I used to make my living as a tech analyst in the finance world.

Infamy79 says:

Personally I'd be a little concerned if my financial investor & advisor overlooked the biggest strength of the company I was looking to invest in, and in Microsoft's case, that is Enterprise.

Well said. A good mix between the consumer market and business is key. Consumer market is most of the time trend based and really easy to disrupt. Compare that to the cooperate market, Microsoft is still rock solid and enterprises trying new things quickly notice that the quality MS brings out is unprecedented and hard to substitute. They are making software for longer than the new dogs at the block and despite being late to the mobile market the are adapting fast now. Microsoft was until now a sleeping giant and you know you should never wake up a giant. Furthermore MS had some imagine problems for their consumer targeted services and devices but Nadella is a great speaks person and has charisma, something people like. All in all Microsoft will turn it around. Resources, talent and assets plus a vast history in the PC market makes them a force to be reckoned with.

tboggs13 says:

Before I say anything else, I would like to say I am firmly embedded in the Windows camp. There is not a single Apple or Android product in my house. At work, I support 50+ Windows servers, Hyper-V, Lync, Exchange and 200+ windows desktops. I don't know exactly how I got here, as in the 90's I used anything but M$ products, but I suspect that it's because I love an underdog and right now, that is what MS is.

Right now, WP seems to be the only underdog that has a chance of survival with the fall of Blackberry and Palm. I truly believe the key to it's success will be Windows 8/9. If they are able to gain significant marketshare and popularity with Windows 8/9, the halo effect will finally rub off on Windows Phone, especially in regards to apps and eventually tight integration.

You say Microsoft is a sleeping giant, but they were so slow to wake up that perhaps the competition is now the bigger giant? If you look at Apple's financials and reserves, they are putting MS to shame. Apple has revenue of  $45.642 billion and reserves of $160 billion compared to MS's $20.4 billion and $88 billion. Apple also has the finances to weather a lot of bad before they find the next killer product.

I really like where MS is headed and I hope they succeed. But as a long time user, I don't know if they are moving fast enough or thinking big enough to restore their status from the 2000's. For all their recent speed, they are catching up and not necessarily leading.

grking1234 says:

I use almost all MS products but other companies make good stuff also. My daughter is in the iCamp, my wife uses Windows, but has an galaxy S4 and a Nexus tablet.

Thank you for pointing out that I neglected to consider the deep importance of the enterprise market over the last year ..... OH WAIT!  I actually pointed this out myself.

(On Apple, while I sure would like to see more growth, I'm a very long term investor and I think if you spend some time looking at the YoY comparable on iPad numbers, they're basically flat when adjusting for sell in vs sell through and carryover demand from iPad Mini last year.  iPad has been an explosive success, and it's silly to judge the company on a single quarter anyway)

Kasey Pierce says:

"I think you are a typical tech writer who thinks the only market is the consumer market, and that nothing else really matters." -grking1234

 

"The solution? Move business IT functions into the cloud and support them from any device whether it runs Windows, Android or iOS. Sell subscriptions to cloud-based software like Office 365 rather than old licenses for Microsoft Office installed on Windows boxes. Sell the infrastructure to build apps in the Azure cloud instead of selling server boxes. Allow corporate clients to downsize their IT departments and pay part of the old equipment and staffing bill to Microsoft instead." -CHRIS UMIASTOWSKI

Pretty sure you missed a lot of the articles point....Sorry to copy and paste a large chunk of his article...i just assumed you didn’t actually read it so here you go!

LOL! Thanks for showing the clear evidence. It used to really piss me off when people misunderstood things that I consider to be obvious aspects of what I wrote. But I soon learned that everyone is a mind reader, it's practically impossible to fix unless you write 100 word articles. So now I just laugh at this stuff. No disrespect to grking1235 or anyone else, but it's a very common trait to read chunks, fill in the rest using imagination (mind reading) and treat the blended product as something that was all in the article.

grking1234 says:

I take it you didnt read what I wrote. I made the comment because he said he was bearish on MS Las year because he underestimated MSs enterprise position. How can you ignore 80% or so of MSs business and revenue, and then make pronouncements about what MS should do.

Kasey Pierce says:

Much like the points Daniel made in his first reply’s before things got really off topic. I am not disputing the latter half of your original post. The very first thing you do is:

1. Make a very blunt personal opinion about what type of person Christopher is

2. Say that he thinks the only market he thinks exists is the consumer market.

These two very blunt statements are what most people are in disagreement with you about. That is what I am calling you out on, nothing more than using your own words against yourself I completely agree with your stance on how Apple is doing and you sound like you follow Microsoft financially pretty well.

P.S I really did not enjoy writing this on a touch cover. blah!

 

bilzkh says:

I think it'll also depend on how well Microsoft makes the transition to internet of things, especially wearables, automobiles as well as embedded solutions. They've shown a few previews, e.g. Windows in the Car and Cortana, but we haven't seen much...yet.

