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This Is Why You Should Think Twice About Microsoft

Tuesday - 7/16/2013, 2:45pm  ET

Redmond-based Microsoft is often considered to be a laggard in the otherwise fast-changing tech industry. It has missed the bus on several occasions, such as failing to capitalize on the smartphone and tablet revolution at the time it happened, and the results are pretty obvious as the company is still struggling to gain a foothold with its Windows 8 phone operating platform. But more than that, the general perception about Microsoft’s delayed response cycle usually centers around the bureaucracy and red-tapism that is thought to be widely prevalent in the 98,000 employee-strong organization.

Yes, Microsoft has always fostered a spirit of internal competition, but then again, that competitiveness has often been so severe that it has suppressed seemingly good examples of innovation in some cases. Enter ‘One Microsoft’ - management’s answer to these perennial problems plaguing the company.

So what is it all about?

Well, for the uninitiated, the entire concept revolves around reducing the number of business units functioning within the company (often as independent Kingdoms, as they say) and simplifying the entire reporting structure. But most importantly, it’s about projecting the company's image in a totally different light. Microsoft no longer wants to be known as a software-focused firm, but rather wants to concentrate more and more on devices and services that it offers to its customers all over the world.

And going by the Street’s positive response, this change was indeed a much-needed one. In fact, certain recent issues such as the glaring disparities between the PC and phone versions of the company’s newest Windows 8 operating system have comprehensively pointed to a lack of cohesiveness within its many different divisions and the way in which they function. Keeping that in mind, a lot of Microsoft investors should welcome this change that is aimed at creating a more seamless experience between the company’s suite of products catering to computers, smartphones, tablets and the Xbox gaming console.

Similarities with Apple

And as we take note of the ever-declining figures for worldwide PC shipments, Microsoft’s need for product diversity and faster design cycles becomes all the more evident. Incidentally, any talk of faster design cycles raises the prospect of comparing the company with smartphone behemoth Apple , as the latter also seems to be grappling with the problem of a distinct lack of innovation, as of now. And even as Microsoft CEO Ballmer has publicly stated that he wants his organization to be modeled on the lines of Apple, both companies have also displayed an attitude of zero tolerance towards key organizational members (read Steven Sinofsky of Microsoft and Scott Forstall of Apple) who have somehow stood in the way of promoting inter-departmental innovation, leading to their sudden departures. And both companies have a common enemy in Google, the developer of the Android operating system that continues to remain way ahead in global popularity.

But then again, once we look at the bigger picture, there does seem to be several aspects that might work out in Microsoft’s favor in the long run. Have a look.

The Xbox One volte face

A classic example of Microsoft’s far quicker response cycle with regard to audience preferences would be the policy reversals related to the company’s newly-launched Xbox One game console. And even if these policies such as the removal of restrictions on used games and daily internet connectivity have been prompted by the need to compete with the relatively less expensive Sony PlayStation 4, that still doesn’t discount the fact that Microsoft was really quick to cater to the core demands made by its loyal gaming audience. Going ahead, the organizational restructuring should lead to more instances of such faster turnarounds, which is what is exactly needed in today’s rapidly changing scenario.

Reaching out to the clouds

The other aspect which I like about the newly-resurgent Microsoft is its willingness to collaborate with industry peers, even those that it may have considered as traditional rivals at some period of time. A case in point would be its recent announcement of a tie-up with software applications giant Oracle, under which the latter’s 12c cloud-based software that includes Java and Linux applications, would be offered as a part of Microsoft’s Azure cloud-based service.

While that means a possible boost for Azure vis-à-vis rival Amazon’s web-based offerings, the thing I feel good about here is the fact that the company is really going all out to attract more customers, shedding its own inhibitions and pre-conceived notions in the process. Now that’s surely a good start, especially in an age when people are increasingly becoming averse to storing their online files and folders on expensive on-premise hardware.

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