What does Microsoft's "devices and services" mantra actually mean?

What does Microsoft's "devices and services" mantra actually mean?

Summary: You've heard it a million times by now -- it's devices and services all the way in Redmond. But have you thought about what that means?

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TOPICS: Microsoft
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You know that if you type "google" into Google, you'll break the internet?

Turns out that if you type "microsoft" into Google, everything's fine. But I did see this:

Microsoft's HTML Metadata
Microsoft's home page metadata rendered by Google.

We've been aware of Microsoft's desire to reposition as a "devices and services" business for some time. But seeing it there in black and white on the screen made me think about it for the first time -- what does it actually mean?

1970s

"Devices and services" seems an obvious mantra, yet the market leaders don't follow it. Apple makes great devices, and one good service (iTunes). Google doesn't make devices, but does make good services. Microsoft is saying they want to be the one that does both?

lumia-1020
Nokia Lumia 1020

"Microsoft" is a particularly obvious name for a company that sells software for microcomputers, that being the plan for the past 38 years.

Over those 38 years Microsoft has done a lot to shape the devices that we use, but up until very recent history it's never gone out there and created PCs directly.

It has always worked with OEM partners to evolve the PC and non-PC devices that we are used to using. And really, "OEM partner" is a misnomer. OEMs are customers of Microsoft -- not partners. They buy Windows licenses and put them on PCs.

We know that Microsoft is producing their own PCs under the Surface brand. These look and behave like iPads and Android tablets in important ways, so let's call them tablets. We also know that they are buying Nokia's smartphone business.

Those two strategies make up the device hardware side of the business. But it's pretty small, both in terms of what they used to have in the PC space and what their competitors have in the post-PC space.

The last reported quarter of PC sales gives a figure of 81 million unit sales. Virtually all of those would have come with Windows OEM licenses, which is great news for Microsoft, except if it's a "devices and services" business, does it remain great news? Because now it's framed as a "devices" business, selling a software component to OEMs isn't a core activity within that strategy. Windows is neither a "device" nor a "service." I guess the argument runs that by installing a Windows component on a device it becomes a "Windows device", although it's not a "Microsoft device," because Microsoft didn't make it.

The Nokia acquisition at least means it has the smartphone side of the device market looking sensible. However on the tablet side — they're still relying on OEMs and probably always will. They have no tablet hardware manufacturer to buy and make their own at this point. The only people who are good at making tablets are Apple, Samsung, and Asus — and none of which seem like obvious acquisition targets.

This means that on the tablet side of things, Microsoft will likely remain a component provider to the OEMs. In this side of the "devices and services" mantra, the "devices" part seems extremely lopsided. All they have is the Lumia that is a true fit within the mantra.

The alternative is that what will then be the Nokia business unit starts making amazingly good Windows tablets that sell in huge numbers. Although in this context, "huge" has to be assessed within the 80-million-units-per-quarter range that the PC currently hits.

In all this though, devices aren't important at all. For the most part, making hardware is a fool's game. The value in the whole post-PC proposition (and the old school PC proposition for that matter) comes down to what you can do with it, i.e. the services that you access.

Services

Microsoft should be good at building services. To all intents and purposes, building "software" and building "services" is the same activity, all that changes is some of the detail of the execution.

On the enterprise side, this makes a ton of sense. If we imagine a future world where on-premises systems are flat-out unusual, having all of Microsoft's products running in the cloud somewhere and sucking the Redmondian goodness into your private-cloud-based enterprise systems seems like a natural and logical progression. Plus, there is no product that Microsoft cannot send into the cloud.

On the consumer side, once you've got a consumer that has a device running Windows, which Microsoft services do they connect to? Bing (a service that connects you to other services), Office 365, and Skype).

Services that users choose to dial into when they use their devices are things like Facebook, Twitter, YouTube, and so on. Go and look at a list of the top 20 web sites and there are no services there that could have originated within a large, generalist computer company.

OK, so several of those services are now owned by large, generalist computer companies (YouTube, Flickr, Tumblr, etc) but they didn't start that way. They were all created within the crucible of the tech startup culture. Can you really imagine Microsoft creating Facebook? Look at Google+ to see what happens when engineers try and develop a social network from scratch.

Yet if Microsoft wants to be a "services" company that's what it has to aim for. In 2023, when that Top 20 list is radically different, how many of those services should be Microsoft owned? How many would have been created by a Skunkworks startup within Microsoft itself?

Conclusion

My concern that's been ongoing for the past eighteen months is that Microsoft can't shift its mindset from the one where the only thing that matters is selling Windows and Office.

The decline of the PC prompts diversification from that position, and ostensibly "devices and services" seems to be about that diversification.

But when you parse that strategy and look at what they're doing, is there any real change?

I can't see one. It still seems to be about selling devices that can run Office. Perhaps it's mellowing slightly in that it's about selling devices that can run Office, run Skype, and access Bing, but the future of the post-PC era isn't in this area.

The future of the post-PC era is about making devices better and cheaper, together with creating new types of services that deliver life-affecting value.