Their focus on being cross-platform (or platform agnostic?) is a great sign, especially in the push to make their services and even programming languages workable across iOS and Android.

If they can offer an wearable 'OS' (akin to Android Wear) that is compatible with iOS and Android (alongside Windows and Windows Phone, of course), they might be in a good position in mobile (assuming mobile transitions to include wearables).

Revi Bennett says:

Internet of things and msft. Yeah like 98% atm, in numerous infotainment system, in the public i rode in a few days ago, numerous commerical embeeded product that are deply embedded in many industry already. Do not let the vaporware fool yo.

Posted via the WPC App for Android!

grking1234 says:

No one has yet demonstrated strong demand to wearables. The whole wearable thing could simply be the tech press looking for the next big thing to write about. Comedians joke about Google glass, Samsung is not selling huge numbers of Gear. So we shall see, but wearables like watches and glasses may not be mobiles savior.

albertom says:

I really believe technology is a trend thing, it's a fashion...one day Microsoft can became number one in whatever what will be the trend, or another company for what matters. Companies just got to make there products good! if they make then good, it can take 10,20,30 years or more and one that they will be number one in some of them!

Blu3V3nom07 says:

I'm glad where Microsoft is going with this new "Microsoft Mobile" initiative. I'm glad they have a definitive name and direction, at least. 'Proud to be on Windows Phone, through and through. :)

davidbeahero says:

I think the landscape is constantly changing in the tech sectors like never before and all the major players are struggling to know where and what to put energy and resources into. They all have major failings and amazing features in each of there operating systems. It is such an interesting time. We all write about the financial success of say of iphone or Galaxy s3/4 but the people that own them certainly don't talk with the same passion for their devices that they did a couple of years ago.

I like Microsoft products and Google services, but despise Apple but I can admit Microsoft needs a better understanding of mobile to make consumer products successfully because that is the future. You don't need a necessarily better product but better advertisement's. There ads kill the mood when watching tv. I hope the new guy can fix this. So pretty much that need better advertisements for better profits.

SinisterDuck says:

Since Apple, Android and WP basically have feature parity, MS has to figure out a way to set itself apart. One way is through products that are head-and-shoulders above the rest while hitting the price points people want to pay. Marketing only creates the conversation, it doesn't actually sell anything. That happens when the consumer touches the product. All things being equal -- which they basically are -- Microsoft's strength in the enterprise may be the way to go, a kind of trickle-down effect.

While I'm no fan of MS's marketing, all they have to offer right now to the consumer market is "Me too!" . . . not a position of strength. Enterprise in the other hand . . .

I'm so disappointed in their decision to eliminate the Nokia brand from phones. "Microsoft Mobile Oy"? Is it April fools again? Losing serious confidence in Microsoft's decision making.

ladydias says:

You say this like MS can legally use the Nokia name and brand. Nokia still exists as its own company you know.

Oy is Finnish for Ltd. It won't be their branding name, just like 'Ltd.' is not used today either by companies on products. That's for business paperwork and really odd to point out as an argument for poor naming.

Regarding the name 'Nokia', please remember that Nokia is still it's own company, who makes HERE Maps and other products. None of those products though are phones. It would be disingenuous to put the 'Nokia' label on a phone by Microsoft. You can't have TWO Nokia companies in the world.

Now, had Microsoft bought the entire company, then your point would make sense.

DJCBS says:

Well...you *could* have two Nokias in the world if the deal had been done the same way Google did the deal with Motorola. But the deal was completely different so yeah, it makes no sense to use it. Specially when Nokia's prohibition window to return to the mobile phone market is as short as 2016.

 

Most of the blame for people saying "they should keep the Nokia brand" falls in the shoulders of news sites and blogs though. For months writers both here at WPCentral and other tech sites wrote things like "Microsoft buys Nokia" and "Nokia to become part of Microsoft". And so many people thought Microsoft had simply bought Nokia and, therefore, the right to use the name.

We both know that's far from being true.

SinisterDuck says:

MS might have asked to license the Nokia name, and Nokia might have said no. I'd be willing to bet that's what happened as it would be a feather in the Microsoft cap. Because it didn't happen doesn't mean they didn't try.

You're right about the media often mis-stating it in the headlines, but "Microsoft Buys Lumia" would just make most folks scratch their heads.

Thank you for translating Oy. I was mystified. I guess I could have used Bing, but failed.

ajaykc says:

Nokia's twitter account confirmed that Microsoft will be using Nokia name on Lumia product line for extended period of time (which maybe litte over than a year).

Wow. That's crazy amounts of money

WinOMG says:

I love Microsoft and think they are awesome. I find it very sad that everyone goes for Apple and Google products. I know Microsoft is cleary better. Even with the newer Surface, I'm doing more things than an iPad could ever do. Same with Windows Phone. Even Bing is kicking ass, with a classy design and great features and results. Microsoft doesn't play around when they release things. They do a great job. Just the main issue is education. Everyone says iPhone and iPad cause it's the only thing they know of. I have to educate my non-tech savvy mother about technology. She quickly states she want an iPad for work, and I have to warn her about no flash or USB ports. Education and features are the key for Microsoft's success.

salazka says:

Bing is not really kicking ass, but let's support it wth! It's good enough and looks awesome.
Not like our life depends on a web search about corn sirup and lemonade brands.

