Microsoft reported its earnings, and other than some weakness in entertainment, the numbers beat the estimates. The PC-software giant showed strength in business sales overall (where market growth was more than double the consumer space) and of course its Windows franchise still works (though not as well as before) even in the consumer laptop space. There’s nothing good happening in phones or tablets, but we all expected that—or should have. If we forgot for the moment the tablet space, it would seem that Microsoft’s franchise was humming along.
We can’t forget tablets, though. The bad news is that IMHO it’s impossible for Microsoft to wrestle out a traditional win in tablets without winning in phones, and it’s impossible for them to win in phones. The good news is that their numbers are advertising the path toward a non-traditional win in tablets that might even help them in the phone space.
Mobile appliances are windows on the world, two-way like real windows and dependent on linking the outside and the inside. In truth they’re a conduit, and if you could get a real handle on what they were a conduit TO, you could make the window less of an issue. The Microsoft opportunity in mobile devices hinges in it pulling together three things it’s doing reasonably well at—online portals, the cloud, and servers and the data center.
Picture a Microsoft developer ecosystem that was focused on cloud-hosted mobile app components that could be assembled through a browser (via Live) or in apps on any tablet or PC. The apps would run in what I’ll call a “sub-GUI” layer, something like the Linux shell. You could paste it on a server, on a desktop or laptop, on a phone or tablet, inside a TV, even on a watch or eyeglasses. This sub-GUI is the application layer of the new Microsoft cloud. Devices vary not on how they empower the user, which is always through a GUI by definition, but what role they can play in hosting components. If you need a component that won’t run on your device, it loads in the cloud and sends you the result. Services like Skype (which Microsoft barely mentioned on its earnings call) are then integrated services into this sub-GUI. This is my view of the future of the cloud. I think it’s also some in Microsoft’s view.
Not all, though. And the problem is that to get to this point, Microsoft has to make a bunch of jealous and competitive unit executives chime at the same time. There are logical steps the company should have taken from the first, but hasn’t taken at all. There’s still time, but not much. First-off, Microsoft’s vision of the cloud needs to be integrated into its server line. Azure, as most cloud users know, is a platform different enough from Microsoft’s data center products that you need an adapter to create a hybrid cloud. The two concepts have to be totally harmonized so applications can be hosted transparently anywhere. Second, Windows 8 has to provide that same cloud-component-platform capability. And finally, the GUI notion that’s implicit in Windows products across the board has to be made explicit to create the clear boundary that a new layer, our sub-GUI, would then occupy. Can you do that, Microsoft? If not, then you’re not going to have a chance in tablets and your current franchises will eventually be dissipated by cloud competition.
In the main, network players have been reporting hard times. Riverbed and Extreme both missed and have both taken hits, and this isn’t a big surprise to me as readers know. The problem is one of VALUE. In the pre-Internet days we used networks to connect to people and that made the network the critical component. What’s the critical component now? It’s what the network can deliver. IT guys like Microsoft are likely to do better in the world of the future than network guys, even though networks built and ARE the on-ramp here. If you’re a network player you have two options; be Cisco or be Ericsson. Cisco’s strategy is to get into the value layers and play there, leveraging its network base. It’s a good idea. Ericsson’s strategy is to exploit the commoditizing trend in the middle layers of networking where the cost is, combining software-defined network principles with optics and then buffing it all up with professional services. That’s also a good idea. All other ideas are bad ideas.
The thing we call “the cloud” is a transformation of information processing and storage that reflects the new network economy and the new power of appliances. It’s going to generate a new IT model, so it’s fair to call this a cloud revolution, but it’s not going to replace data centers with hosting or any of the other high-flying nonsense you read about. The flexibility of the process, the pushing of power to the point of experience, is what’s new, and what will generate the value that will drive spending. If you can harness this, you’re an architect of the future. If not, you’re a plumber with a plunger trying to keep the drains running.