I am in Seattle today. I happened to finish reading the final chapters of Hit Refresh on my way to Seattle. What a coincidence. Because of the timing and the hangover, I happened to perceive and associate anything and everything I saw in Seattle — starting with the airport — with Satya Nadella. After all, 28 years is a long time — I have never been in 1 city for this long — since I was born.
After reading this book, I reckon the reader will have a certain sense of clarity about what Microsoft is doing and where Microsoft is going. The story of failed acquisitions and other failed endeavors have been elaborated in great detail. So when I read that Microsoft is giving up its mobile business, it was not only not surprising, but very clear in many ways. Asks Nadella in his book (several times), “Why do we exist?”. “What unresolved problem are we solving?” “What is the soul of Microsoft?” — I guess any product that doesn’t fit their existential questions will be knocked off — especially if they are not profitable and leading.
Following are reasons why Microsoft giving up mobile business is not the same as RIM giving up Blackberry business.
- MS did not wait until its late — Microsoft came to this conclusion is an extremely short period of time. In fact, long before this happened, they wrote off an entire acquisition that just didn’t make sense. Blackberry, on the other hand, is still in denial.
- MS doesn’t want to compete with everyone and everything — In the book, he openly accepts defeat to and openly admires competition — but does so only based on specific products (ex, Apple’s IOS or Amazon’s Public Cloud business)
- MS is already working with everyone and everything — Including Cortana, Office 365 and some of the other experimental applications, most of his innovations are available whether you are an Apple user or Android user.
- MS is on to something bigger — Capturing a market share where they stand at 0.03% is not their #1 priority. In fact, they are single-mindedly focused on AI/ ML and Quantum Computing, the latter of which has yet to see major competition, save Google.
In fact, the decision to shutdown mobile hardware business will totally make sense to anyone who has read this book, assuming you had to read this book to know his vision.
But let’s face it — Cortana is not only a voice-assistant, but the delivery-device for Microsoft’s AI. Same can be said for Siri/ Apple and OK/ Google. In this context, one aspect is unsettling. While OK is available on Apple, OK will never be as accessible on Apple as Siri is. Similarly, Cortana will always be a second-class citizen to OK or Siri on the respective mobile platforms. With mobile usage picking up and exceeding PC/ laptop usage in terms of apps usage or even plain browsing use, I feel like Microsoft is leaving money on the table. I wonder what MS’s (read: Nadella’s) thinking around that is. Giving up the (mobile) platform means two things — there won’t be a single platform on which Cortana is front and center. Secondly, all the ad revenues from mobile as well as running their own mobile appstore will be gone. Instead, they will be reduced to the position of a developer — for Apple and for Google.
In short, we can expect Microsoft to be on a focused and profitable growth curve based on openness and collaboration, contrasted with Amazon’s rather diverse and risky ventures but all working “customer and backwards”. Meanwhile, Apple is all-too focused on iPhone based balance-sheets and a rather closed ecosystem. Google? Google and Microsoft seem to be investing most in futuristic technologies — however, the near-term impact has not been felt.
Microsoft really has hit Refresh.