Microsoft’s Role in the Next Wave (Premium)

To many, Microsoft’s identity is still very much tied to Windows, the legacy platform that defined personal computing for three decades. But that view is now outdated: Microsoft has long earned more revenues from its cloud/server and office productivity businesses. And Windows doesn’t align with the “growth mindset” that CEO Satya Nadella demands.

Last week’s decapitation of the Windows organization was designed to put an end to that unhealthy reminder of the past. And it’s working, generally speaking: Wall Street cheers every time that Microsoft pushes its digital transformation, and nothing says transformation and Microsoft quite so well as the software giant exorcising its legacy past.

For Microsoft’s customer base, however, Windows remains a daily fact, and it will for many years to come. Consumers and business users deal with Windows every time they boot up their PCs. Developers use Windows more than any other platform to develop apps and services of all kinds, and many still target Microsoft platforms and technologies. IT continues to manage Windows systems alongside mobile devices of all kinds.

None of this “ends.” But it will all evolve. PCs last longer these days, because (like cars) they are better made than used to be the case, and also because we use them less often. This is bad for PC makers, and it will eventually be bad for Microsoft’s Windows licensing business. But it will help us make the transition from the past to the future.

And Microsoft has a rich future, I think. On both the server and the client. Because after all, digital transformation occurs in both places.

The server story is obvious: In Microsoft’s case, products like Windows Server and Office transform to Azure and Office 365, and are combined into all-in uber services like Microsoft 365.

The client story is, well, more complex, and that’s especially true for Microsoft. Where Google and Apple control dominant mobile platforms. Microsoft does not, and that robs them of an obvious “next wave.” That’s the hole in Microsoft’s digital transformation continuum. And it’s a big hole to leapfrog.

So Microsoft has been searching for the next wave after mobile, and the firm has publicly stated on several occasions that it has no intention of missing this one. But many have wondered, what is this next wave?

For once, I have the answer. As I’ve noted in the past, the next wave is very clearly what I call ambient computing. (Though I will sometimes refer to it as pervasive computing in my own form of poor communication.)

“Today, ambient computing is most clearly seen in home-based appliances like the Amazon Echo,” I wrote in May 2017. “But it will progress quickly, and to a Star Trek-like future in which we can walk around our homes, and eventually public spaces, and speak and otherwise indicate to unseen AI- and machine learning-backed sensors what it is that we need and want.”

In Microsoft parlance, ambient computing is the company’s “intelligent cloud and intelligent edge” initiative, which I just wrote about again in Windows, Diminished (Premium). As that tagline suggests, it encompasses both the server/cloud and client sides of this ambient computing wave.

Here, again, the server/cloud story is obvious enough: Microsoft commands vast cloud-based resources and infrastructure, and there are only a handful of companies—Google, Amazon, maybe IBM—that could ever compete at this scale and scope. This set of businesses represents most of Microsoft’s future in a nutshell.

But there is always that client story, too. And where the client was dominated by the PC, and it is currently dominated by mobile and the web, the future of personal computing, as I think of it, will also be defined by this ambient computing wave.

First-generation ambient computing technologies were/are, by definition, laughably underpowered. I’m talking about things like Apple Siri and Amazon’s first Echo devices. But like anything personal technology-related, evolution happens quickly. And we’re already seeing major improvements in both functionality and the seamless nature of our interactions with this technology.

The future will be truly seamless. Instead of installing smart appliances around our homes, these locations will instead be permeated with microphones and sensors so that we can utter commands, get information, do work, and be entertained. This will happen everywhere over time, to our cars, our workplaces, and to public spaces. It is inevitable.

(You can compare this change to homes getting plumbing or electricity. Or, more recently, wired networking.)

But what I’m concerned with here is the role that Microsoft will play in this future. Here, again, the server/cloud is well-defined. But what about the client?

As with any transition, this happens over time. Microsoft, specifically, added Cortana capabilities, first to the phone and then to PCs, because those were/are the relevant client platforms that they control(led). It built and extended its software platforms so that developers could target Cortana and then other AI/ML technologies in their apps and services.

And it created an Internet of Things (IoT) platform.

IoT is the future of the client. It is the platform that sits under the tiny embedded devices that will power those sensors. As is the case today with other client platforms, there are many IoT platforms, including those that are open source, and those that are made by Microsoft’s competitors, including Google (which makes something called, go figure, Android Things).

IoT is so clearly the next wave of personal computing that it is almost not worth arguing. But to put this in perspective, there is an almost exponential scale that occurs when you move to ever-bigger platforms over time. PCs are dwarfed in size by mobile, which is in turn dwarfed by the web, which is in turn dwarfed by IoT.

Think of it this way. Some number of people own a PC, but it is almost always that one PC. Likewise, a much bigger audience will own a smartphone, but here again, it will be one smartphone per person. But how many sensors will serve you someday, just in your own home? And how many services will these sensors interact with? It’s hard to even conceptualize this.

Think now of the audiences that are important to these tiny client-side devices. The services that will power them. The developers who will target them. And the users who will interact with them. Each is a huge and lucrative potential customer base for Microsoft.

When I think about the way forward, I think about it in the context of Microsoft’s customer base or, more specifically, the enthusiast base of which we are a part. But if the notion of invisible sensors all over the place doesn’t sound very compelling at first, you’re not thinking clearly. Today, smartphones are far more personal devices than PCs, and that’s a huge reason for their success. IoT, for all its goofiness, will be even more personal. It’s not something we carry with us. It’s something that will just always be with us.

Today, we huddle over our phones like hunchbacks, ignoring those around us, and we feel separation anxiety when we inadvertently leave the phone behind. But once this initial period of immaturity passes, and we can simply get things done and get answers more easily, we will be freed from the terror these tiny screens. We will be free to seamlessly direct what it is we want and get back to real human interactions.

This isn’t science fiction. It’s already happening.

If you haven’t already, be sure to read the Billboard article I cite in Amazon Claims “Tens of Millions” of Streaming Music Subscribers. In it, an Amazon executive explains how the intuitive and simple voice interface used by its Echo speakers is opening technology to new demographics like older and less sophisticated people. Ambient computing, unlike smartphones or PCs, is an equalizer.

That this is the future is clear. What Microsoft’s role will be, or, more specifically, how successful Microsoft can be going forward, is less clear.

But I’m bullish on its chances. Microsoft is full of smart people in the right place. It is uniquely positioned for this transformation. And it has a user base, and a developer base, and an IT infrastructure it can help make the transition.

Letting go of the notion that Windows is the center of all things Microsoft is hard for some, including me. But Windows isn’t going away. And the future, as I see it, is bright.