Satya Nadella gave a press briefing on March 27, 2014 and left no uncertainty about his intended direction for Microsoft®. He summarized the vision as building toward a “Cloud first, mobile first” world. The company announced the highly anticipated Office® for the iPad® which was immediately available. Mr. Nadella stated that Office® for the iPad® was built specifically for the iPad® and it is not simply an extended version of the recently released version for the iPhone® or a ported version of Office for Windows®. As with the iPhone® version, users can read and present Office documents by downloading the free application from the Apple® Apps Store, but they must purchase an Office 365™ subscription to create or edit documents.
The release of Office® for the iPad® represents a major strategic shift from the way Microsoft® has operated in the past and is a significant step toward achieving the “Cloud first, mobile first” vision. Nadella stressed the goal of making Microsoft® products accessible from the cloud on all devices and he specifically named Windows®, iOS, and Android™ operating systems. While he didn’t come out and say it, the message was clear that we should expect a version of Office for Android™ in the future.
It will be interesting to watch the results of offering read-only versions of Office® at no charge on non-Windows® platforms (assuming an Android™ version of Office would follow the same path as that of Office for the iPad® and the iPhone®). The demo during the press briefing showed some impressive functionality while creating and editing content, but some may question how many users will create or extensively edit their documents on a tablet. Offering read-only access to Office on non Windows® platforms may or may not offer a meaningful increase in subscriptions to Office 365™ , but if Microsoft® can make Office 365™ as ubiquitous in the mobile space as it is on desktops and laptops, they would all but eliminate the market for Google Apps and Apple® productivity applications. Of course such wild speculation is pointless at this stage of the game, but it does represent an interesting strategy.
Many industry watchers were anxious to get a glimpse into how Microsoft® may change under Nadella, and this press event didn’t disappoint. Ironically, their “new” strategy has a number of similarities to that which made Microsoft® successful in the beginning. In 1981 Microsoft® signed a deal with IBM® to provide an operating system for the IBM® PC. One of the biggest negotiating elements was one of exclusivity, as IBM® wanted the OS to be exclusively theirs. Microsoft® believed that if personal computing were to be as successful as they anticipated, MS could license the same OS to multiple hardware manufacturers (OEMs) and the collective total of their sales would far exceed that of IBM® alone. In other words, MS would license the OS to as many OEMs as were willing to pay for it.
The strategy Satya Nadella announced today is essentially the same, except this time MS is selling Office 365™ and they’re selling to customers on multiple OS platforms rather than selling an OS to OEMs as in the past. Consider the vision statement of Microsoft® during their early years and the text of a slide during Microsoft®’s recent press event:
1977 – “A computer on every desk and in every home”
2014 – “A cloud for everyone on every device”
Fortunately for Microsoft®, they have many more products and factors than just offering Office 365™ on multiple operating systems. MS is a major host in the cloud with Windows® Azure. Not coincidentally, Microsoft® recently changed the name, dropping the term “Windows®” and renaming their cloud hosting service “Microsoft® Azure”. Part of the success of Azure to date has been that it embraced platforms that were not Windows®, thereby broadening their potential customer base. The renaming is consistent with the newly announced strategy of expanding beyond Windows®.
Enterprise Mobility Suite
Another significant factor in Microsoft®’s strategy is their global dominance in the enterprise markets. The entire BYOD concept presents numerous challenges to enterprise IT departments as they are forced to manage data security, user access, and device management resulting from an increasing number of uncontrolled devices. Volume Licensing customers are painfully aware of these risks and they are looking for reliable tools to protect their company data and assets. By definition, VL customers have a relationship with Microsoft® and they will look to MS to provide tools to protect their data. MS has a clear interest in meeting these needs as a means to preserve their $40B annual VL revenue source.
During Microsoft®’s press event, Satya Nadella introduced the Enterprise Mobility Suite (EMS). While he offered very few details, he referred to this as a suite of tools to provide identity management, access management, device management, and data protection into a single suite designed for enterprise deployment. The Enterprise Mobility Suite will support devices running Windows®, Android™, and iOS. The goal is to allow users to use the devices they want while letting IT govern the devices.
With EMS, identity and access management will be controlled by a new Azure Active Directory Premium; device management with Windows® Intune, and data management with Azure Active Directory Rights Management Services. These tools exist separately today but with varying licensing models and fees. By combining them into an EMS Suite, Microsoft® will create a User CAL which will reportedly grant access from an unlimited number of devices per user. The Enterprise Mobility Suite is expected to become available May 1, 2014.
As is so often the case, the release of Office for the iPad® was known long before the official announcement, but many were watching to see Satya Nadella in his new role as the CEO at Microsoft®. He came across as very composed, articulate, polished, and accessible. Nadella’s public persona appeared quite different from that of Steve Ballmer, who was often very intense and animated. After only a few weeks in office, it’s too early to predict his long term effectiveness, but if this event was any indication, the future of Microsoft® looks promising once again.