Windows 10Since taking over as Microsoft CEO, Satya Nadella has remade the company. What was a PC giant is now a cloud and enterprise computing giant. And that has implications for Windows.

Microsoft’s latest financials underline the change. In the three months to December 2017 the company’s revenue was almost US$29 billion. Of that, what Microsoft calls Productivity and Business Processes was almost US$9 billion. Intelligent cloud made up almost US$8 billion.

The remainder, a little over US$12 billion, fell under the label of More personal computing. This unit includes Surface hardware, advertising and everything Xbox.

Given the gaming business brought in around US$4 billion, that means in round numbers, Windows accounts for only a quarter of today’s Microsoft.

That proportion is falling fast.

Windows stagnant as cloud, enterprise booms

Microsoft’s More personal computing business grew around one percent between the end of 2016 and the end of 2017. Intelligent cloud was up almost 15 percent. Productivity and Business Processes climbed 25 percent.

Draw a straight-line projection and Windows will be under 20 percent of Microsoft’s revenue by the end of this year. Within two to three years it will be less than 10 percent.

Microsoft’s accounting is hard to break down, but looks as if the operating system business is fading into the background.

Some parts of Windows have done more than fade. During the year Microsoft dropped Windows Phone. Then company admitted it failed to keep pace with iOS and Android.

You can’t dismiss the phone OS as a meaningless sideshow. Former CEO Steve Balmer spent close to US$10 billion on it. This figure includes the US$7.6 billion write-down of the Nokia acquisition.

Poor performance

It would be fair to say Microsoft’s Windows strategy hasn’t been right since Windows 7. Some less kind souls say it hasn’t been right since XP. That’s extreme, yet Windows 8 was clearly a flop.

Windows 10 stopped the immediate rot, but did nothing to recover Microsoft’s reputation with uncommitted users. It’s no accident that PC sales have stayed in free fall since 10 appeared. Nor is it an accident that Apple sales have climbed in that time. Likewise Chromebook sales rocketed.

Those users who can are bailing out.

Something else is going on. Writing at ZDNet Ed Bott says: “Microsoft’s steady retreat from consumer products is nearly complete.” Bott’s story looks at how Microsoft has shifted its focus from the consumer towards business.

What’s next to go?

Bott doesn’t say so, but you could read between the lines when looking at the financial numbers and conclude that Windows could be next. He writes about Microsoft: “…shifting resources to business units that are thriving: enterprise software and cloud services”.

Go back to the financials mentioned earlier: those thriving business units do not include Windows.

People who are heavily invested in Microsoft and its OS may argue otherwise, but if you use another operating system and make occasional visit back, there’s a feeling things are running down. Not a lot, but there is a sense Windows is past its prime.

There’s also a sense Microsoft no longer has a clear vision for its operating system. Or maybe any vision.

A year ago Microsoft introduced Windows 10 S. The company said it was a new edition. On paper it sounded good. 10 S boots faster, is more secure, offers better battery life and is more robust in the sense that its harder to corrupt files.

These positives are down to the fact that Windows 10 S is a cut-down, limited version of Windows 10.

10 S was a mess

Windows 10 S turned out to be a mess. Nobody outside Microsoft seemed to like it. Reviewers panned it. Consumers hated it. It is another shot-in-the-foot disaster on the scale of Windows 8.

At the time of the launch the idea was that users could pay US$50 to switch to Windows 10 Pro. Microsoft would pack 10 S with a new computer. Customers buying a new PC would then be hit up for an extra charge later to unlock all the features of the computer they purchased. Almost everyone would want to upgrade. At Redmond it looked like free money.

Let’s hope no-one at Microsoft wonders why Chromebook and MacBooks are selling so well.

Last week Microsoft backtracks on that madness. It said users can now upgrade to Windows 10 at no extra charge.

The10 S debacle tells us Microsoft no longer employs its best thinkers on its operating system software. It suggests Microsoft doesn’t really care about the product any longer. After all, it doesn’t make much money.

Microsoft has a huge cash cow. The software is still installed on most of the world’s traditional computers — although not the pocket computers people now use most often. There are ways it can and will continue to squeeze money out of its huge installed base.

Ring out the old, ring in the new

And yet you can’t help getting the impression Microsoft’s top brass are no longer interested. That’s the old world; a declining empire. Meanwhile there are exciting new opportunities to chase in the cloud and enterprise spaces.

One possible way out would be for Microsoft to hive off Windows into a seperate business and sell or otherwise demerge the operation. This worked for IBM’s PC business, although not for IBM. A similar approach also worked up to a point for HP.

More likely Microsoft will continue to manage down its Windows operation. Sooner or later even the most die-hard fans will realise they are neglected. Apple and Chromebooks loom. There’s an opportunity for Android or for a revival of desktop Linux.

We’ll soon be in a post-Windows world. It’s just that two-third of computer users don’t realise that yet.

Apple iPad Pro 2015
Apple iPad Pro

CEO Satya Nadella has turned Microsoft around. It is relevant again. Things didn’t look that way when he took over the company. His switch of focus to the cloud was timely and has been a huge success. Much of what he says and does is sensible.

Much, but not everything.

In November, Nadella made a playful, off-the-cuff remark about an Apple iPad not being a proper computer. The comment should not be taken too seriously. But as Sahil Mohan Gupta notes at Tech Radar, Nadella’s words speaks volume about where Microsoft is heading and how it views computing.

Real computers

No doubt Nadella thinks all computers made by Microsoft are real computers. Even if some of those computers share a lot with the iPad Pro. Microsoft’s Surface models have many good points. They also have well documented flaws and angry customers. Making too much of a comparison with iPads could backfire on Microsoft.

