Understanding Microsoft’s Re-Org

Lane Shelton

(Photo credit – Brian Smale. This post was originally published on swlicenseguru.com)

There was a lot of buzz about the latest re-org at Microsoft last week. The short version of the re-org: Microsoft is pivoting away from Windows-at-the-center-of-the-universe and more towards a vision of Microsoft as an integral compute fabric that exists everywhere and is visible nowhere – intelligent cloud, intelligent edge. Windows isn’t going anywhere – it’s still a bright star but now it’s going to be just one of many stars in the sky for Microsoft. There was a lot of external buzz, but my contacts at Microsoft expressed calm and confidence, even excitement. From what I’ve seen and experienced, CEO Satya Nadella has earned a deep level of trust and respect from my contacts. I talk to Microsoft peeps from Redmond to the field, so I get a decent sampling of sentiment.

If you step back and think about it – the move makes sense as just another step in the evolution of computing in general, of which Microsoft has always been a major player. First, Bill Gates democratized computing in the era of the personal PC. Steve Ballmer later went “all-in” on cloud computing when cloud was just an exciting big question mark. I was there when he shouted it from that stage in DC years ago. I thought he was crazy at the time, but his all-in cloud gambit may prove to be almost as visionary as Gates. On his watch, Microsoft transformed into a devices-and-services company. Now, Mr. Nadella is transforming Microsoft yet again, but this transformation is more nuanced. Ballmer was both old school (Microsoft’s platform or bust), and new school (cloud computing). Ballmer’s aggressive approach was right for the time, and to bet the farm like Microsoft did required an extreme approach. Ballmer delivered – devices and cloud-connected services.

When Mr. Nadella started heavily emphasizing AI, data economics, machine learning – I thought he was a bit too far ahead of the market. But I was wrong – I’m seeing it happen right now. I was in Redmond a couple weeks ago getting a peek at Microsoft’s latest and greatest in these areas, and I sat through a two-hour demonstration that was all about higher-order mathematics, heuristics and algorithms, and teaching machines to think about everything. I turned to the person next to me and said, “Remember when new and exciting was pivot tables in Excel?”

Machine learning is everywhere, just as compute is everywhere. But it’s not Ballmer’s one platform for hardware, software and all the spaces in between. I love Microsoft’s Office 365 platform for productivity – I’m living Satya’s vision of “doing more” because of it. I love my iPad Pro and iOS, which was a game-changing experience for me, so much that I haven’t touched a piece of paper in over a year. I adore how Google just keeps getting smarter at delivering not only the information I need, when I need it, but somehow figuring out what I didn’t even know I needed. Mr. Nadella gets that – the Microsoft experience on the iPad is outstanding now, same with Android. Microsoft and Linux are playing nice in the sandbox. Microsoft wants VMware in Azure. PWAs are going to make Google Apps sit side-by-side with Microsoft apps in the Windows store at some point. And behind all of that is the data – the mountains and mountains of data that Microsoft wants to transform into an intelligent stream of information that leads to smart decisions – some made by humans and some by robots, some made by both together.

In this world, the devices and applications are just a means to an end – the ends being whatever we define them to be. Better crop-yields through IOT soil sensors, better retail revenue through powerful edge devices that deliver targeted advertisements to shoppers in realtime, cooler presentations that impress the heck out of our bosses (that were almost effortless to make). We’ve been focused on the science of compute for so long, but it feels to me at least, that this era is going to be all about the art. Mr. Nadella is removing the science from view – knitting the pieces together so that to the user, it’s invisible and effortless. Until machines achieve sentience, the winners of tomorrow will be the artists that leverage data to do new things. Our economy has always been driven by the visionary artists – but just as the PC democratized computing and gave us common folk amazing new powers, it’s happening again with data right now. What used to be the purview of supercomputers now happens on a cell phone. In that world, Windows does matter less. It’s a piece of the fabric – and the re-org reflects that and makes sense.

Lane has dedicated the last 25 years to helping organizations build software investments that are strategic, successful and sustainable. When he’s not plumbing the depths of licensing arcana or creating gigantic-yet-somehow-appealing spreadsheets, Lane enjoys VR and old-school PC gaming.

One thought on “Understanding Microsoft’s Re-Org”

  1. John Galt says:

    Nadella is focusing on his strength and has no plan for his weakness. The result is that he’s the CEO that is making Microsoft into IBM. That isn’t something to be proud of.

    Nadella needs to be smart and recognize that he is HORRIBLE at consumer and higher/aquire the talent that is necessary to transform Microsoft in the consumer space because if he doesn’t, Microsoft will be departing the consumer space in the next 18-24 months entirely. When that happens it will also hurt Azure and Office just as when IBM left the PC industry hurt their server business badly.

