D6: Snippets of Microsoft's morphing business model emerge

D6: Snippets of Microsoft's morphing business model emerge

Summary: As expected, Microsoft's brief multi-touch demonstration of Windows 7 garnered most of the headlines, but when the crowd goes one way sometimes it makes sense to go the other way. And if you go away from the crowd you'll notice more than a few subtle hints were dropped about how Microsoft is changing the way it does business.

SHARE:

As expected, Microsoft's brief multi-touch demonstration of Windows 7 garnered most of the headlines, but when the crowd goes one way sometimes it makes sense to go the other way. And if you go away from the crowd you'll notice more than a few subtle hints were dropped about how Microsoft is changing the way it does business.

First, the big headlines (Techmeme). Microsoft said Windows 7 will get multi-touch capability. Mary Jo Foley confirmed that tidbit on Tuesday. The other big takeaway is that Vista will be the kernel for Windows 7. That's another interesting nugget since it may indicate that Windows 7 will work better with all of Microsoft's hardware partners out of the box. Ed Bott had noted the Vista kernel point on our little roundtable on Friday. News.com and Dan Farber had all the live coverage of D6 (roundup) with the hits and runs and errors.

But what stood out for me was the following:

  • Microsoft CEO Steve Ballmer acknowledged the fact that a lot of computing is happening in the browser and not in applications. He also said that the future of software will have "a much more balanced computational model" and that Microsoft will have to compromise. Make no mistake that Ballmer is talking the hybrid apps line, but Microsoft will have to play ball in the new world order while preserving its cash cows. How will that happen exactly?
  • Microsoft is decoupling how it sells Windows Mobile. Ballmer hinted that Microsoft will sell Windows Mobile differently. In some cases, customers will only get the operating system. In others, there will be software and services combined. This decoupling could be a precursor to how Windows on the desktop is sold in the future.
  • The software giant will be an advertising company come hell or high water. Ballmer obviously talked a bit about its Yahoo bid, but also indicated that Microsoft is patient about its advertising business. Ballmer does seem to know where the ad line stands. He shot down an idea about layering advertising on the desktop. Amen to that, Steve. If you listen to the high Web 2.0 priests you'd think advertising was the savior that will infiltrate or desktop--and possibly your pores too.
  • Microsoft will need to make Windows a UI juggernaut. Microsoft can talk about touch technology all it wants, but it is going to have to wow consumers somehow. By the time Windows 7 launches in late 2009 I'd bet Apple will already have something. Ballmer said Windows PCs are going to "look fantastic," but it's competing against a supermodel (Apple). Can Microsoft wrangle all of its partners and ecosystem into building a supermodel OS? It's telling that Microsoft has to cook up software that pinpoints problems in its ecosystem when you run Vista.

Add it up and it's safe to say the Microsoft you see today won't resemble the one you see five years from now. Microsoft's soul--Gates--retires in a month or so and you have to wonder how his departure will impact the company. Ballmer and Gates have great chemistry and it's unclear whether that can be maintained with Gates playing chairman and focusing on his charity work.

Of those aforementioned model questions, the most challenging one to tackle will be the final one--leapfrogging on the Windows UI front. Looks matter. So does functionality. Apple has raised the bar and even if you disagree with that you'll have to admit there's something to controlling the hardware and software. How can Microsoft manage that entire ecosystem and be competitive? It's shocking that Microsoft's herding cats routine works as well as it does, but there's a management case study waiting to be written if the software giant can up the ante.

The other things on Microsoft's to-do list--changing leadership, decoupling the OS, figuring out the mobile model and growing advertising--are all doable. And they will get done. The big question is whether Microsoft can take its ecosystem to a new level.

Here's the video from the Gates-Ballmer chat:

Part 1

And

Part 2

And the multi-touch demo

Video: Multi-Touch in Windows 7

Topics: Operating Systems, Hardware, Microsoft, Software, Windows

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.

