Microsoft needs the enterprise - not mobile

Microsoft needs the enterprise - not mobile

Summary: Mobile is a distraction for Microsoft, not the future. The bigger problem: virtualization. Adding VMware's $38 billion market cap would raise their stock price almost $5 a share.


Recently, Ed Bott said the mobile business is crucial to Microsoft's future. What? Are Office users giving up PCs for phones and tablets?

Mobile is a distraction for Microsoft, not the future. The bigger problem: their failure to own virtualization. If Microsoft added market leader VMware's $38 billion market cap their share price would be almost 5 dollars higher.

This is a market that Microsoft should own: they own the operating system; they have a huge reseller channel; an enviable position in the enterprise; and some of the best software engineers in the world. So why don't they?

"Do what we do, RUN!" Microsoft won't succeed in the mobile business, especially against Apple. Their every attempt to take down Apple - Zune, Windows 7 phone, tablets, retail stores, even the X box vs iPhone/iPad gaming - has failed.

Sure, the iPad is eating into PC sales, but only for consumers who didn't need a PC. No way does a tablet replace a PC for serious work. Apple saw that, Microsoft didn't. End of story.

Lack of focus Microsoft has spent 20 years becoming an enterprise software company that happens to sell a lot of clients and the most popular client productivity software. They aren't a consumer product company.

OK, the Xbox has achieved some success. But while Microsoft was blowing billions to unseat the PlayStation Apple reinvented the entire gaming ecosystem.

Apple is not trying to compete with Microsoft in the enterprise and Microsoft is foolish to try to compete with Apple in the consumer market.

This is where Hyper-V comes in. Two years ago Microsoft had great plans for overtaking VMware in virtualization.

Ballmer made speeches, aggressive plans were laid out, the reseller channel was primed and ready. But then what? Nothing.

Microsoft discovered that it is tough to take on entrenched competitor with a 10 year lead, even when your product is free. So they've given up.

Or, more accurately, Microsoft's CEO has turned his limited attention elsewhere.

The Storage Bits take Someday, perhaps, Microsoft may have a CEO with a clear vision and the patience and tenacity to achieve it. But not now.

The trends that led to virtualization were obvious: CPUs getting faster; plunging CPU utilization; and costs and management were out of control.

VMware entered the server market in 2001, well after Ballmer became CEO in January of 2000. Now VMware is using its 75% market share into leadership of the emerging platform-as-a-service market.

Then what is to stop VMware from offering a “workalike” OS to run on top of its virtual machines? The fact that former Microsoft executive Paul Maritz runs VMware should make Redmond nervous.

Bottom line: the mobile space is a nice to have for Microsoft, but the enterprise is a must-have. While Ballmer fiddles Microsoft's enterprise stronghold is slipping away.

Even MS insiders aren't hopeful: in the last 6 months they haven't bought a single share of MSFT. Oh yeah, W8 gonna rock!

Comments welcome, of course. 2 years ago MS had me thinking they were serious. I was wrong.

Update: Why aren't commenters addressing the MS failure in virtualization? Lots on MSFT vs APPL, but am I the only one surprised and concerned by VMware? End update.

Topics: Microsoft, Hardware, Laptops, Mobility, Tablets, Virtualization, VMware

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  • Meh

    I think both you and Ed are looking at it from two different lenses. Let's look at it from the "content creation" vs. "content consumption" dynamic instead of Enterprise vs. Mobile.

    Microsoft' PerformancePoint, SharePoint, Dynamics, Fast, and Office365 are clearly enterprise solutions. They are also content creation-focused. Quite frankly, Apple, Google, et al, really have no cohesive strategies to viably challenge Microsoft on all of these content creation fronts. Microsoft has done an effective job cohesively integrating from the front end office productivity suite to the back end collaboration suite all of these solutions.

    However, Microsoft does need the ability to make that information available to content consumers, specifically PCs, ipads and mobile devices. There are many applications that do not require the creation of content. For example, the ipad is a fairly useless device for content creation. However, it is very useful for viewing PerformancePoint dashboards and following up on Dynamics CRM sales leads.
    Your Non Advocate
    • RE: Microsoft needs the enterprise - not mobile

      Ed's point - I think - is that MS needs to be successful in the mobile device market or they're toast. My point is that no, they don't, just as IBM is not successful in the consumer market but has a market cap on par with MSFT.

      All MS has to do to get on mobile devices is to offer the content that their apps create in industry standard ways: H.264; HTML5; or whatever. If they insist on their way or the highway, the highway it will be.
      Robin Harris
      • RE: Microsoft needs the enterprise - not mobile

        <ul><i>My point is that no, they don't</i></ul><p>
        In the summary you wrote, "Mobile is a distraction for Microsoft, not the future." It occurs to me that if in 1981 someone had said, "Desktop computers are a distraction for IBM, not the future," people would have thrown crates of tomatoes at them. "Everybody knew" that the PC was going to take over everything, the mainframe was dead, yadda yadda.

        But that isn't how it turned out. The PC <i>was</i> a distraction for IBM. As successful and big as that business got, it was all a bubble. IBM's future really was mainframes all along. Best of all, they figured that out while they still had time to act.

        Today they don't even have anything in 'client space' desktop or mobile, and they don't care. They're making tons of money doing what they know how to do instead of trying to be all things to all people.

        I agree with you on this: it is extremely risky for Microsoft to allow anyone to slip a software layer between the hardware and the Microsoft OS. It is a lot riskier than allowing Apple and Google to fight over cell phones.
        Robert Hahn
      • RE: Microsoft needs the enterprise - not mobile

        @Robin Harris

        My cellphone has a 1ghz processor in it. It's faster than most desktops from 10 years ago. It is considered low-end. Another few years in this direction and mobile will have all the capability that most people need from a computing device.

