Long-time Softie Raymond Chen is famous (infamous?) for his "Microspeak" blog entries, where he translates into plain English the many words and pseudo-words used inside Redmond's hallowed halls.
I haven't seen Chen yet post an entry for what is likely to become one of the most important words to those attempting to track Microsoft's future performance. That word is "device."
One reason Microsoft is playing up the word "device" is the company is attempting to distance itself from "PC." If you aren't making PCs, you can't be disparaged as doing business in a post-PC world, right?
But there's another reason the Softies are moving to use the word "device" instead of PC. Device is a broader term that can be used to cover anything with an operating system in it. Phones are devices. Set top boxes are devices. TV remotes are devices. Medical imaging systems are devices. Surfaces, Microsoft's PC/tablets, are devices.
Check out a couple of relevant quotes from Microsoft's Chief Financial Officer Peter Klein from Microsoft's Q1 FY 2013 earnings call last week:
"We are bringing a new range of capabilities and scenarios to Windows and with support system-on-chip architecture we are moving beyond the traditional PC to the widest range of Windows hardware we have ever seen. New hardware will debut next week and will broaden over the coming months."
"One of the exciting things about Windows 8 is how it really redefines, so how people think about devices and the experiences they get across those devices and up until now, that’s sort of narrowly been defined as PCs or tablets and customers have been forced to choose and may trade-off, frankly of what they get. With Windows 8, you can kind of get whatever you want at whatever price point you want."
Klein told analysts on last week's call that Microsoft has "discontinued the bridge to the PC market as Windows 8 will be a platform across a broad set a form factors. As we go forward we will provide updated information and metrics about our business performance in the new context."
The last time Microsoft used "the bridge" was when it reported Q4 FY 2012 earnings. The bridge showed the ties between the PC market to the OEM revenue. The new argument is that the traditional definition of the “PC market” no longer exists, and as such, the bridge is no longer meaningful. Here's the last bridge, for posterity's sake:
My expectation is we're going to hear Microsoft talking about "Windows" as meaning everything from what's installed on consumer and business PCs, to what's installed on phones, to what's installed on gaming consoles (if rumors of the next version of Microsoft's Xbox OS being built on Windows is accurate). In reality, at least at the moment, it's not the same Windows powering all of these things. Windows 8 and Windows Phone 8 may share a common "core," but they are not the same OS. And Windows RT is yet another Windows variant, as myself and others have tried to explain.
But counting everything equally as "Windows" will allow Microsoft to claim a much bigger Windows base. (And likely will make it more complicated for analysts seeking to break out Windows Phone share vs. iPhone vs. Android phone share, as well as Windows tablet share vs. iPad share vs. Android tablet share.)
Forrester Research has a new report entitled "Windows: The Next Five Years," that reinforces this point. One of its key findings: "Microsoft Windows’ share Of all personal devices has shrunk to 30 percent" as a result of weakness in phones and tablets. But by 2016, the playing field will level out, according to Forrester's predictions, with no one vendor dominating the PC, tablet and smartphone categories.
"Windows 8 will simply stop the shrinking, maintaining Microsoft’s share at about 30% through 2016. By 2016, we believe that Microsoft will have about 27% of tablet unit sales, but only about 14% of smartphone sales (and some of us are very skeptical they’ll even get to 14%)," wrote Forrester analyst Frank Gillet in a blog post today.
Forrester's predictions aside, the one thing I can predict with near certainty is that we'll hear lots more references to "devices" than "PCs" during this week's Windows 8 and Surface RT launches.