From a behind-the-scenes perspective, Microsoft’s week must have been enormously busy. Between archrival Google announcing its intention to acquire Motorola and hardware partner Hewlett-Packard announcing its imminent exit from the PC business, there was more than enough to keep Redmond’s executives in battle-stations mode.
If that wasn’t frantic enough, the company also began the inevitable ramp-up of its Windows 8 marketing campaign and wrestled with an outage of its Office 365 cloud service.
Steven Sinofsky, president of Microsoft’s Windows and Windows Live division, kicked off the new “Building Windows 8” blog with an Aug. 15 posting that described Windows 8’s radical user-interface changes, most notably the abandonment of the “traditional” Windows desktop model in favor of colorful, Windows Phone-style tiles-all the better, apparently, to port the upcoming operating system (due sometime in 2012) onto touch-friendly form factors such as tablets.
“So much has changed since Windows 95-the last time Windows was significantly overhauled-when the ‘desktop’ metaphor was established,” Sinofsky wrote in the inaugural Aug. 15 posting. “Today, more than two out of three PCs are mobile (laptops, netbooks, notebooks, tablets, slates, convertibles, etc.). Nearly every PC is capable of wireless connectivity.”
In his second posting a few days later, he described the engineering teams putting the operating system together. “We have about 35 feature teams in the Windows 8 organization,” he wrote. “Each feature team has anywhere from 25-40 developers, plus test and program management, all working together.” He then provided a list of “features or areas” under construction by those teams, including “Graphics Platform,” “Hyper-V,” “Media Platform” and so on.
According to Sinofsky’s feature list, Windows 8 will also feature an App Store of some sort. That could directly counter Apple’s Mac App Store, which lets users download applications to their desktop instead of having to purchase boxed software. The presence of a Microsoft-branded App Store would also let Windows on tablets compete on equal footing against rivals such as the iPad (which offers access to Apple’s App Store) and Android devices (which include Android Marketplace).
Microsoft also had to deal with a few hours’ worth of outages for its Office 365 and CRM services Aug. 17. A spokesperson later told eWEEK that the downtime was due to a “networking issue” at “one of our North American data centers.”
Office 365 links Microsoft Office, SharePoint Online, Exchange Online and Lync Online into a platform that costs between $2 and $27 per user per month. On top of that, Microsoft is offering an Office 365 Marketplace with productivity apps and professional services.
Microsoft launched the final version of Office 365, its cloud-based productivity software, with a June event in New York City hosted by CEO Steve Ballmer. The new offering was supposed to be much more stable, in terms of downtime, than its BPOS (Business Productivity Online Suite) predecessor. And like Windows 8, it’s one of the products that Microsoft hopes will define its future.
How HP, Google News Will Affect Microsoft
Microsoft’s future is also determined by other players in the tech space, and those players made some big moves this past week. On Aug. 18, Hewlett-Packard announced it will explore “strategic alternatives for its Personal Systems Group (PSG),” its PC arm, including a possible spin-off. That, combined with the summary execution of the webOS ecosystem, appears to be the beginnings of a plan to consolidate the company’s operations around services and software, imitating in many ways the model established by IBM some years ago.
While the failure of webOS could possibly boost Microsoft’s fortunes in the smartphone arena, by removing a competitor to its Windows Phone, HP remains the largest producer of Windows PCs. Chucking its PC division will almost certainly have some sort of effect on Microsoft, but at this early stage it’s impossible to predict with any accuracy how any of this will play out in quarters to come.
If that didn’t make things complicated enough for Redmond, Google announced during the week that it will acquire Motorola Mobility (and its extensive patent hoard) for $12.5 billion. That represents both a challenge and opportunity for Microsoft: On one hand, it could complicate the tangled legal battles over Android; on the other, it also gives Microsoft a chance-however tiny-to convince smartphone manufacturers of the virtues of Windows Phone.
“The likes of Samsung, HTC and LG obviously don’t have any other choice than to say at this point that they welcome the deal,” Florian Mueller, an intellectual property analyst, wrote in an Aug. 15 posting on his blog. “But there’s no way that they can compete with a Google-owned Motorola Mobility on a level playing field.”
That might drive those players into the open arms of Microsoft. “This deal could throw [Microsoft’s smartphone platform] a temporary life-line,” John McCarthy, an analyst with Forrester, wrote in an Aug. 15 corporate blog posting. “Forrester can hear [Microsoft CEO Steve Ballmer] and company pitching the Asian players on how Microsoft is the only hardware agnostic player left and that HTC, Samsung, and LG should increase their support for [Microsoft smartphones] as protection against Google.”
Indeed, soon after Google’s announcement, Microsoft already seemed intent on playing that angle. “Investing in a broad and truly open mobile ecosystem is important for the industry and consumers alike, and Windows Phone is now the only platform that does so with equal opportunity for all partners,” Andy Lees, president of Microsoft’s Windows Phone Division, wrote in a widely circulated Aug. 15 statement.
The other big question is whether Motorola Mobility’s 17,000 patents will give Android the cover it needs to repulse its rivals’ intellectual-property lawsuits. For the past several months, Microsoft has pursued a particular strategy with regard to Android manufacturers: enter into a royalty agreement or face lawsuits. So far, a number of companies have taken the royalty option. However, Motorola was a notable holdout, more than willing to drag the dispute into courtrooms.
The Google acquisition might not prevent the case from breaking in Microsoft’s favor. “If regulatory scrutiny delays the closing of the acquisition, Google could end up buying a company that is formally enjoined from importing Android-based devices into the United States,” Mueller wrote in his posting. “In that kind of scenario, Google might come under pressure from its own shareholders to consider paying the huge $2.5 billion break-up fee.” In addition, “such an outcome could also raise questions about the strength of [Motorola Mobility’s] portfolio.”
In other words, yet another battle for Microsoft to continue fighting-on top of everything else-over the next several months.