I left Microsoft a few weeks ago after ten years in the Web Developer Tools and Platforms group. Leaving a company after that long is kind of like a divorce. You’re a little sad, a little anxious, a little angry.

However, I think it’s wrong to start with the premise that there  is anything “wrong” with Microsoft. One could argue that this is just a time of growing pains for the company.

I must note before I continue that what follows is nothing more than my personal opinion, it’s just observation and conjecture based on my experience.

Microsoft grew to dominance in a very different technological era than the one we live in today.

AT&T was once absolutely dominant in the telecommunications industry, it slid almost into obscurity and it has since rebuilt itself to become a significant participant in a re-invented industry.

The question as it pertains to Microsoft is, does Microsoft need to do that today, and is it capable of doing so?mismanaged

Microsoft’s success was more than just a matter of being in the right place at the right time. Bill Gates made clever decisions during a perfect storm or circumstances that made the personal computer both possible and viable. But Bill Gates is not making the decisions at Microsoft any more. Microsoft Windows and Microsoft Office grew to dominance in a time when the personal computer was the entire industry. Now, I’m not suggesting that Microsoft didn’t make smart choices and investments along the way and I’m not saying that they didn’t develop some outstanding products because they did.

So, what’s different now? What are the new challenges?

When I last heard a statistic on the subject, something like 65% of Microsoft’s residual revenue stream was produced by Windows and Office, which I’ll collectively refer to as “the desktop”. We could make the argument that these two sets of products are really a single product line as they are inextricably bound and marketed to a single customer base via a unified strategy. Microsoft still has market dominance in the desktop, though it has started to lose some of that majority percentage to Apple, Linux, and non-PC based computing.

But the state of the desktop is becoming a problem for Microsoft. I predict Windows Vista will be looked back on as the biggest disaster in Microsoft’s history, and not because it was technically bad. In fact I don’t think it was technically bad, but I think as a product it was terribly . Microsoft started talking about Windows Vista and advertising it’s features far before it was sure it could even deliver those features. Ultimately it didn’t deliver some of the features that were most anxiously anticipated. Microsoft also failed to properly engage OEMs and ISVs to insure compatibility of existing hardware and application software.

Window 7 was an improvement, but Windows Vista had done it’s damage. Millions of users discovered that they didn’t actually need to upgrade their operating system just because Microsoft published a new version. The poor publicity of Windows Vista fueled an acceleration of new Apple Mac purchases and a bump in adoption of Linux on the desktop. People purchased new Windows based Personal Computers and “upgraded” Windows Vista to Windows XP.

Windows XP is still the most popular version of Windows and this is symptomatic of a bigger problem. When it comes to both Windows and Microsoft Office, the existing, and even older versions of the software are “good enough”. The more the products evolve, the more the development teams need to stretch to add new features and the less the average user needs those new features. Those features don’t always justify the cost of an upgrade.

Should I upgrade Windows and Office with features I probably don’t need or should I use that money and go buy a new iPad ?

This is a real problem when we remember that 65% of Microsoft’s revenue stream comes from Windows and Office.

With Windows 8, Microsoft will look to force users to upgrade. More on that later.

Though Microsoft has worked hard to succeed in additional genre, the company has really struggled to hit home runs in lines of business beyond the PC desktop operating system and office productivity tools.

Lets review some of the spaces where Microsoft competes.

1.) Web Workload.

Though ASP.NET had strong early success, LAMP (Linux, Apache, MySQL, PHP) is, and looks like it will continue to be #1 in the space. The margin appears to be increasing and Microsoft seems to be reducing it’s focus on self-host web technologies in favor of a Microsoft centric cloud strategy.

2.) Mobile.

Microsoft spent HUGE amounts of money to renew it’s phone strategy, however that investment has not yielded as much adoption as they probably hoped.

Windows Phone 7 is actually a pretty good technical effort, but has been delivered in the face of several big challenges.

The target market for Windows Phone 7 is exclusively the consumer market. For developers, Windows Phone 7 is all about targeting that consumer market as well by building applications for distribution through Microsoft own Phone app store. Unfortunately, Apple beat them to that market by a long shot and Android beat them by a good stretch too. (And version #1 of Windows Phone 7 was good, but not perfect.)

Another potential challenge is that Windows Mobile 6x, was not exclusive to the phone as a platform. It was an embeddable operating system that was used in all kinds of devices, but lacked a modern development model (like .NET), but developers using Windows Mobile for embedded development were left behind by Windows Phone 7 which is a “Phone Only” effort at this point.

After leaving Microsoft I divested myself of all the Microsoft stock that I held at the time of my resignation, but as a shareholder I was particularly worried by what seemed to me to be Microsoft’s own statement of concern about the likely hood of Windows Phone 7’s success.

