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At this week’s NZ Tech Podcast host Paul Spain threw me a hospital pass: Is it time to stop hating Microsoft?

Younger readers may not remember, but at one time Microsoft was unpopular in many circles. Yes, there were even people who hated the company.

There were reasons for this. Pedants might argue Microsoft Windows was not a monopoly. Yet its 95 percent plus share of desktop operating systems sure felt like one.

Abusive monopoly

In effect Microsoft called all the shots. At times it abused its monopoly. It wasn’t always ethical1.

There are too many examples to mention. People have written books and doctrinal theses on the subject.

Microsoft attempted to parlay its desktop OS monopoly into other areas.

At one point it set out to win the desktop applications software market. Microsoft Word and Excel were up and coming challengers at the time.

The Lotus position

There are reports an internal message went to developers: “Dos ain’t done until Lotus won’t run”. In other words, bosses told them to build the operating system so a rival spreadsheet was useless.

That story may be a myth. Yet it explains why there was so much ill-will towards Microsoft. The accusations didn’t have to be true. They only had to feel true.

There are actual examples of bad behaviour. Some ended up in court.

The Internet Explorer antitrust action was a low point.

In those days critics suspected Microsoft’s motives even when it did good things.

In 1997 Apple was struggling and needed cash in a hurry. Microsoft came to the rescue. It agreed it would support a Mac version of Office for five years. It is still going today. Apple agreed to drop a law suit over Microsoft copying Apple’s OS look and feel.

Microsoft personalities

Microsoft’s key personalities did not help. Bill Gates’ rubbed people up the wrong way. Steve Ballmer took that to new levels.

Ballmer left Microsoft in 2014. While he was boss the company’s share price stagnated. So did its technology. And the company’s hardball attitude. Often Ballmer would sink innovative projects to protect the Windows and Office monopoly.

Some of that was baffling. Like the excellent iOS versions of Office apps which was held back from the market.

Nadella takes over

Early in 2014 Satya Nadella took over the reins. He moved the company into cloud computing. More to the point, Nadella stopped the aggressive defence posturing.

Today’s Microsoft is a different beast. It is still big, some of the time it is the world’s largest company by market capitalisation. It can still upset people. Every large corporation has its critics.

No doubt there will be those who continue to hate Microsoft. You don’t get to be number one without creating a few waves. Yet there is less to hate, less to object to.

Even, gasp, Microsoft Open Source

Today Microsoft has embraced open source. It is possibly the world’s largest provider of open source products. By some measures the company’s Azure cloud services uses more open source than proprietary software.

Windows is no longer a monopoly. It still runs on more computers than any other OS. But it now has to compete with ChromeOS, MacOS, iOS and Android. It doesn’t dominate.

Likewise while Office remains popular, it is not the only game in town.

You don’t have to love Microsoft. Actually that would be weird. There are still plenty of things to criticise. But if you carry a grudge from 20 years or so ago against a company that is now different in many ways, that seems like a waste of energy. Go and do something creative with it instead.


  1. What’s the point of building a monopoly if you don’t abuse it? ↩︎

wellington cloud
wellington cloud

Four years ago Microsoft lost its mojo. The software giant had failed to compete in web search.

People questioned whether Microsoft was on an IBM-style path to irrelevance. When the phone business flopped, it looked like Microsoft’s time in the sun was over.

Today it is back. The 2017 Microsoft is a different beast, the main reason for its revival is a successful transition to selling cloud computing services. Microsoft’s birth isn’t yet on the same scale as Apple which came back with the iPhone, but that can still happen.

This week Microsoft reported quarterly profits that are more than twice the level of a year earlier.

It’s not all good news. Some of the jump was down to the company realising a tax benefit after writing off its failed mobile phone business.

Fast growing cloud transition

Yet that’s the past The important part of the quarterly announcement is that Microsoft’s cloud business is growing at a clip. That was enough to send the share price up three percent.

This wasn’t the first quarter where Microsoft’s cloud business was the star of the show. It’s been climbing for years now. In the latest quarter Intelligent Cloud revenue was up 11 percent to US$7.4 billion. Revenue for the company’s Azure cloud services was up almost 100 percent.

While Azure still trails behind Amazon Web Services, there is clear blue sky between Microsoft and the next set of cloud service providers. Being second in the most important market of the day is a huge win for Microsoft.