Talkback

10 comments
Log in or register to join the discussion
  • Microsoft should not emulate apple

    Macintosh sales come from iPod sales which come from aggressive marketing campaigns. Microsoft needs to ignore Apple and focus on improving software that people use to get the work done. While the Apple may have cornered beatnik and trendy posers market, their market model is not something that Microsoft (which makes mundane tools we all use) needs to emulate.
    hamobu-22333136139518773481685514128812
    • Get thee under a bridge. (NT)

      .
      shawn_dude
    • Translation of "Microsoft should not emulate apple"

      Macintosh sales come from [i]{the fact that they produce a
      superior product and i can't afford it}[/i].

      [i]{I can't understand how to work Linux either, not even
      Ubuntu, so i just use what everyone else does} [/i]

      Microsoft needs to ignore Apple and focus on improving
      software.

      While the Apple may have cornered [i]{the people cooler
      than me}[/i] market, their market model is not something
      that Microsoft (which makes [i]{bloatware}[/i] we
      [i]{could}[/i] all [i]{do without}[/i]) needs to emulate.
      /A\V/
    • Re: Microsoft should not emulate apple

      Not emulating Apple? Why would microsoft break a 25-year
      tradition?
      YouAreSuperWrong
    • RE:Microsoft should not emulate apple

      I agree Microsoft should not try to emulate Apple, at least not with all the version of their O.S.
      What they can do however is designed a special version of Windows strongly optimised for a limited set of hardware which could be called ultimate PC.
      These ultimate PC would be built on the same model of Mac(high quality high end PC) and would be preloaded with an extensive set of appropriate and high quality applications to make them better than Mac for virtually everything.
      If they did that and advertise them correctly then i think people interested by Mac could consider these Ultimate PC instead.
      Of course the criteria for a PC or a laptop to be labelled Ultimate PC should be very stricts.
      timiteh
  • RE: D6: Snippets of Microsoft's morphing business model emerge

    They have nothing, the throes of desperation, or is it aloof
    ignorance? Word is all that anyone really uses and the text
    editing capabilities of an email package are all that is
    required. Affluence begot stupidity since the 90s. M$ and
    its ubiquity is an example of nothing more than profit
    driven markets. Cut the fat and you are left with very very
    little. The "channel" is dying, you don't need rolex clad
    salesmen and a team of expensive IT nerds to keep your
    network running, no one can afford that anymore. That is
    the computing reality of M$ and it will be swept out with
    the rest of the glitzy trash. Macintosh was exposed by ipod
    to the dull masses, ipods will diminish but *nix based
    systems and their progeny will dominate. Jobs woke up in
    time, Gates bailed in time, Ballmer (drinkin' buddy) is too
    stupid to see that the train has left the station, Bill is
    leaving him a lot of money but that too will be gone soon.
    ecrelin@...
  • Diversification

    I fully expect Microsoft's main revenue streams to be dominated by their current bellcows for the forseeable future. And compared to most tech companies, they're already very diversified with massive revenue coming in via several channels - Windows/OS, Apps/Office, enterprise. But they clearly have their eyes set on far more extension than that.

    In fact, I see them as being the first tech giant to essentially morph into a new generation of tech holding companies. Some of their ventures might be directly under the Microsoft brand. Some might have greater separation. Either way, the beauty of that approach is that you don't have to be a dominant player in any one market space (like they have to rely on currently.) You just have to be competitive with significant enough marketshare and revenue to justify your presence. They've built up a ton of money and their main business channels are slowly (probably more slowly than most readers here think) changing. Now's the time to start investing some of that money back out into other channels.
    Glados
  • What a hoot

    Yet again, MSFT shows is capability at stealing the best
    parts of Apple.

    No doubt Ballmer has fleets of lawyers examining all
    the Apple patents to determine what he can legally
    steal.

    Is it any wonder that the public thinks MSFT is a big
    lazy conglomerate of slobs incapable of real
    innovation?

    Yeah, MSFT is trying to be cool. What a joke; what a
    hoot!
    Jeremy W
  • Vista SP2, m-m-m... Windows 7!!!

    IS COMING!!! :-)

    I am glad for everybody running Vista. (Really).
    Solid Water
  • Microsoft is giving more fodder to Apple fanboys

    So now we know the Zunephone is in some stage of
    development.
    YouAreSuperWrong