Nadella’s comments got me thinking about the iPad, especially the large 12.9-inch iPad Pro. I use one now as my main mobile computer.

As far as I’m concerned it is a proper computer. It seems the best computer for a technology writer on the move, although others may not agree with me. Apart from anything else I find writing long documents on the iPad Pro is at least as easy as working on a Mac. There’s something about iOS 11 that helps me focus more on the job in front of me.

iPad Pro ready for serious work

A year ago the iPad Pro was not ready for serious use. The software didn’t handle files outside of application silos. Moving text from, say, a word processor to a text processor or a web-based app was simple enough. But opening a document in a different app was often tricky.

Dealing with attachments that arrived through mail was just as hard. There were basic things the iPad could not do. My router needed a firmware update. The new software arrived as a zip file, needs unpacking and uploading. The old version of iOS couldn’t handle that. The new iOS 11 makes it all possible.

While there are still times I need to reach for the MacBook, those ‘need’ times are fewer and fewer. It’s already a real computer.

There is a Windows computer that is mainly used for games, for running digital audio workshop software and for testing Windows apps. Increasingly Windows looks old-fashioned and iOS looks like the future.

This isn’t everyone’s view, many people reading this will scoff at the idea.

Yet despite Nadella’s comments, Microsoft takes the iPad seriously enough to make sure its key productivity apps and OneDrive all work on the iOS hardware and stay bang-up-to-date. I’d argue that Word is better on the iPad Pro than on a Mac and possibly even better than on Windows. What could be more serious than that?

Also on:

Microsoft Surface BookConsumer Reports has pulled its recommendations for Microsoft’s Surface products, citing an industry-worst failure rate.

Source: Consumer Reports: Microsoft Surface is Dead Last for Reliability –

Reliability is one of the hardest things to cover off when reviewing hardware.

It’s no accident that Apple, which sits at the top of the reliability league table lends hardware to journalists for extended review periods. That makes for better reviews on two counts.

First, you can dive a lot deeper into the product and use it more like a buyer would. I often wait  until a month or more before writing about Apple kit. I write about my experiences using the product in real, everyday work.

There’s no need to run through artificial tests which is what happens when you only have something for a few days. A longer test means a better understanding of quirks and nuances, and what they mean in practice.

Testing for reliability

Second, you get a better feel for reliability. If you use a computer for a couple of months without a glitch, there’s a good chance it will last for 12 months or longer without a problem.

A third benefit of extended review periods, is that a reviewer can find something they are so comfortable with, that they are happy to spend their own money on. It’s because I spent quality time with Apple hardware I chose to buy that brand later.

Something similar happened when I borrowed the HP Spectre. I loved it so much that I’m writing this post on mine.

I didn’t see anything wrong with the review Surface Book. But I only had it for a little over a week. I did notice a minor hiccup with the Surface Pro 3, but didn’t write about it at the time because it happened once and just may have been user error. A longer review might have shown me it was a device problem.


Monday Note’s Jean-Louis Gassée writes about the death of Windows Phone:

How could Microsoft’s Windows Phone licensing business model stand a chance against Google’s Free and Open Android? None of the Redmond giant’s complicated countermeasures worked, its smartphone platform is dead. And yet, inexplicably, Microsoft failed to use a very simple move…

Source: Fiction: Who Killed Windows Phone? – Monday Note

For a long time Windows Phone was a better phone operating system than Android. By better, I mean it was easier to use, understand and navigate than Google’s phone operating system.

It was also better because it provided essential information in a straightforward way. You could glance at your phone and see the important things straight away.

A better phone OS

Windows Phone was better because it integrated well with Windows on desktop and laptop computers. It was also better in that it played nicely with Microsoft Office. If you were wedded to Windows and Office, you could get huge productivity gains choosing a Windows handset over an Android.

Today’s Android phones have improved on all these things. Yet at the time Windows Phone was first introduced, it was streets ahead.

I know this better than anyone. I used Windows Phone everyday for the best part of two years. For me, at the start of that time, the advantages outweighed the negatives. Before the two years were up, the balance tipped the other way.

From a user point of view, Windows Phone lost its charm because third-party software developers ignored it. At best they neglected it. If any third-party developer did create an app, they failed to upgrade it as fast as their Android or iOS versions. But many apps, including important ones, never made it to Windows Phone in the first place.

Never mind that many of those apps were worthless one-trick ponies. There was a lack of choice, there was a feeling Windows Phone was becoming a forgotten backwater.

In his post, Gassée takes his time getting to the nub of how Windows Phone became a backwater. He writes:

Microsoft made a number of bad decisions that stem from its hardened culture…

For a long time, Microsoft’s orthodoxy placed the PC at the center of the world. When smartphones took center stage, the company’s propaganda censured talk of a Post-PC world. Smartphones and tablets were mere “companion devices”.

The simple move mentioned at the top of this story was making the operating system free to phone makers. That’s what Google did with Android.


Gassée argues that Microsoft’s culture meant it didn’t think to make its phone operating system free until it was far too late. That’s true. By missing that boat, Microsoft’s phone OS never gathered enough momentum to attract third-party app developers. Meanwhile the Android and iOS app stores were filling with every imaginable phone application.

Which is odd, because know how to attract developers was a Microsoft strength with MS-Dos and Windows as it was building an empire.

From there it all went downhill fast.

Could Windows Phone return from the dead? Probably not. Apart from anything else, Microsoft has moved its focus to more lucrative markets like cloud computing.

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.