Everything is changing as far as Microsoft is concerned. Not only is the company itself under new leadership, it is having to adapt to a rapidly changing ecosystem where consumers expect free operating systems, and the PC has given ground to mobile devices such as smartphones and tablets.
Here are five of the biggest challenges facing the company over the coming year.
Microsoft as a whole is highly reliant on the Windows platform, but interest in new Windows releases has waned in both the consumer and enterprise segments. New releases bring some user interface tweaks and a handful of new features, but on the whole there's little that Windows 8 can do that people can't do with Windows 7, or for that matter Windows XP.
This means that there's little incentive for people to upgrade, and this in turn has a knock-on negative effect on PC sales.
Windows 10 gives Microsoft a chance to turn things around. The platform itself is shaping up well, but generating sustained consumer and enterprise interest is going to take a lot of ad dollars, and a lot of hard work. Free upgrades to existing Windows PCs would be a good start – Microsoft could monetize this either through Bing services, or just see it as a cost of keeping people in the ecosystem.
Microsoft also needs to rope in the PC OEMs into this. Their future successes or failures are also tied to Windows 10, and they will have a bit part to play if Windows 10 is going to be a success.
Developing and then fostering a mobile platform isn't easy, as Microsoft has discovered. The to main problems facing Windows Phone right now are:
- Intense pressure from iOS and Android, both of which are established and firmly entrenched.
- Lack of differentiation from iOS and Android, which makes a third-place ecosystem a bad bet.
- Poor carrier support.
Then there's the hardware. A company can have a strong reputation for building quality products and still end up in the tar pits. This is what happened to Nokia. Now that Nokia is part of Microsoft, things are still far from peachy. If anything, with Nokia being the primary Windows Phone platform, that could be harming more than it helps given that it is seen by many as an old-school brand.
No matter how we cut it, PC sales are declining, and any reprieve that a corporate upgrade cycle brings will be temporary. Windows is tied to the PC, and Microsoft is tied to Windows, which means that declining PC sales are bad news.
It's hard to know what Microsoft should do here. Try to boost PC sales by making them cheaper by shaving a few bucks off the price of Windows licenses, or throw more effort and energy into areas such as mobile or gaming? Whatever it does, Microsoft needs to get that plan in place soon because the faltering PC ecosystem is a drag on the company's image, and in the long term, it's dominance and bottom line.
This is the next big thing, and Microsoft has hit the ground running with the Band. However, it's clear from the complaints that this is very much a first-generation device, and while the hardware is top-notch, the overall user experience – from wearing it to using it in the real world – leaves a lot to be desired.
Apple will be releasing its Apple Watch early next year, and if Microsoft doesn't have a dramatically improved Band 2 out soon to respond to it, it runs the risk of missing out on this market in the same way it missed out on smartphones and tablets.
Something strange is going on with security patches over at Microsoft. With an ecosystem as complex as Windows or Office, there's always a risk that an update will upset something, but as of late the problems seem to be hitting epidemic levels, with almost every Patch Tuesday bring with it a new set of headaches.
I'm not sure what's going on here, whether Microsoft has changed the way it tests patches, or that the whole ecosystem is just so complicated that we need to expect that even a small change is going to break something.
Whatever the reason behind it though, it is making administrators' lives a lot more difficult.