While Steve Ballmer, CEO of Microsoft, stalked the stage at Build, the software giant’s annual get together for software developers in San Francisco, California, last week, the famous quote by Japanese naval marshal Isoroku Yamamoto after Pearl Harbour about never waking a sleeping giant could apply to the company.
One can’t accurately describe Microsoft of being asleep at the wheel when Apple brought out the iPad in 2010, or when Google embarked on its Android smartphone strategy, because at the time Microsoft was enjoying the success of its previous operating system Windows 7 – the best-selling operating system in the company’s history.
However, Microsoft, which employs 1,500 people in Ireland and has just completed a US$640m data centre build in west Dublin, was nevertheless caught off-guard by changes sweeping the IT industry. Mobile devices led this change, and Microsoft has had to shift tack. Microsoft has learned the lessons of an age where consumers require simpler, yet faster, mobile computing devices and prefer to buy software in the form of apps, as evidenced at Build.
Yet, it must have been galling for Microsoft, which invests US$8bn a year in research and development. Microsoft invented the tablet computer concept in 2002, but never exploited it the way Apple did with the iPad. Google largely dominates the smartphone market, which, according to research firm Gartner, has more than 70pc of the global market. Not only that, the currently fashionable concept of ‘flat’ design that Jonathan Ive, Apple’s design chief, is bringing to the iPhone with the iOS 7 operating system was initially introduced by Microsoft on its Windows Phone devices.
The thing that Microsoft needed to accomplish was to turn the ship around and be seen again to be relevant. At Build, there was a sense that it was payback time and Microsoft might finally have all of its ducks in a row.
Partners, developers and hardware makers are the key to Microsoft’s business model. At Build it was all about the developers, the rock stars of what Microsoft’s critics like to call the “post-PC” world. In addressing these developers, Ballmer gave an insight into what has been an enormous and painful transformation of the world’s biggest software company.
“Devices and services can only be delivered on a principle of rapid release,” Ballmer said, as he unveiled the next version of the Windows operating system franchise, Windows 8.1, just eight months after Windows 8 rolled into the world.
Ballmer described a leaner, more efficient version of Microsoft that also would have more humility; one that will listen to the end users. In Windows 8.1, Microsoft has restored the ‘Start’ button and it has made design changes to the operating system to include a much better search engine powered by Bing, and a better environment for users to find and manage their favourite apps.
Popular news reader app Flipboard is making an app specifically for Windows 8.1, as is Facebook and the National Football League.
“We’re moving more quickly with Windows but also with Windows Phone devices.”
In the first nod at the notion that the PC as we once knew it – the immovable beige box that vaunted the blue screen of death occasionally and took half a morning to boot up – might be dead, Ballmer said Microsoft is now a “multi-screen device” company.
“The PC of today doesn’t look anything like the PC of five or 10 years ago and really in the last few months since we launched Windows 8 we’ve seen an explosion in the range of devices designed with Windows inside,” Ballmer said, and pointed to new “small tablet” devices like the 8.1-inch tablet just launched by Acer, as well as large-screen “two-in-one” machines that double up as tablet computers and ultrabook computers.
“Lightweight PC, all-in-one or phone – I call it Windows all the time; it reaches out and touches a need a lot of people feel,” Ballmer said, referring to the uniform feel of the current Windows generation across devices.
That Microsoft is playing catch-up with Google and Apple on the apps and devices front there is no doubt. Ballmer said Microsoft is about to pass the 100,000 app milestone, but it still has some distance to go to catch up with Google’s Android Store, which has 800,000 apps, and the Apple App Store, which has 900,000 apps.
Windows 8.1 apps
While Windows 8.1 is no doubt an impressive piece of software and the pride among the Microsoft ranks was discernible, Ballmer said there are currently 2m-3m Windows 8.1 apps in production among developers. “The importance of those desktop apps has never been more reinforced than in the last six months,” he said.
“We pushed boldly in terms of Windows and the feedback from customers was, to put it in coffee terms, ‘why don’t you go and refine the blend’? We refined the blend of desktop experience and modern user interface on tablets and so we returned the Start button to the desktop and if users want their machines to boot to the desktop they can boot up directly to the desktop.”
Microsoft’s transformation in the last two years is about to be put to the test and Ballmer is understood to be working on another restructuring that is a closely guarded secret but which is expected to emerge in coming days. Ballmer is understood to have kept the reorganisation confined to a close group of advisers, but it is also clear that two rising stars at the company will play prominent roles in the IT industry in the coming years: Julie Larson-Green, the corporate vice-president in charge of Windows, and Antoine Leblond, corporate vice-president in charge of Windows Web Services.
Larson-Green wowed the audience of developers at Build with some of the game-changing features of Windows 8.1, such as ‘hands-free’ computer usage borrowed from the Kinect game controller that allows users to control their touchscreen device without touching the screen, and Radio apps in Xbox Music that compile music playlists based on web pages users are reading.
Leblond emphasised Microsoft’s focus on software developers whose job it is to build the apps that will enable Microsoft to sell more software, pointing to a newly designed Windows Store and tools to help app creators sell more apps and make money.
3D-printing capabilities for Windows 8.1
Windows 8.1 also includes some big bets on the future of technology for consumers and Leblond revealed that Windows 8.1 will come with capabilities for 3D printing. He pointed to new machines like the Cube printer from 3D Systems that sells for less than US$1,300 and the MakerBot Replicator 2, which Microsoft will soon sell to consumers on its e-commerce site.
With the launch of the XBox One gaming system and a whole panoply of machines containing Windows 8.1 and Windows Phone 8, Microsoft clearly intends to bring the fight directly to Google and Apple. “There will be 3,000 Windows 8 tablets and PCs on the market in the coming months,” Leblond said.
There were two key developments in the past week that suggest it is Google, rather than Apple, that Microsoft wants to take on first. At Build, Gurdeep Singh Pall, corporate vice-president in charge of Microsoft’s Bing search engine, revealed new tools like 3D mapping, voice search and other new natural human interfaces that could enable Microsoft to compete more aggressively with Google. The Bing search engine currently powers Apple’s Siri, as well as Facebook’s Graph Search.
“In this coming decade apps will have eyes, ears and a mouth,” Pall said, and urged the 6,000 developers present to be more adventurous in terms of what they can build on the app front.
The other key development was the continued growth of Microsoft Ventures, a new investment arm that will see Microsoft take on Google Ventures in discovering and investing in “the next big thing” in tech. Rahul Sood, the head of Microsoft Ventures, who sold his start-up VoodooPC to HP in 2006 for an undisclosed sum, explained that focusing on supporting start-ups will be beneficial to Microsoft on a number of fronts, such as identifying new technology trends and getting a return on investment.
It appears to be a clear play to remain vigilant and relevant long into the future. “This is about identifying interesting trends, working with entrepreneurs who are trying to build and scale a business and helping them to unlock their ideas. This is more about partnering with young companies early and if we do invest our investments will come off the balance sheet. This is more about resources and ability.”
Rather than focusing only on PCs, Microsoft is embracing a multi-device strategy and focusing its efforts on app creators and entrepreneurs. It intends to not be caught napping again.
A version of this article appeared in the Sunday Times on 30 June