        The future of personal computing for most probably looks a lot more like a cellphone with a dock than a laptop or desktop.

        Unlike IBM, much of MSs revenue stems directly from the end-user, corporate or otherwise. If MS cannot successfully move into the mobile segment it will be a heavy blow for them in Enterprise AND consumer.
      • Robin is that what Loverock Davidsond told you?

        @Robin Harris, can't help but wonder why your though process is so close to Loverock ........ Is their something we should all know about? :-)
        Over and Out
      • @Robert Hahn .. did you even read the article?

        <i>"... it is extremely risky for Microsoft to allow anyone to slip a software layer between the hardware and the Microsoft OS."</i><br><br>Harris even mentions the big white elephant you clearly like to ignore called <b>VMWare</b>.<br><br>(... and that <i>whinny galloping away at a decent clap</i> makes it pointless shutting the barn door[sic].)
      • RE: Microsoft needs the enterprise - not mobile

        @Robin Harris
        I think Microsoft needs both the enterprise, and consumers. They might be little bit late but windows phone 7 is excellent and will be above 10% next year, Windows 8 looks very promising too for next year.
        Microsoft have hyperV which is again a very good product. enterprises go for vmware first cause it was first to the party, but with microsoft offering hyperV at a better price won't take long to erode their lead.
        I think microsoft are doing fine. With regards to the share price, if microsoft enforced their licenses in China only where 20-30% of the PC are using fake licenses their share price will increase by $5!
      • RE: Microsoft needs the enterprise - not mobile

        @Robin Harris - you complain that nobody is commenting on Microsoft's virtualization efforts, and yet you sent a lot of your post denigrating Microsoft's current focus on mobile. Perhaps if your post had focussed on the subject in the title, you'd have seen comments mote related to the subject you claim to have wanted to discuss in the first place.
    • Enterprise VS Mobile?

      Where did we get a "Versus" in this? Enterprise IS Mobile, in part. Mobile and pad computers are increasingly used in the enterprise environment. There should be a seamless, compatible way to employ them.

      I suppose we could argue the merits of Windows All-In-One vs Windows Separatist version, but however it is accomplished, Windows needs "to work and play well with others".

      Yes, there is a large mobile Consumer market. But there is also a significant mobile Enterprise market, and it is a segment that continues to grow, both in size and importance.

      And it's not just a content creation market. The enterprise uses production control, inventory control, order processing, CRM and a wide variety of applications that need to be friendly to BOTH the desktop environment AND the mobile environment if they are to succeed in the Enterprise environment.
  • RE: Microsoft needs the enterprise - not mobile

    "Zune, Windows 7 phone, tablets, retail stores, even the X box vs iPhone/iPad gaming - has failed."

    Are you kidding me? WP7 has been out for 7 months and it's already a failure? Kinect is the fastest selling tech and it's a failure?

    I understand your point but making this up to prove your point is pathetic.
    • RE: Microsoft needs the enterprise - not mobile

      @CJArnola <br>Right, the incredible buzz around WP7 - reaching all the way to downtown Bellevue - presages iPhone doom. <br><br>And you're correct: the Kinect is a cool piece of kit. I use MS's hardware: the Natural Elite keyboard and the LifeChat 3000 headset. Good stuff. But Kinect doesn't change the gaming dynamic they way the iPod Touch did.
      Robin Harris
      • Best observation ever...

        @Robin Harris "Right, the incredible buzz around WP7 - <b>reaching all the way to downtown Bellevue</b>"
      • RE: Microsoft needs the enterprise - not mobile

        @Robin Harris
        WP7 sold out in some parts of the world.
      • How many units of WP7 have sold globally, Loverock?

        @Robin Harris ... Sales to end-using customers?
      • RE: Microsoft needs the enterprise - not mobile

        Why would that matter?
      • Because channel-stuffing is misleading

        @Robin Harris ... I'd like to know how many units consumers bought, not how many Microsoft "sold" to channel partners.

        So do you know?
      • HollywoodDog, you can try the channel partner excuse

        @Robin Harris
        that you bring up as much as you would luike, but it does not change the fact that sales figures for these are to end users, not channel partners, as the numbers are backed up by web usage.

        Nice attempt, but you must work harder if you are to fool people into believing that sales are less then they actually are.

        Tim Cook
      • RE: Microsoft needs the enterprise - not mobile

        @Robin Harris

        Right...I mean its not like Kinect was the fastest selling electronic device of all time or anything. You're assuming everyone who bought a iPod Touch bought it for gaming. Gaming on ANY mobile platform is just something to do because its there and cheap...everyone who bought a Kinect bought it for games. The Touch did nothing but give us touch games...Kinect gives us controller less gaming, Id say its clearly the better innovation and clearly its caught on faster.
      • RE: Microsoft needs the enterprise - not mobile

        @Robin Harris Meh... you're sensationalizing your view. WP7 has garnered lots of speculation from think tanks like Gartner and IDC. How could one really believe what they write about MS in Enterprise and then turn a blind eye to the analysis that's going on the platform.

        VMWare is one of the competitors of Microsoft - it has grown but it has a ceiling to it. Just by instituting HyperV into Windows Server Microsoft is easily able to take on VMWare. From a functionality perspective any person who has done an actual analysis between the two knows HyperV is the clear price to value winner.
    • I agree. The bloggers here are becoming less informative

      and more combative.

      I do find it interesting that on the rare occasions they do "get it right" they make sure they link to their original posts, yet the rest of the time those posts are never to be seen again.

      You must understand that they are here to create an article that will bring people together to post, nothing more.

      It does not need to be based on fact, or on truths, just opinions, amd guesses.

      Once proven incorrect, you will hear of this article no more.
      Tim Cook