Change is still needed at Microsoft. "Devices and services" is better than "software for microcomputers", but it's not quite there.

What do you think? Post a comment, or talk to me on Twitter: @mbrit.

Topic: Microsoft

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51 comments
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  • Distinct Signs

    What are Surface tablets and Nokia smartphones, if not devices?
    And what are Office subscription and Skype ... and BING and outlook.com, if not services?
    Those are pretty clear.
    So are the blinkin' prices for the same!

    And if you look at the redesign of Skydrive in 8.1 you see that MSFT are trying to grab consumer storage as a service too.

    And if you look at METRO, you see it essentially a facade on all major consumer activity; adding weather, cooking, travel, games, music, video ...
    ... so the framework is there, even if MSFT don't own many of the services.

    How will they manouevre in future?
    Buying ADOBE would lock in the other major application suite (and it's already heading for subscription) ...
    ... I expect to see other service acquisitions and tighter integration those existing properties which are not for sale (as we have seen this will encounter resistance e.g. GOOG).
    I'd also expect alliances with media providers e.g. NETFLIX (to combat AMZN and Lovefilm) ...
    ... but whether MSFT has any taste for cooperation ...
    ... I suspect MSFT would have been been better off continuing to work with DELL and HP on tablets instead of casting them out.

    I can see the strategy but whether MSFT can execute it is certainly in doubt.
    jacksonjohn
    • Microsoft's mantras are always the industry joke

      Remember Microsoft's previous mantra: "Three Screens" (PC, phone and television).

      It was a complete and utter joke. The laughing stock of the industry.

      So now Microsoft had to come up with a new mantra. So here it is. "Devices and Services". I'm sure Ballmer came up with this himself while eating his peanut butter sandwich.

      It's incredible that such a large company has no idea about which way to go.
      Vbitrate
      • Delivering on a vision

        Oh, and you are the industry's chosen representative to report on what it finds humorous, is that it?

        I don't know about devices and services, but Microsoft has delivered big-time on the "3 screens" vision. They have a mostly and increasingly common UI across PC, tablet, phone and Xbox, with apps that can run across all devices. As a bonus, they have tablet/phone apps (SmartGlass) that allow you to control the Xbox. You can argue whether it was the right vision, and you can argue that Microsoft has done a poor job marketing that vision (i.e., all the bad product naming decisions) but if you think 3 screens and a cloud was a joke, the joke is squarely on you.
        FDanconia
        • Please name one app that can run on Xbox, Surface, WP8, and Windows 8

          There's a big difference between an app that can run on all of them, and apps for each that do the same thing.
          matthew_maurice
          • Their eco-systems are merging and 2014 might be the year.

            You can't say combining these platforms is an easy task. I imagine the time and effort required is a major undertaking. Kudos to MS if they can pull it off.
            Rob.sharp
          • I hope the desktop won't dissapear for the next 20 years.

            I love Windows desktop, I have XP, Win 7 and Win 8 computers at home and I don't want to use a OS that doesn't have the desktop.
            If Microsoft ever does this, then is time to go to OS X or Linux, bye bye Microsoft if you do this.
            Gabriel Hernandez
          • The key to how long the desktop

            is around is if the applications that run in desktop are migrated to tile applications. The main reason we all use Windows is because all the apps we need run in Windows. Your not going to switch if that app you depend on isn't available in OS X or Linux unless they have an alternative you can learn to like.
            Orlbuckeye76
          • Thus the "web-app" revolution we're currently seeing

            This is why more and more tech companies who can run their software thru a web browser, are. It makes them less dependent on microsoft. In fact, this is a great strategy by microsoft to keep any other companies who are in the software business (which makes them competitors, as ms is also a software company) constantly behind the curve. (How Microsoft lost the API war- http://joelonsoftware.com/articles/APIWar.html) They can consistently change the way apps on their Windows OS have to run so anybody who wants to run software on a ms-OS is playing catchup while ms pulls into the lead.

            That's why with the powerful development of the web and web browser applications, more companies who can do it that way are. It makes them platform-independent: now it runs on Windows, Linux, and OS-X all at the same time. Just throw a dedicated Android and iPhone app in there and you've got a complete packaged solution.
            gmoney1911a3
          • well that was the Windows 8 promise

            at least what fanboys were selling here when Windows 8 came out. They were selling a "vision", a glimpse of the future, as someone poetically wrote... Why Windows fanboys always are talking about the future?
            theo_durcan
          • @Matthew Maurice

            Ummm... Do you even use those products? Here are just a few for you that you may have heard of? ESPN? Netflix? hulu? CW? Fox? Skype? YouTube? Redbox? etc... Do you even know what an Xbox Live Account is? Answer this one honestly - do you know who Cortana is? I'm seriously questioning your credibility to comment here...
            Jensco
      • A computer on every desk and in every home ...

        ... running Microsoft's software.

        That was a pretty successful mantra.

