Office 365 is a response to an 8 year old challenge. Microsoft has the luxury of extreme belatedness. Its enterprise customers are companies whose CTOs largely are Microsoft monoculutralists who do not dare look outside Microsoft offerings. And Microsoft offerings always are sufficient for them to keep their jobs and keep challenges at bay. That is, until employees and other corporate officers all start buying iPhones and iPads and want Apple compatible solutions. So now finally Office users (at least those who upgraded to 365) can collaborate on a single document from various devices and finally have access to version controls. It is mediocre, it is late, it is the opposite of innovation, but who cares? It works. And Microsoft’s enterprise dominance is secure as long as Microsoft can keep those risk averse CTOs on board.
Windows? At one time, Microsoft’s dominance depended on keeping developers on board; they developed the programs that run on DOS and windows computers and as long as Apple & Linux were minor, Windows was all that people wanted. Two developments changed this. One is Apple’s unix-based iPhone and iPad. Two is Google’s adoption of Linux for its own search enterprise and for Android. Today under the arrogant noses of Microsoft’s executives, the Windows division is reporting less than stellar results. Because Microsoft failed to keep developers attached to its platform. iOS and Android are compelling alternatives. Desktop computer gathers dust while consumers prefer a tablet to starting up their windows computer which whines about updates and our security failings.
And now investors wonder: if the current chief Microsoft executive so failed developers and failed consumers, then does he have what it takes to keep CTOs and enterprises on board? What if Microsoft fails in the enterprise space as well? This isn’t altogether an illusion, many companies would dearly love to absorb the vast fortunes that company CTOs have the discretion to spend. Amazon, Google, IBM, Oracle; they all will insist to the CTO that if only they move their operations away from Microsoft and into their brilliant cloud infrastructure, heavenly manna will be theirs. A risky proposition to the risk-averse CTOs it is, but staying with Microsoft while others achieve decent results with competitor offerings is risky, too.
So in that space, the venerable MSFT stock suddenly arrives in the grey space where activist shareholders think they know best. Perhaps they do What is MSFT after enterprise fails; A games company only? It ought to be a dread prospect and that’s why we ought to wish those activist shareholders good luck & godspeed. Mature the company and hire some talent at the very top, finally.