Lmao, "lord of finances". At least there's a solid discussion going on. :). I don't have much to say about finances, but I think the major risks have mostly been remedied(the windows 8 touch everything no mouse and keyboard love push). The rest of the battle, as I think has already been mentioned, is on a decreasing slope, is less risky, and more financially and customer relationally stable. Sorry if that doesn't make sense. Running on an 90min nap in 2 days.

"Microsoft just needs to move faster than its customers need them to"  This is a slippery and expensive slope.  Moving too far ahead of the curve is a bad idea for consumers.  Examples: 3DTV, Active 3D glasses, HTC First, etc...

salazka says:

Bad point.
They moved faster with Windows 8. People freaked out. Got scared and angry. Asked for one of the same.

Next suggestion?

DJCBS says:

What you consider "moving faster with Windows 8" may also be seen as "moved in the wrong direction with Windows 8". I, for example, think it's the second option.

ebradley says:

Wrong direction, no. Gradually introduce touch for it's products would have been better, imo. I love using Win8/8.1.

salazka says:

Have you considered that the world around you is moving fast to a richer man/machine interface? Gestures, touch, voice controlled.. small but convenient machine learning features that are making typing more and more obsolete. Precision being only the need of a "few" compared to billions of users.

Do you think all these companies manufacturing keyboards and mice were happy about this move? Why would they share happy thoughts about Windows 8 with their partners? Why would they urge them to adapt and adopt? You think the last dying dinosaur was singing praises about the Ice Age? 

Even for OEMs it is a sweet market providing a healthy margin for just a piece of plastic wrapped around 10 years old tech. Mice costing $30+ is ridiculous! They are produced by the ton!

The answers to why Windows 8 was not adopted fast are definitely other than it being "a wrong move". Unless you meant that Microsoft should have known all that in advance, take it into account,  and dilligently keep walking towards the edge of the cliff like all their competitors expect them to for decades.

Have you considered that perhaps it is you who moves in the wrong direction and further cornering yourself to becoming obsolete in a modern computing world? Do you think that Microsoft should follow you in that corner?

I don't. I wouldn't like them to. And i really am a very old user and developer! But i give you that,  people like you, once again, succedded in slowing down change. Congratulations!

cool8man says:

Considering there's entire countries that are protesting the end of XP and a commercial on TV objecting to the end of support of XP, I think it's more the former than the latter. People who use Windows are afraid of any change no matter how small. Whether it is the start menu the ribbon on Office or the start screen in Windows 8, Windows users always say every change made is terrible. Then they get used to it and complain when MS takes it away.

As much as you think people hate the metro start screen, imagine after six to ten years if they suddenly took it away. There would be howls as loud if not louder as you're hearing about the start menu.

ebradley says:

MS has moved faster than it's customers, at times. Look at SPOT, for example. Just my 2cents about smartwatches and MS being slow/fast. Perspective

grking1234 says:

MS customers are Enterprise, not really you and I as much.

paulxxwall says:

Wonder why he doesn't use Ms products?

For the same reason I only use Microsoft products (though I own competing brands): preference.

I also prefer M products. So much so that I run Windows 7 in a VM on my Mac at work. It just works better.

TechAbstract says:

Because he is an Apple guy? lol

Chris is mostly a BlackBerry guy, tbh ;)

Great question.  Like most people I was 100% MSFT for a very long time. At least I was 100% where they had offerings. When I started using a BlackBerry in 2000 there was no such thing as a smartphone, and there was no Windows Mobile, or Windows Phone.  

At the time, in my view, Mac was not attractive.  Funny story: I had a job working for Nortel Networks in Ottawa back in 1997. My group used Macs.  Cocos mail, etc.  I HATED  it.  I could not stand Mac and I deeply pushed for us to move to PCs running Windows.  It happened within about 2 years and I was thrilled.

In 2003 I bought an Airport Express.  Then an iPod.  Then another iPod.  Then in 2006 a Macbook after seeing my friend's awesome machine with Bootcamp.  I thought I would use it to run Windows XP because it was an awesome laptop but I preferred windows.

After I owned it for a month I realized I was not ever running Windows anymore.  I'd switched totally over to MacOS (Tiger at the time).  This was not a decision based on "I hate windows" or anything like that.  It was just a decision based on the fact that I found the MacOS much much better. I still needed to use VPN software and the browser to remote access work files.

That was the end of my consumer use of Windows.  I moved to an iMac at home, upgrade to a Macbook Pro for my personal machine, and I stopped using the ThinkPad that my work gave me for work.  I hated it.  

