Microsoft in 2012: two screens and a question mark

Microsoft in 2012: two screens and a question mark

Summary: For three years, Microsoft has been pushing its vision of "three screens and a cloud." Tonight, in Microsoft's final CES keynote, CEO Steve Ballmer has many questions to answer about that third screen - the smartphone and tablet category.

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Tonight at 6:30 PM Pacific Time, Microsoft CEO Steve Ballmer will bound onto the stage at the Venetian Hotel in Las Vegas and deliver the company’s final CES keynote with his trademark enthusiasm.

He will, no doubt, expound on the theme that the company has been pushing for nearly three years: three screens and a cloud. But he will also have many questions to answer, especially about that third screen.

From both a consumer and a business perspective, Microsoft has managed to keep its focus during a three-year sprint that began in 2009 with the release of Windows 7. Two of those three screens are on track:

  • Windows 7 has shipped a half-billion copies, fueling a PC business whose growth is slowing but is still immensely profitable. Apple makes tremendous profits from its Mac division, but Microsoft still controls roughly 90% of the PC market worldwide and is still the standard for business computing.
  • Likewise, the Xbox 360, once derided as a money-losing folly, has become a billion-dollar business with a bright future thanks to the Kinect. A new Metro-style dashboard and ambitious partnerships with media companies might help expand the Xbox from its traditional core of gamers and turn it into a media hub for the living room.

But that third screen—the one that’s small enough to fit in a pocket or purse? That’s the troublesome one for Microsoft.

Windows Phone continues to get great reviews, but after more than a year on the market its market share is still anemic. Apple and Android devices own the smartphone segment today, leaving Windows Phone with a formidable hill to climb.

Meanwhile, the iPad dominates the tablet segment, with a dozen or so fair-to-middling Android-based tablets fighting over the crumbs. Microsoft won’t have a credible tablet competitor until later this year, when Windows 8 ships. And details about ARM-based Windows tablets are still sketchy, to put it kindly.

So, Ballmer has to tell a credible story tonight about how Windows Phone will gain market share in 2012 (hint: do not include the word “Nokia” in your keynote drinking game unless you are prepared for a serious hangover tomorrow). And it’s also time to fill in some of the holes about how and when Microsoft and its partners are going to deliver Windows 8 tablets.

But even the best-case scenario has Microsoft still in a distant third place next year at this time. Where does that leave the cloud? Microsoft has been steadily improving its SkyDrive and Windows Live services for consumers, rolling out some interesting new features recently and promising much better integration with Windows 8. On the business side, Office 365 is holding its own with Google Apps, and Windows Azure continues to grow, slowly.

But those cloud strategies assumes a world where customers remain loyal to Microsoft on all three of  those screens.

With a few exceptions—OneNote and Lync for iPhone and iPad, Bing and Hotmail clients for iOS and Android, a new SkyDrive client for iPhone—Microsoft has been slow to deliver solutions for those other platforms. The biggest missing piece of all? The absence of any of the big Office apps, with or without cloud support, on non-Microsoft mobile devices.

So the real question becomes: can Microsoft build any momentum—or stop falling behind—in a world where it doesn’t control all three of those screens?

Mary Jo Foley and I will be live-blogging the keynote tonight from a distance. You can bet we’ll be listening for answers to those big questions.

Related posts: 

Topics: Windows, Hardware, Laptops, Microsoft, Mobility, Operating Systems, Software, Tablets

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17 comments
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  • RE: Microsoft in 2012: two screens and a question mark

    Ed once Windows 8 ships there will be a Halo effect for Windows Phone. Eventually it will just be Windows (Metro) on tablets PCs and phones.
    jatbains
    • RE: Microsoft in 2012: two screens and a question mark

      @jatbains

      That's an optimistic viewpoint. A lot of Microsoft employees and shareholders hope you're right, but this is a very big gamble.
      Ed Bott
      • RE: Microsoft in 2012: two screens and a question mark

        @Ed As far as the business PC market is concerned, I don't see anyone challenging MS / Intel duopoly. Well over 90% of them run Office and / or need support for legacy apps. As long as that's the case, I don't see them purchasing anything but Windows 8 PC's (running Intel-based CPU's). That will provide them a good bridge / transition with the world of legacy apps and new Metro-style apps. This may also provide MS with a halo effect within businesses who wish to use Win8-based tablets.