Microsoft seemed to have modified it’s model for competition in the mobile space by, rather than competing primarily on technical and value based merit, moving to rely most heavily, at least in the short term, on inhibiting the competition through litigation, or more accurately the threat of litigation – alleging patent infringement of the part of device manufacturers, often suggesting infringement against patents of technology that Microsoft acquired through mergers and acquisitions rather than on technologies that were invented in house by Microsoft.

3.) On Line (Cloud, Search, etc.)

By Microsoft’s own admission it’s on line business is not succeeding as it desires. They recently moved developer hero Scott Guthrie to try to drive Azure to viability.

Microsoft focus on both search and cloud offerings came after other companies had already established dominance in those respective spaces.

Historically, Microsoft has been able to come late to the table, behind other companies, and leverage it’s dominance of the desktop market to catch up to the competition, but one could argue that this business model no longer holds promise because the desktop itself is no longer so important.

4.) The Browser.

Microsoft has the #1 browser market share (with all versions combined) primarily because Internet Explorer comes with Windows, but Firefox and Chrome have succeeded in garnering many hundreds of millions of user to proactively choose to use a non-Microsoft browser in place of Internet Explorer

Is this a big deal, you may ask?

Yes, because the desktop of the future is the cloud and the Window to the cloud (in the short term at least) is the browser.

Win the browser (and control over the technologies that he browser supports) , and you win the user. (Check out on Amazon’s huge play with a new browser this week.)

5.) Servers.

Microsoft has done OK with server products where those products are tied to it’s desktop ecosystem, like with Sharepoint, and it’s database has done pretty well outside the web workload space. Microsoft client developer tools remain the leaders for Microsoft centric development, especially when the environment is Windows only and relies on Windows based authentication.

In recent years Microsoft has invested in projects to the tune of hundreds of millions of dollars only to pull the plug after version commercial release (like the Surface and the Kin)

And, Microsoft has consistently failed to to “grock” the consumer space.

Microsoft recently pulled the plug on Zune, the Kin, and previous attempts at the table form factor have been consistently underwhelming.

Microsoft REALLY gets the desktop, but doesn’t really seem to get much else.

But wait, what about Windows 8 ????

In my personal opinion (and it is just my opinion), Steven Sinofsky is positioning himself to take over Microsoft, and I think he is succeeding.

We’ve heard little from Steve Ballmer of late and Scott Guthrie had very little presence at the BUILD (Windows 8) developers conference earlier this month.

And really, who is left. Long standing candidates like Bob Muglia are no longer around and Microsoft has been unable to retain newly recruited prospective senior leaders like Ray Ozzie.

So what’s happening at Microsoft?

Literally hundreds of people have left Microsoft this fall alone

Now, Microsoft folks would suggest to you that this turnover happens every fall and it does, but not nearly to this extent.

I think this exodus is probably a necessary trend at Microsoft, and at least in part, is expected by Microsoft’s management. Selective attrition and Microsoft’s updated forced stack ranking should help Microsoft reduce it’s staff by ten percent or so.

My guess is that much of the attrition will take place in the expensive director level, senior technical contributor, and superfluous management staff complements. This attrition may even be intentional on the part of Microsoft and is probably necessary for Microsoft long term fiscal success. Microsoft is simply too large, too top heavy and it needs to reduce staff and cut spending in order to survive and thrive in the new market climate it must succeed in.

In any event Microsoft seems content to allow so many people to leave and I’ve not heard of any attempt to retain people who announce their resignatoin, though they do seem to care where they are going to.

This will be a very hard time at Microsoft. As it becomes less and less “fun” to work at Microsoft, as benefits are reduced and bonuses shrink, more senior technical folks will seek out new thrills and challenges at the likes of Google, Amazon, Facebook, and the plethora of start-up companies that are popping up to pursue opportunities in the emerging cloud and mobile computing spaces.

What I think Sinofsky “gets” is that Microsoft has to stop spending money outside it’s core competence and, for a while at least”, get back to keeping control of, and making money from, it’s mainstay – Windows.

I have to give Stephen Sinofsky credit. Though I’m not sure if his Windows 8 strategy will save or destroy Microsoft, it’s a bold move and I applaud him for seeing that something has to be done sooner, rather than later, and making a big bet!

So, what is he doing.

Again – this is just my speculation – it’s not based on any inside information.

First, Sinofsky is taking Windows and everything about it BACK into the Windows team (s) and keeping control of it all centralized there. And by that, I mean complete control.

Windows 8 will be a huge change in the evolution of Windows and Sinofsky has, so far, avoided many of the early problems with Windows Vista.

Early Windows development was locked down. If you weren’t working on it, you didn’t have access to it. There were no leaks.

There is no release date speculated – they declare “it will ship when it’s ready”.