Then comes the iPhone (wife uses it) and the iPad (we have an original, not yet upgraded).  And of course my big change in lifestyle where I do not have a corporate job anymore, so I do not have any need to connect to an exchange server, no need to share big complex Excel files, no need to use PowerPoint, no need for MS Word (believe me I ran huge complex spreadsheets on Excel.  I LOVE MS Office).

So I've just stopped using MSFT products because I don't need them anymore.  I'm well aware that the products have deeply improved since I last used them habitually.  Doesn't matter.  I'm deeply invested in the Apple ecosystem now so I'm not going back.

MIcrosoft makes great stuff.  No debate.  I've just switched.  That's it.

Apple isn't perfect either, BTW.  I run into my fair share of problems.

... and on mobile I've switched to Android after a 13-year run on BlackBerry. I find it OK. I'll probably switch to an iPhone when I replace the Galaxy S4. 

cspkcats says:

I drove a VW ten years ago. It gave me a lot of trouble and I switched to a Honda and then an Acura. Since then, I'm sure the quality has improved, but I can't offer an opinion on the quality of their current products or their product strategy. As someone who hasn't used their products in a while, I just don't know.

dcrobbins1 says:

Actually there was a Windows Mobile in 2000.  Remember the iPaq?

smoledman says:

Apple hardware is simply better for home use than anything Microsoft. Microsoft doesn't even make a usable tablet.

salazka says:

@smoledman
Could you explain "doesn't even make a usable tablet" ? 

cool8man says:

I tried to use Mac OS, for 4 years a MacBook was my main PC. The OS and ecosystem is lacking compared to Windows. There are some nice things here and there but in the last several years it is obvious Mac is an afterthought for Apple. The Mac app store is a joke compared to Windows store.

People say WP is far behind iPhone, well by comparison Mac app store is dead and gone. In the last few years PC hardware manufacturers have caught up on design as well which was my initial reason for buying a MacBook. After the next Windows update I think Mac fans need to reassess their platform of choice for computers.

n m says:

You switched from MS to Apple because 'they were just better' than seriously you need to now spend some time on a Surface running W8.1 becaue you know what? 'It's just better'.....lots better.

I had an iphone and an ipad but hated the walled garden with nazis and guard dogs keeping me prisoner, so switched to a Surface and WP and could not be happier, the products IMHO 'are just better' for lots of reasons, you seriously should try them out!

davidbeahero says:

The only thing I'm struggling with is the lack of being able to access my company files because OneDrive doesn't support exchange accounts yet on Windows phone. If this continues then there is no use using Microsoft for the cloud

Your pain...more Microsoft employees need to feel this...in the words of doge, "Such Lack....One Drive....So Exchange...Cloud No....."

salazka says:

I think after yesterday's update it does? Or perhaps i do not understand what you mean.

Microsoft already makes more from Android than Google. Big picture, androids growth may force Microsoft to diversify from windows to the cloud faster, but they aren't in any danger of seeing their revenue radically decline. They need to grow in the tablet space to offset declining PC sales, but they appear to have a better overall product than most Android tablet makers (when you look at the entire ecosystem as part of the product) and they have better price points in the space than apple. I think people want to see Microsoft in freefall and keep waiting for it to happen, but the way they're built around the enterprise world, I just can't see it.

antonius138 says:

Honestly I stopped reading after this part of the article 

I say this despite not exactly being a Microsoft fan. I own and use exactly zero of their products so I'm simply looking at the business as a technology investor here

Not because I think he is bashing Microsoft or that I am unafraid of criticism, its just that I can find plenty of Microsoft cirticism elsewhere.

My .2 cents

That's a little shortsighted, especially since the rest of the article doesn't trash the company and is, in my opinion, pretty even handed. It's an editorial. If you can't even read opposing view points, then that's unfortunate because that is how many of us learn new things and adjust our world views.

daisy110 says:

Give em s#?t Dan, I trust you wouldn't let an article go through if it was rubbish. It is not you that annoy people with the tone of your replies, it's the crap you have to reply to at times that annoys me. The cranky under tone in some of your replies makes me laugh, but hey I'm an Aussie doesn't take much to make me laugh...

antonius138 says:

Well hello Daniel,

First let me say I was a little surprised to see your response.  To be fair I did go back through and read the rest of the article, and I think I would still reiterate my previous comment that he wasn't necessarily bashing Microsoft, and I am still unconcerned with anyone criticizing Microsoft nor am I defending them in any way.  I am a 20 year IT Professional and almost a Microsoft fanboy by default from the nature and experience of my professional work using their products.

So to clarify, I am a newer subscriber to Windows Phone Central (check the profile), and the reason that I stated that I stopped reading initially was that I found it a little odd that this type of article would be written on this site.  Again, I am newer to the site… but for the short amount of time that I have been "daily driving" WPCentral the type of article written by the author sort of threw me for a loop as I would normally find this type of news on other tech blogs…no offense intended and I concede your point that it’s good to get other perspectives, it is just that it seemed a departure from what I normally see here.

