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 But that view is now outdated: Microsoft has long earned more revenues from its cloud/server and office productivity businesses.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 "intel...

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