Microsoft’s cloud first, mobile first challenge

Microsoft shows an ability to reinvent itself. On his first day in the job, incoming CEO Satya Nadella told employees:

“Our job is to ensure that Microsoft thrives in a mobile and cloud-first world.”

Microsoft has repeated those words, rearranged as cloud first, mobile first many times since. It  used them as a slogan when launching the iPad version of Office.

While the phrase sounds good, it leaves questions. Not least: what does Microsoft mean and how can two things be first?

Cloud computing and mobile computing are not distinct categories but two aspects of the same idea:

• Cloud is about abstracting data, intelligence and services from place and device.
• Mobile is the means of accessing data, intelligence and services. To a degree that means devices. Mobile can include phones, tablets, laptops and anything falling into the gaps between.

Modern work now revolves around mobile and cloud computing. Nadella’s statement acknowledges that. When Microsoft says cloud first, mobile first, it is telling us it has repositioned its business in light of the new reality.

In other words Microsoft understands the challenge. So do Microsoft’s rivals: Apple, Google and Amazon.

Apple dominates mobile. The iPhone and iPad redefined mobility while the MacBook Air set the laptop standard. Outside Apple’s world it looks as if it under-performs in cloud computing. That’s not how Apple customers view iCloud.

Google’s mobile play is Android. Most smartphone users and many tablet users get mobility through Google’s operating system. Google’s cloud-based apps are their productivity tools.

Amazon‘s mobile device move floundered, it towers over all-comers in enterprise cloud services.

Microsoft is strong in cloud services. Compared to Amazon it is still small in enterprise cloud, but it is expanding fast and has a solid lead in consumer cloud. Office 365 plus Azure is a powerful combination.

Apple and Google compete head on with Microsoft’s Office, OneDrive and Skype. They give services away for free while Microsoft is still in the business of selling software licences. That’s tough when competitors own the cloud and mobile parts of their technology stacks.

All this explains why in a cloud first, mobile first world Microsoft has no choice but to move into devices. Long term it needs to move from selling software licences to selling cloud and mobile focused technology.

Update 2024: Looking back, Microsoft's "cloud first, mobile first" transformation proved remarkably successful.

Azure became the world's second-largest cloud platform behind AWS, Office 365 subscriber numbers exceeded 400 million and Microsoft's market capitalisation grew from around $300 billion in 2014 to over $3 trillion.

The company did move into devices with the Surface line, though it eventually exited the mobile phone business entirely, instead focusing on delivering Microsoft services across iOS and Android. The shift from selling software licenses to cloud subscriptions became the company's dominant business model.