I enjoy and will continue to enjoy WPCentral including all of the high speed videos that I have watched starring yourself.  I come here first for the latest and greatest, which in my line of work is relevant.

Friends still? 

Anthony

lol, it's never personal, so no worries at all. Welcome and hope you enjoy the community, it's a fun place!

(And yes, I tend to be very active in comments, though as you can see above, some don't appreciate my brashness, which is fair).

Welcome Anthony - I'm a hired gun to write about the financial side of the stocks that are within the Mobile Nations family of sites.  You'll see me write about Apple, Google, Amazon, BlackBerry, Microsoft and more. I write it how I see it. I'm open, honest and willing to admit any mistakes that I make (and I make plenty).  

I'm definitely NOT your average tech blogger, so feel free to enjoy and get involved in the discussion as you have. 

I agree this kind of article is definitely not what most people expect.  It's what makes Mobile Nations different.  

antonius138 says:

Hey Chris,

Thanks for the welcome.  As mentioned above, I was definitely not trying to pull your card in any way, I was just being a noob and noticed that the article appeared (at first glance) as out of place from what I had been seeing.  As I had admitted with Daniel, its good to get a different perspective from time to time.  After looking at the back and forth, people can be harsh on these articles and forums at times, so I appologize if I came off that way.  So I guess keep doing what your doing and I will be a little more fair and read things through next time.

Cheers,

Anthony

crise says:

Come on Dan, it's a rubbish article, lets face it. How can a guy like Chris with apparently close to zero experience with MS products/services write an article about telling MS what to do do and what not. That's just ridiculous. It would be like if I came into your office and told you guys what should be done. Second, I see a lot of awful written tech articles out there that are way too subjective. Chris: "I'm not exactly a fan of MS". Oh boy, what news site is this? Another wannabe tech writer that has 0 experience with whatever he is writing about. How can we even take his article serious? If he was indeed a financial expert, he does need a lesson in writing, because adding his own opinion to this matter of financial numbers is totally unnecessary.

Haha hahaha! This is funny.

riffraffy says:

Haha hahaha! This is even funnier:

By Chris Umiastowski on 14 Mar 2013

"But that said, we’re all loving our Z10 devices, and I think an order of this size from a partner is further proof that BlackBerry is back."

http://crackberry.com/what-does-order-one-million-blackberry-handsets-mean

crise says:

Well, that is indeed very funny. This guy must be joking around. BlackBerry is dead, I already knew this 3-4 years ago.

Dear riffraffy,
Thank you for going through the effort of digging up of of my many mistakes. I'm sure it didn't take very long. You could have put forth a more impressive effort and made a much longer list. I have been investing in tech stocks (and writing about it) for nearly 20 years. As successful as I've been, I've made countless mistakes. I'd contratulate you on your findings, but given how much I've published it is not hard to find a call that's gone wrong.

gevabar says:

Chris...do u live in this world....if u go to an apple blog....and write an article like this...of course starting with I don't use any apple products etc....they would mark u as troll before they read ur next word....ur not writing like a Goldman sacks point view....its obvious.....u just sound like u had ms products through ur life and u switched to whatever.. got use to it and now you think that the product u choose is best.....have a small business with 150 employees that u need to buy PC for and mobiles and u quickly buy Microsoft products...they have huge market....and more is coming....daniel is defending u or might defend u probably because he put u on here....

Couldn't agree more. A hired gun? Perrlease! Chris, if you want to comment on financial results at least offer some insight or value add.
I'm disappointed in Dan. This article is way off topic for WPC in the first place, but then isn't even good.
There is an exciting new play by MS to sell off-premises IT, with Office365 for mobile as catalyst, but I see no redeeming features in this article.
The offering is summed up perfectly here:
http://office.microsoft.com/en-us/business/office-365-enterprise-e3-busi...

salazka says:

"How’s Microsoft doing in its cloud and mobile transition?"

How about it's too friggin early?!?!?

raiinman says:

Yup. Look at the WP market share in Europe vs US. Also need to develop for an avg user and not for techies.

Fritzly says:

For the average consumer is Nokia, Samsung, Apple etc. The OS is not, again for the average buyer, a determining factor.

I agree. I like Nadella and I think he sounds like he really gives a sh*t. But it's a tough as hell fight here and it's way too early.

henocksandy says:

MS is a really good company! The day MS will stop thinking about US, and support all others countries as equal, that day they will grow like they never expected

DJCBS says:

I think that's the main reason their growth isn't faster. Microsoft insists in their "US yesterday, US today, US always" mind-set and that's why so many people around the World are moving towards Apple and Google. If you give no love and no respect to your consumers, they will ditch you. And Microsoft simply doesn't care about consumers outside the US.

abduz says:

That's actually so true.  In the Middle East (and maybe most parts of the world), Apple is trendy cool tech, Google is the daring advanced tech and Microsft is just ...Windows XP; while they may have changed their image in the US and possibly Europe, here their image is as if they haven't advanced at all and this is what worries me about the new Lumia's being Labeled 'Microsoft mobile' and not 'Nokia,' because here people don't even realize Microsoft has a Mobile OS.