        I've always maintained that Office is THE killer app for Windows & as long as that's the case there's not much incentive for businesses to shift to another platform. Now of course there's rumors of MS porting Office over to iOS platform & if that does happen, that's when we'll start seeing any significant shift (or if Apple builds a version of iWork that can compete in any way with Office).
        smulji
      • It is more of a question mark for ARM devices; issues with J-Micron jmf-616

        @Ed Bott

        My ssd is a ADATA 596 and I have nothing but problems being online with IE9 or Firefox 8.0.1; consistent freezes and black screens. I had to go entirely Google Chrome to resolve all of the issues that I was having. I believe Chrome is a Java based software, so if IE10 can cope then more power to Microsoft. But, for now I will be bringing out my point at every opportunity until Windows 8 comes to market; just for the sake of " I told you so".
        Zurk_Orkin
      • It's not a big gamble

        @Ed Bott ... a big gamble is whether it matters if you lose. If you lose and nothing changes, then it wasn't much of a gamble.
        HollywoodDog
    • RE: Microsoft in 2012: two screens and a question mark

      @jatbains I think if somehow Windows 8 apps can run on Windows Phone 8 devices (like in the smaller docked mode), it solves the huge hurdle of people not wanting to rebuy apps for their smartphone since they'll also work on their PC.
      Jeff Kibuule
    • RE: Microsoft in 2012: two screens and a question mark

      @jatbains Metro doesn't seem to be making Windows Phone popular.
      symbolset
  • RE: Microsoft in 2012: two screens and a question mark

    That 90% figure is increasingly becoming whistling while walking past the graveyard. Try totaling all "personal computers" including smart phone and iPads (yeah iPads) and MS, while still dominant on the decreasing desktop is missing entirely from the other two, increasingly important, screens. Innovate in a timely fashion and compete (rather than relying on a misbegotten monopoly) or follow RIM into the technological dustbin.
    dheady@...
    • RE: Microsoft in 2012: two screens and a question mark

      @dheady@...
      I'd think as long as you sell 500 million copies, it doesn't matter what your percentage is...you're not graveyard material.
      WebSiteManager
      • RE: Microsoft in 2012: two screens and a question mark

        @WebSiteManager Yeah never mind that ice burg our ship is too big to sink
        dheady@...
    • RE: Microsoft in 2012: two screens and a question mark

      @dheady@...
      Oh, Please already! As much as I may like my smartphone or tablet it is no replacement for my desktop. I will not do serious video editing on them. I will not do serious software development on them. I will not do serious design work on them. I am not going to store or access my 1.5 Tb of working data on them. They are add-ons for doing browsing and answering email and finding out what the latest score is.
      pc@...
      • RE: Microsoft in 2012: two screens and a question mark

        @pc@... True, but on the other hand, most people are just e-mailing and surfing the web and updating facebook and tweeting and playing angry birds and skyping. The less they use their PC, the less likely they are to upgrade its hardware or OS.
        jgm@...
      • RE: Microsoft in 2012: two screens and a question mark

        @pc@... Your point is well taken, if you use your computer as a professional tool. The vast majority of consumers do not. Do you really think that there are half a billion 'professional' installations of pcs? Even Apple is abandoning the 'professional' market as too small to be profitable. There will always be a need for workstations, but not the glut we've seen. The market is changing, ipo facto. If MS wishes to remain a 600lb gorilla it needs to adapt. Frankly I hope it does, but it will take a new corporate culture and CEO, I suspect.
        dheady@...
  • The best Microsoft can hope for

    Is to stabilize its core business, enterprise computing, consumer channels, but the smartphone business will always be playing catch-up and in an Android/iOS world that is a challenge that may be difficult to overcome.<br><br>Azure has the potential to be their best growth area.
    Dietrich T. Schmitz *Your
    • Oh, that's funny. Look. I've been 'flagged'

      @Dietrich T. Schmitz * Your Linux Advocate

      Outrageous!
      Dietrich T. Schmitz *Your
      • RE: Microsoft in 2012: two screens and a question mark

        @Dietrich T. Schmitz * Your Linux Advocate
        You mentioned Linux in a Microsoft thread! Didn't you see that coming?
        dheady@...
  • UEFI

    Hi @EdBott
    Your UEFI writings seem a bit silly now eh ? ;)
    tomaszkubacki