        And while '3 screens ...' wasn't massively successful, its actually closer to being true today than ever before. In fact, one might argue that there are a lot more screens ... including screens that aren't running Windows, but are running Microsoft software (Office on OSX, SkyDrive, Bing, etch on iOS, Android, OSX, etc.)
        bitcrazed
      • They are still beating a three screen drum

        I look at it daily with my Xbox One, Windows Phone and Windows Ultrabook. I personally enjoy the 3 screens they provide. I have a powerful set of devices and services to get real work done with plenty of entertainment options when I need it. Thanks MS from a happy customer. By the way MS must be doing something right to be such a successful company. ;)
        Rob.sharp
        • So do I !!!

          Me to. I have a shinny gray Xbox One with sleek outer covering, pin stripped details, fashionable exterior. All embossed with Corenthian leather and silver lined features. This shinny, brand new, Microsoft product can be yours !!!
          Tim Jordan
  • Let me see if I get this straight

    So, most hardware manufacturers and Microsoft are still reeling from the post-PC slide and, in reaction, Microsoft has created a vision (and I assume, a strategy) for getting to this "devices and services" value proposition and market. Meanwhile, you're sneering at the fact that they haven't rolled out a fully-formed, mature, set of "devices and services" that realizes this vision?

    Rome wasn't built in a day. It takes time, a great deal of resources, skill and daring for a company of Microsoft's size and scope to - in a metaphorical sense - change out the company's aircraft engines while still in flight.

    I'm not sure Microsoft will get there, but to judge their success or failure after only a few months to craft and implement seems to be premature.
    Njia1
    • Look at his bio - "mobile software development consultant"

      if he didn't push as hard as he can against PC's, and the top PC OS manufacturer, who would hire him to consult?

      His revenue comes from pushing mobile solutions from those that have built that mature, set of "devices and services over the last several years.

      He doesn't get hired if someone chooses MS over Android and iOS .
      William.Farrel
    • A Few Months?

      Microsoft has been trying to do tablet OS for a decade.

      It's been trying to do smartphone OS for as long.

      It decided that it needed to integrate hardware and software and be a device company years ago. It's entry into the market was the Microsoft Kin.

      Ok, it's months.

      But it's not a few months.
      Henry 3 Dogg
  • Apple changed too

    I remember when Apple went from Apple Computer to just Apple. It was setting a trend that a technology company has to be more diverse then just one area. The one problem is that Apple has always made its devices and Microsoft just recently challenged its own supply chain of PC makers with the Surface. That's a big difference! It remains to be seen if Microsoft has actually made a permanent move to computer hardware. Since the Surface is not exactly setting sales records in a good way. Mobile devices are obviously taking off, but in my opinion you have those that want Apple and those who want cheap Android tablets. I just never thought Microsoft had anything for either. Maybe Microsoft should just stick with Software and try and make that better.
    JohnnyES
    • Actually, Apple DOES NOT make all of its own devices

      Foxconn (a Chinese company) makes its iPads and iPods based upon Apple designs. I don't know if the story is the same for Macintosh or not but ...

      It is likely that someone (perhaps Samsung) is making the Surface tablet for Microsoft under the same kind of arrangement.

      Microsoft simply cannot afford to abandon its OEM model for the Windows desktop/laptop but they are already #3 (units by vendor) for Windows RT/Phone devices. Market-share is likely to continue to grow.
      M Wagner
      • MS designs and markets the Surface.

        Pegatron manufactures the devices the same way Foxconn does for Apple. The same happens in the manufacturing of Laptops Dell, HP, Apple and Lenova are OEMS that design the laptops and ODM's are the manufactures.

        http://en.wikipedia.org/wiki/List_of_laptop_brands_and_manufacturers
        Orlbuckeye76
      • While in general you are correct, in specifics you are incorrect.

        Yes, Foxxconn does *assemble* Apple's products, so I guess you could say they 'make' them, but then an American plant *assembles* Toyota's trucks, so I guess you could say Toyota is an American company--right?

        Secondly, you said, "... iPads and iPods *based* upon Apple designs." (Emphasis mine). Wrong. A product being "based on" a company's designs means that they use those designs as a starting point--making changes to put their own slant on it. Apple's A-series processors are *based on* ARM designs, but Apple takes those designs and modifies them to suit their purposes, then has Samsung (and likely someone else very soon) manufacture those designs. And by contract, Samsung cannot copy those designs and use them for their own purposes due to patent and copyright law. The same is true for those devices *assembled* by Foxxconn. That company's output has to exactly match Apple's designs to be labeled an Apple product while nearly every other similar device--be it smartphone or tablet--may be "based on" Apple's original design.

        You may consider this an argument on just semantics, but how something is stated can decidedly change the meaning of the statement.

        As for what you say Microsoft "cannot afford to..." do, is really something they NEED to do in order to recover their (supposedly) good name. For far too long they've relied on the OEMs to run with their new technologies, only to see idea after idea fall flat due to lack of support from both developers and hardware manufacturers. They NEED to take the leadership role and show the OEMs what they want done.
        Vulpinemac