People have been talking about the latest Nokia and it's just recently that people started noticing how great the "new" NOKIA's are, not once have I heard anyone mention Microsoft or Windows Phone when talking or  mentioning any of the Nokia Lumia's.  So I can't help but feel Microsoft is going to regret not lisencing the Nokia brand for it's future phones unless it plans to do some massive work on marketing in these areas because here, it's always been Nokia territory.  Microsoft might be able to get away selling phones under it's name in the US because it's much more recognized there, aswell as their products and hardware but here people don't know them for their hardware. 

Despite gaining popularity and seeing more and more people carry them around, people still think twice about buying a Nokia Lumia because it's still "safer" and "cooler" to own an iPhone or Samsung, so I'm certain that they would think not twice, but three times before buying a Phone by Microsoft.  A great example of that what I'm talking about is Surface, you rarely see it anywhere because hardly anyone knows about it unless someone tells them about it.

I'm known to enjoy Microsoft products and I've come to love their hardware such as their Mice and Surface and I've always been a fan of Windows;  I'm loving Windows 8.1 and WP 8.1, so I'll surely stick to the bandwagon because I now know Microsoft CAN build quality products but that won't be the case for most people because most people here who buy iPhones and Galaxies buy them because of trend and brand name, which Microsoft doesnt have here, Nokia was just finally gaining momentum and I can't help but feel MS would have benefited more by keeping the Nokia brand even if they had to shell out more for it.. Hope they manage to pull this off.

n m says:

Totally agree and MS has missed the boat here. Nokia may be nowhere in Merica, but around the rest of the globe, Nokia is an extremly well respected company with a decades old legion of fans, to ditch the Nokia name would be like Coca Cola changing their name to Black Soda Pop, or McDonalds to Bland Burgers, might be factual but who gives a shi# and who would buy their products???

davidbeahero says:

To add to my earlier point. If we can't view and edit our company files in Onedrive on our phones how can Microsoft compete in the mobile and cloud space

Mike Gibson says:

To the author. You are absolutely correct to be worried about the Windows erosion. If MSFT loses Windows (the platform), it loses the company. It's as simple as that. They will become just another application software company. It won't happen overnight but in ten years people will say, "Microsoft? Do they still make software?".

WinRT+Metro is the biggest example of corporate suicide in business history. With Metro, MSFT threw 1.5 billion users in the trash. With WinRT, MSFT threw hundreds of thousands of Win32 ISVs in the trash. They literally threw billions of manhours of experience and expertise in the trash. It was unbelievably stupid. The author is a numbers man, I'd like to see him calculate the value of all the experience and expertise that was destroyed (it has to be close to $1T).

MSFT's only hope now is to:

1. Fire everyone involved in the design of WinRT

2. Define a secure subset of Win32 (eliminate obsolete and insecure stuff)

3. Create a scalable UI API for #2, call the combo of #2 and #3 "Win32X"

4. Create a Win32X Store and set a new standard by only taking a 10% cut of sales

5. Most importantly, backport Win32X to Windows 7

Win32X would benefit both users and ISVs by being compatible with their existing systems yet forward looking to the scalable UI future. It eliminates the idiotic "Metro" and "Desktop" split in Win8. MSFT benefits by getting a cut of *far* larger sales of Win32X programs in addition to saving their platform.

 

Interesting comment - thanks for this.

Infamy79 says:

Personally I see it as someone who is just upset at him having to learn a new way of doing things rather than keeping an antiquated runtime. Would a variant of Win32 be possible with ARM/x64 platforms and would it also be as suitable for the Univeral App world that Microsoft is heading towards? If you are introducing a variant of the API anyway which will require its own learning and compatibility issues then is that any more different to just creating a new API for the future?

Win32 has been around since Windows NT back in 1993, so over 20 years. Just like they introduced the new API back then I see no reason to hold on to such an antiquated runtime to use for the future, as long as they maintain backwards compatibility with x86/x64 systems.

Mike Gibson says:

I have a fairly complex C#/C++/Direct3D app in the WP8 Store ... so apparently I'm not "upset" at having to learn a new way of doing things. What I am upset about is MSFT wasting time on a completely new API, WinRT, that is poorly designed and poorly implemented. Going Async was a mistake because Win32 already had the best multithreading support of any major OS. They threw away that advantage. What did the "New Coke" (aka Async) way of file/directory access buy us? Nothing, you still have to chain OpenAsync, ReadAsync or WriteAsync, etc. to do an operation on a file except that you take at least an order of magnitude hit on performance in the wonderful world of Async (a directory listing takes two orders of magnitude perf hit). Worst of all? The wonderful new WinRT Async file and directory APIs eventually simply turn around and call Win32's functions to do their work (through the horribly performing File Broker, where most of the perf hit occurs). All that was completely unnecessary.

