After reading Patrick Rhone's article on Microsoft's Biggest Miss allowing the world to realise Microsoft are not necessary to get real work done, I started thinking, where do Microsoft go now?
Before we can answer that question I think we need to look at what Microsoft's competitors are doing.
Apple is a hardware manufacturer; it does not care (as much as it used to) about OSX and the amount of money it generates. The majority of its revenue comes from the sale of iOS devices (nearly 75%) such as the iPhone & iPad, and the 30% commission they take off software developers in the sale of apps. This is why they will sell OSX Lion for £20.99 because they want people to upgrade their devices, and to start purchasing apps.
Google is an ad provider, they are not terribly concerned whether you search on a Windows machine, a Mac or a Chromebook, just so long as you use Google. As an ad provider they are constantly offering new services that allow them to show more money-making ads, for example Gmail, which they now offer to businesses in the form of Google Apps. Other than Android, Google doesn't seem to be too interested in the hardware side of things but more the software as a service. With the introduction of Google Docs, this can replace Microsoft Office which is a huge part of Microsoft revenue stream.
So where does this leave poor little Microsoft?
With Windows 8 getting a mixed reception from the Consumer Preview, and the sale of tablets at an all time high, what does Microsoft have going for themselves?
The Xbox division is on the rise and going from strength to strength, and Microsoft has the corporate users. It's going to take a lot for large organisations to move away from Microsoft, and even when they do, they tend to move slowly. Even though a few large organisations have made the move to services such as Google Apps, the majority will stay with Microsoft for the foreseeable future. The real worry for Microsoft is the home users.
What Can Microsoft Do?
If we look at the average domestic user, what do they want a PC for? Surfing the Internet? Writing a couple of documents occasionally? Listening to music? Watching YouTube? All of which can be done on a Mac, Chromebook or tablet.
So what can Microsoft do to prevent a tidal wave of users leaving the Microsoft world and potentially never coming back? I think the short answer is not a lot! The changes in Windows 8 seems to have polarised users, with some commentators saying it could be a bigger disaster for Microsoft than Windows Vista.
If this is the case what is Microsoft going to do?
I think the only reasonable answer is that Microsoft needs to invest heavily into its cloud computing solution Windows Azure. Software installed on a computer is becoming a thing of the past, everything now is in apps, and the majority of which connect to web services. Microsoft needs people and companies to host these web services and applications on their servers in Windows Azure.
Microsoft has already made a number of improvements lately, reducing pricing and allowing Node.js application to name a couple but it needs to do more.
Windows Azure need to rival and surpass Amazon's AWS; it needs to become the number one cloud provider. It needs to expand to allow other frameworks such as Ruby on Rails and PHP to run on Windows Azure. It needs to allow non Microsoft services such as Reddis and MongoDB running and available. Currently you can create and deploy Node.js applications through Cloud9 IDE (a cloud IDE), but Microsoft needs to expand on this and allow OSX developers and Linux developers to be able to deploy to Windows Azure.
If Microsoft manages to do this then it does not matter how many users jump ship to MACs or tablet computing. All the websites that the users visit, and apps they use, will be hosted on Windows Azure, and Microsoft will make far more money hosting the world's websites and apps than selling people Office ever will.
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