Unlike the early previews of Windows Vista, everything Microsoft has shown about Windows 8 looks pretty functional and so it’s not likely that they will get the community excited about features that won’t actually be able to ship.

Marketing and Evangelism have been centralized with product development thereby centralizing not only all product and feature development around Windows and Developer technolgies, but the related messaging as well. Blogging and other Developer Community efforts (and people) are being pulled beck to the Windows organizations.

And what about .NET? After all, Microsoft has been touting .NET for over a decade now.

Well, here are some GUESSES!

I doubt that future versions of .NET will be supported on versions of Windows older than Windows 7. What is especially important about this is that newly built applications will therefore not work on Windows XP. If you want to run a “new” .NET application, you will have to upgrade from Windows XP, which means Microsoft will get some money from you.

Note: there is nothing really underhanded about this. Windows XP is more than a decade old and so Windows XP reaching End-of-Life is in keeping with the standard product life-cycle policy that Microsoft has always had.

What about Silverlight and WPF? I think .NET’s future, especially these parts of it, is precarious at best.

Silverlight and WPF have been on converging trajectories for some time now. It’s MS folklore that Bill Gates always referred to Silverlight at the “ef” Windows strategy as it was built to be cross-platform. It’s easy to guess how the Windows organization’s executive team feels about Silverlight or anything that comprises an average consumer’s dependence on Windows.

All “Windows Client” development technologies are now owned by the Windows team. Though it seems likely that Silverlight will remain important for development on the Windows Phone, at least for the near future, you can guess what the ultimate long term future of Silverlight & WPF will be. Even though WPF and Silverlight applications will run as legacy applications on Windows 8, clearly Microsoft’s emphasis for Windows 8 user interface development is the new Metro based stack and a Resurrection of C++.

If I’m right this will be very painful for developers that have chosen these technologies and don’t look for these technologies to go away over night.

“But wait”, you say. It’s HTML, CSS, JavaScript so it’s “standard”.

Well, not really. I wouldn’t call it standard, I’d call it familiar. JavaScript code for a Windows 8 application user interface will need to be heavily interlaced with Windows specific code and API usage.

It’s not going to run anywhere but on Windows 8 (and above), at least not with technology provided by Microsoft.

The big question remains, will Windows 8 save, or kill Microsoft (or neither) ?

I wish I new. There is no question that Windows 8 is interesting, but will it hit the intended target?

Though reports of the demise of the desktop are premature, it is a statistical fact that more than half of the traffic on the Internet no longer involves a desktop Personal Computer or traditional Laptop. This is the single-most important bit of data that should be keeping Steve Ballmer and Steven Sinofsky up at night because the decreasing importance of the PC powered desktop is now a FACT.

Again for emphasis. More than HALF of the traffic on the Internet does not involve a computer in the traditional sense.

Microsoft’s future, therefore, must hinge on it’s ability to leverage it’s existing dominance in the desktop operating system market to drive some really significant penetration in to some part of the consumer space.

Short of getting the Windows Phone 7 or XBox operating systems running on refrigerators and automobiles everywhere, the big bet is on Window’s 8’s ability to cross the platform gap to the tablet form factor and to do it quickly enough to still be able to matter. No small feat as shipping Windows 8 before it is technically ready might be the last mistake Microsoft can ever afford to make. (And Sinofsky has stated publicly that Microsoft will not ship Windows 8 before it is ready.)

Though Microsoft has pretty consistently failed when building products for the consumer space (with the notable exception of the xBox) and more specifically they have failed in regards to the tablet form factor, Microsoft has an ace up it’s sleeve in this latest round of device wars.

Original Equipment Manufacturers. Personal Computer OEMs are in the same boat as Microsoft.

They too are threatened by the decreasing importance of the classic personal computer and they too are struggling to succeed in the new consumer form factors. (Refer to HPs recent failures re: WebOS devices and Amazon’s release of it’s own Internet connected tablets.)

Though Microsoft’s treatment of OEMs was central to their Department of Justis problems of yesteryear, their OEM relationships have remained strong.

Based on Microsoft’s significant majority in the desktop market share, Microsoft holds sway over large portions of the the hardware manufacturing industry and can use this leverage to encourage evolutions in device hardware in ways that afford Microsoft unique synergies between the Windows operating system and the new hardware those OEMs will create.

When coupled with the massive patent portfolio that Microsoft has accumulated and it’s apparent skill at using it to slow the progress of one of it’s two major phone / tablet competitors (Android), Microsoft may just be able to finally cross the void from Desktop Operating System Mogul to “Computing Device” Operating System provider.

Only time will tell, but I think time is of the essence and it will be a race to dominance for all the technology providers in the mix.

Please use the comments section to share your thoughts!

And did I mention that the above is just my personal opinion and not based on any non-public information ? :)

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