Did we need a new way to download http files? There are at least two iterations of http access in WinRT already. Guess what, they're simply Async wrappers on Win32's WinInet API ... except that they screw with the WinInet settings to make it aggressively cache everything. The result? MSFT folks recommend that we, ISVs, add junk parameters to our URLs to defeat that aggressive caching. I won't even mention that they also set the gzip flag, which screws up GET range-bytes requests to a major http server. Those two problems forced me to use freaking WinSock in my WP8 app. Do I need to mention that none of this was necessary? We could have used WinInet but I guess it wasn't "Async" enough for MSFT.

You asked if Win32 would be possible on ARM/x64. At first I thought you were joking. Of course it is, what OS code do you think is running on a Surface RT tablet? WinRT is just an app framework on top of Win32. The NT Win32 codebase was designed to be portable across CPU architectures! It has been compiled for x86, x64, MIPS, N10/i860, ia64, ARM, etc. (I think the only restriction is that the architecture must be little-endian but I can't remember).

Would Win32 code be suitable for the Universal App world? Of course it would. The bulk of my WP8 app is Win32/C++ code that uses Win32's Direct3D for its output. I even "cheat" and use the Win32 file and directory APIs that are still available in the so-called "Modern" API set. That means my Win32 code runs on my HTC 8X phone, my Samsung Series 7 tablet, my laptop, and my desktop.

You say that Win32 has been around since 1993 and "just like they introduced the new API back then". Except that's not true. Win32 was a straightforward extension of Win16. You could almost just recompile Win16 code to work on Win32. For minimal pain you got a tremendous gain (huge address space, no more segments, multithreading, etc.). What's funny is that MSFT tried to introduce a new "modern" API even back then: OS/2. It did not maintain source code compatibility with Win16 and it failed miserably. Just like WinRT, it was all pain with minimal gain.

All that Win32 needed was to be cleaned up and a simple scalable UI API added. That's it. Users don't give a crap about Async or other new programming fads or how hard it was for a dev to write code. All they care about are bits on the screen.

PS. I case anyone wonders if I'm an Apple troll, I'm not. I hate AAPL with a passion. I'm a veteran of the OS wars from the late 1980s to mid 1990s and won't fork over a dime for AAPL stuff.

 

L Beezy says:

I hope this transition works well for Microsoft. With tech trends continuously evolving, hopefully Microsoft can meet these changes head-on instead of lagging behind.

lancorp says:

Don't any of these millionaire executives wear suits anymore?  First, Apple.  Now, Microsoft.  Jeans and Tee's is "dressed to impress" now?

ali_pandeyan says:

MS clearly shows the urge to find a piece of what google and apple do. Considering what they did in the past time, this new transformation would change balance of competitions. Think about say, Asus, Acer, HP, Dell etc, they are traditionally, the follower of MS. My point is MS has Windows for OS, many manufacture build they hardware to work best with Windows. This is where the 'environment' laid before MS and Windows. If, they could manage to transform this 'environment', basically, nothing can stop MS. Users will see the difference between iOS, Android, or else, and start to choose. The big chunk of the pie will belongs to the company that makes the best possibility for users.

asylumxl says:

All well and good, provided they don't make the same mistake as Blackberry and alienate their existing customer base.

Mike Gibson says:

Oh, they did better than that. MSFT alienated their 1.5 billion users and 100,000+ developers with Metro and the WinRT API.

asylumxl says:

And yet they're doing fine as they have other sources of income :).

Mike Gibson says:

Unfortunately, those other sources of income are mainly based on the Win32 platform, which they're busy killing right now. It'll take ten years but those "sources of income" will die too.

blackprince says:

Microsoft doesn't need to be #1 or #2 in smartphones to be profitable. They just need to be a solid #3 and they know this. If they can stabilize their market share around 10% then they are golden and well poised for the next generation.

raiinman says:

How can you get to 10% when I walk into a Verizon store and not a single advertisement of WP are to be seen in the entire store. Sales reps like the easy sale (ios, android) and don't want to waste their time convincing customers to purchase a WP

Jas00555 says:

By you know.... Going after other parts of the world besides one carrier in the US.

ronty says:

On the contrary, I was literally forced to buy a WP by the salesperson. He simply didn't say anything good about the competing Android devices(iPhones were not in my budget) & made sure that I buy a Lumia.

blackprince says:

When I say ten percent I mean worldwide not the USA. There is an entire world outside your doors, try exploring it.

paulheu says:

THIS ^^

 

MSFT is diversified enough to have their mobile platform hover in a solid spot and just wait for the other shoe to drop for the competition. Apple may be good at presenting huge numbers and spinning them but I am fairly confident MSFT has the longest breath as far as staying in business goes.

cspkcats says:

My cousin walked into a Verizon store in LA to buy an iPhone and the sales guy spent 30 min trying to sell her a Samsung phone instead. Anyway, I assume Verizon (and other carriers) actually makes more money on Android and Windows Phones, but chooses to keep iPhones to avoid losing out to other carriers.

