What Now for Microsoft?
Microsoft has a new CEO. And while many experts and pundits are debating the appointment of Satya Nadella to lead this technology giant, one thing is clear, Microsoft continues to succeed as the dominant player in the business and enterprise marketplace.
Dozens of articles and commentaries have been critical of Microsoft's latest product offerings, and rightfully so. Clearly the company misread the market for tablet devices with the rollout of Windows 8, RT and the Surface. Targeting the student and education marketplace did not work. A lack of available apps is not helping the cause. However the company seems to be addressing that problem by going back to its roots and focusing on the business customer.
Others have chided the company for its rollout of Xbox One. A product that, according to reports, actually does not create profits for the firm.
Then there is the "death" of Windows XP. An operating system that is reportedly on some 20% of all PCs in existence. Surely an issue that needs to be addressed.
In spite of all this, Microsoft is an extremely strong company. The firm generated some $24.52 billion in the first quarter. Most companies would grab that in a heartbeat.
Where does that money come from? In 2014, that business is dominated by enterprise software and services. Commercial Licensing, makes up nearly half of Microsoft's revenue. It covers Windows Server products, Volume Licensing editions of Windows, and Office for business.
Commercial revenue also comes from the company's rapidly growing enterprise services, notably Windows Azure and the commercial editions of Office 365. Nearly 75% of its profits come from Windows and Office.
Having been through the Microsoft "wars" for over 22 years, Nadella has a clear vision of what lies ahead. He sent a company-wide email hinting that Microsoft is headed into a software powered world, evolving alongside new hardware. He said this will be made possible by an ever-growing network of connected devices, incredible computing capacity from the cloud, insights from big data and intelligence from machine.
Microsoft has a strong position in cloud and IT technology. Nadella made his mark and developed a strong reputation leading the company's cloud computing division. It makes sense for him to focus on this commercial market, where profits reign the greatest.
Despite the staggering amount of revenue, there are challenges ahead. Mobile is one of those areas where the growth of smartphones and tablets continues to be strong. Competitors such as Apple's iOS and Google's Android together dominate 95% of the mobile market. This is a real impediment for Microsoft to gain the kind of software and channel support they need to grow strong demand for their mobile offerings.
That being said, the company has the time, the resources, and the knowledge base to turn their mobile shortcomings around. Don't be surprised if Nadella is able to right this ship sooner than later.
Despite all the naysayers, Microsoft continues to be the dominate player in the business and enterprise marketplace. As Microsoft proved in the first quarter, there are 24.5 billion reasons not to shed any tears over this software giant.
Marc Arbesman is a founder and CIO of ThrottleNet, Inc. ThrottleNet offers an array of technology services and products to help business owners achieve their corporate goals, while reducing overhead. This is accomplished through outsourced Managed Network Services which helps companies improve their technology uptime and IT capabilities while, at the same time, reducing costs. The firm offers custom software development and mobile applications to help companies accelerate their business growth. For additional information contact ThrottleNet online at or call 866-826-5966