    The reality is clear as day for consumer tech: Content and distribution drive devices and software. Microsoft has done nothing, while Apple, Amazon and Google have made deep inroads. That means that Microsoft must make a bold move and take risk or see 50+% of it’s business vanish.

    The solution is the following:

    1. Buy T-Mobile.
    2. Put John Legere in charge of all consumer goods and technology at Microsoft.
    3. Buy DISH
    4. Merge DISH’s unused spectrum with T-Mobile’s and create cheap gigabit internet without wires with no data caps that covers the vast majority of the US thus destroying cable and phone companies.
    5. Include TV and Cell services in said package that allows full family plan with gigabit internet to any device in your family for say $60 / month including home internet.
    6. Use AI and Azure to intelligently cache upcoming programmed content, and other on demand videos like YouTube over night and with IP multi-cast via DISH satellite ensuring great network experience at peak times.
    7. Buy Netflix.
    8. Own the very best content.
    9. Release Surface Phone with Android emulation turned on as intended before.
    10. While all of the above is happening, kick the a$$ of the Xamarin team, fold them into the core .NET team, Blazor team and UWP teams, and get UWP running cross platform as is without Xamarin silliness. Get Blazor running native as well so developers can pick their tool of choice.
    11. Do deal with Apple or whatever you have to do, play nasty if you need to, so Windows developers can build for iOS without having to own a Mac. Host it in the cloud with a simulator running there or whatever you need to do. No Apple devices required except for actual hardware testing.
    12. Release a headless home server with storage, router and wifi with plug and play mess repeaters. Make it just work with no configuration .Allow snap ons that have additional modules, more storages, z-wave controllers, etc. that just work when plugged in.
    13. Make the Xbox work in standby with full cortana that actually works and make it the very best head unit for media consumption all cached using the Home Server. Make it work as a mini-home server if one isn’t present on the network as well.
    14. Create an Xbox Media device that doesn’t play games, but has the very best of the best Media Experience all using the Home Server for caching content so it’s always available whenever you need it transparently. Make sure it works without it, but is better with it.
    15. Buy Plex and dump Movies and Audio apps throughout windows and plex becomes the whole thing including all of the live tv and DVR functionality all linked back to either cloud or your home server intelligently. Embed Netflix within it as well, movies, music, the whole deal.

    Developers will return if Windows and UWP/Blazor is the best story for unified platform development. With PWAs and Android apps running natively the app problem goes away in the short term, and in the long term developers will embrace Blazor and UWP for their speed and simplicity while working cross platform just as they have with Unity in the gaming space.

    By beating the incumbents with excellent internet with no wires and no in home technicians etc. Microsoft can drive adoption of it’s technologies while controlling a huge part of distribution like Google Intended with Fiber without having the infrastructure costs. The only player that will be able to compete with you will be SpaceX’s low earth orbit internet if it ever gets up and you’re way ahead of them with better terrestrial coverage already available.

    By controlling the distribution you also get to create an ecosystem that makes broadband over wireless viable by controlling when the vast majority of content is downloaded to control congestion and for sporting events etc. you can multi-cast over satellite. This provides a HUGE competitive advantage.

    By controlling Netflix you can drive the others to join your Plex ecosystem and create a unified whole that allows any content anywhere all from one seamless UI the way everyone wants.

    By doing all of this, Microsoft Phones become viable again, and the Windows Store for the few that use a full desktop/laptop anymore will also be viable, while the Xbox brand becomes the way people access content in the home.

    While this is mostly US centric, the same process can easily be expanded world-wide. And Legere will get it done, because he knows how to market and how to make COOL.

    But Nadella doesn’t have the savvy to do anything so bold in the consumer space, so what will happen is that Windows will atrophy until he kills all consumer use of Windows because it’s losing money flushing 500 billion dollars of value down the toilet and since Apple is also bailing on PC the few engineers/developers left will be forced onto Linux and MS will become a cloud provider with Office and even that will be under threat because Office will be no more unique or have any better a competitive advantage than Google Apps so that market share will be gone too within 5 years leaving just Azure which means Microsoft will be IBM. If you disagree, note that the Build site doesn’t have any mention of UWP, which is always the first sign that MS is about to dump a new technology. Ignore it, then let it die a slow death.

    If you read the tea leaves the writing is on the wall. There will be some doomed-to-fail half measures in-between now and then, but the ultimate trajectory is set unless Nadella can do something that he’s not good at and make a “bet the farm on the internet” move and save Microsoft from himself.

    Sadly I see no indication what-so-ever that he’s capable of that and indeed this reorg proves it.

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