As far as I am concerned, I think it's better to invest in Apple's stock than in Apple's products.

rory753 says:

My takeaway from this is the basic overall new strategy. I think the analysts is showing that MS knows Windows is not the favorite platform, however, an OS is soon to be about as important as an app. By pushing Azure, that will basically take the place of Windows, IE, the new system running cloud based apps, regardless of platform. I enjoy my WP, and my surface, but no matter what I say, people around me don't care, and will most likely buy an android or iOS device. MS's only option is to give a service that will be widely used on those devices, but integrates well into existing systems in place...

Revi Bennett says:

Xerox (or whatever its called), ibm, windows, ios, android. What is common among all those? They live and they will surely die. The consumer market is fragile and you cannot build you home there for too long. Apple knows what that is like. And it is playing out wth music for example. Vinly, tape, cd, itunes, now streaming. It is the way of the world.
Moverover, the final form-factor is not smartphone or tablet anyways. Its wearables, but not the google glass does it. It has to be aprt of the person, and extention of them, invisible, but to the wearer. Most important it jas to totally intuitive. The company to crack will win.

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raiinman says:

Same here. I show them features and all but they say it is difficult to use and confusing.

ortizang says:

I just think Microsoft has to be careful about how to move. This is a war, and in war every move will decide if you live or die.

marcuzdjew says:

MS is the undercover of tech. It works slowly but surely. They had blunders and mistakes but they learn from it.

raiinman says:

Blew a huge chance on the consumer front with windows 8. Too cluttered and confusing for an avg user. Now it is an uphill battle with public perception. Hopefully they can make some radical user interface changes in windows 9.

Revi Bennett says:

Why tech focus people keep saying that. Everytime and see the average joe using windows 8, they simple use it has windows 7 and they never complain once they know a few little tweaks. Plus windows 8 has serve it purpose. That purpose was to disrupt the pc industry and start making them foucs and functionality in tablet form.

Thats why hybrids are the fastest growing computing group bar none. That is samsung made their product, thats phablet are rising, thats apple wants a pro tablet. Tablet will not survive nor will pc, or smartphone, cause within ten year it will not matter the form factor, but rather how will they are connected. And msft sees this and is working to ensure they get a big portion of that.

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marcuzdjew says:

The avg user that you stated are the older ones who uses win xp or 7. The newer generation loves w8.1. MS is looking for the future.

AriesDog says:

Thank you for not being one of those financial guys saying sell off this division or that division.

The only thing I know about the cloud is the way my music is handled by Xbox Music....TRAIN WRECK.

paulheu says:

MSFT has many eggs and several baskets. If they crack a few there is no real structural impact. Apple has one egg really and they have to carry it around on a spoon. If it cracks they're done.

Mike Gibson says:

AAPL has $150 billion in the bank and just one of their products (iPhone) outsells all of MSFT's many eggs combined. In addition, you had to have noticed how Cook talked quite a bit about the enterprise market in their latest conference call. They're going for MSFT's jugular now.

Revi Bennett says:

Sure they. Thats is msft windows pro liscense increse 19%, before business are buying bulk of ipads and putting them on desks. Sure becuase apple has its own cloud infastructure not built on azure and aws. Apple also has the operating system use in 90% of all business. And ipads cannot be replaced by any other tablet, but windows can be replaced easily and office is nothing now.
Becuass office 365 does not have a run rate of 2.5 billion with office in the empire still raking it in. And apple has its own sql server, virtual machine business, and countless business foucus partners. Yeah apple is going for the enterprise. But i am sure they make less than money than msft will make for phones and tablet and msft is still not significant there. So who is n more trouble.

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Mike Gibson says:

You need to get your facts straight. AAPL sold $9B worth of iPads in the latest quarter. That's almost half of MSFT's total revenue for the same quarter. And those things are in use by businesses everywhere. They have to be licking their lips at the prospect of upselling Macs in those businesses. AAPL could be a $500B/year company if that happens.

srmiller82 says:

Mike you should also check your facts before spewing number MSFT has been always will be one of the highest profiting companies in the world, ya apple did what 40 some billion gross but they only profited 9 billion, out of all of that. So that's a 20% overall profit, here we have MSFT who ONLY grossed 20 bln as you saw but profited 7 billion of that, yes that's 3 shy of 50%, MSFT has some of the best profits in the world. Even might apples percentage is way worse. MSFT only made 2 billion less last quarter so all these people say they are growing doesn't really matter at this rate they will be banking more than apple by next year. Do some math stop wasting my time, consumer market is fickle and trendy it never lasts forever. MSFT bailed apple out before it might happen again before its all over.

paulheu says:

THIS ^^ and thank you for laying it out..

Mike Gibson says:

It's great that MSFT has a high profit margin. They were a software company. Now they're getting into low margin hardware at a time when they've screwed up their high margin software. As a MSFT shareholder (with 5% of my net worth in MSFT, yikes), I'm very concerned.

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