Azure profits

At the same time, cloud economics means it is close to a winner takes all game. Amazon and Azure share almost all the cloud profits.

The other cloudy good news from Microsoft is that revenue from the cloud version of Office 365 went past traditional software sales for the first time. There are now 90 million Office 365 users on iOS and Android. That is a big thumbs up for CEO Satya Nadella’s decision to support non-Microsoft operating systems.

Although Microsoft is doing a better job of transforming than rivals like IBM, Oracle or Google, it isn’t in the clear yet. Sales of Surface devices fell two percent during the quarter. Meanwhile enterprise service revenues fell. Yet it appears to be keeping pace with AWS, that’s something no-one else can manage.

Office 365 businessMicrosoft partners have warned enterprise cloud service customers to expect a 22 percent price increase from April 1.

In a message to its customers one Microsoft partner says the increase applies to Office 365, Azure, CRM-Online, Enterprise Mobility Suite, Intune and other enterprise online services.

The customer message reports Microsoft saying

… this is an adjustment to more closely align prices to the NZ market and reflects the rapid evolution of cloud services and the dynamic nature of the market.

In Microsoft’s defence, the partner points out it is years since Microsoft prices have risen and that there is now more value in the products.

It goes on to say that a 22 percent price increase does not alter the financial sense of a subscription.

real price increase

While these points are both true, the price rise is still a long way ahead of New Zealand inflation. At the time of writing inflation is close to zero.

It is also out of line with the recent fall in the value of the New Zealand dollar.

Companies can renew before the end of the month and pay the existing rate.

Frazer Scott, director of marketing and operations, Microsoft New Zealand says:

Microsoft is committed to delivering state-of-the-art security and compliance enhanced cloud computing solutions. As part of our on-going business process and in light of the rapid evolution of the local market dynamics, Microsoft will adjust prices for company’s enterprise cloud products in New Zealand.

Microsoft’s price increase underlines the risk companies take when adopting cloud services. Although there’s no absolute lock-in, moving a company that depends on, say, Outlook.com for its email to an alternative service, is far from trivial.

Many businesses will feel they have little option but to swallow this price rise. Yet Microsoft is taking a risk here. If customers fear that subscription software prices will ratchet up in coming years, they’ll look elsewhere. A 22 percent increase tests the limits of what customers are happy to accept.

Intellipath

A partnership with Australian national network provider Nextgen means Intellipath has expanded its reach creating what may be the region’s largest bandwidth-on-demand service.

Intellipath previously only offered its services in New Zealand, the west coast of the USA, Sydney and Melbourne. The deal with Nextgen means it now covers the rest of Australia including Perth, Brisbane, Canberra and Adelaide.

It now reaches 45 Australian data centres and a total of 63 worldwide. The network has connections to the main Australian data centres including Metronode, Equinix and NextDC. It reaches all the main cloud services including AWS and Azure.

IntelliPath is a subsidiary of Vibe Communications. In effect, it offers a wide-area-network as a service.

This works in much the same way as companies already buy cloud computing services on demand. IntelliPath allows them to create a contract-free communications link in a matter of seconds.

In practice it means an organisation can respond immediately to a business need or an emerging opportunity, only paying for the communications services they consume at the time.

Forget Surface, Lumia and Windows. Today’s Microsoft is all about cloud and subscriptions.

Surface Pro tablets did well. Microsoft has strong orders for the Surface Book. Yet the big story is elsewhere. Investors are more interested in the Microsoft cloud progress: Azure grew 140 percent last year.

Office 365 subscriptions continue to surge. The interesting thing here is that Office 365 has broken out of the Windows market. The Android and iOS apps are a huge success and they, in turn, generate subscription revenue.

Service the main game

Microsoft’s quarterly financial result highlights success with services sitting on top of Azure and Windows.

Reaction to the result was upbeat given stalling phone sales and traditional PC sales in a tail spin. Microsoft now only accounts for one percent of the global phone market. PC sales are down ten percent on last year.

Microsoft has shown a remarkable ability to reinvent its business to cope with change. Looking back Satya Nadella’s appointment and his focus on a Microsoft cloud looks like a masterstroke. The only fly in the oinment is falling margins. That’s going to mean cultural changes throughout the business.