Microsoft Doesn’t Need Windows Anymore?

InfoWorld’s Eric Knorr penned an opinion piece this week in which he claims that Microsoft doesn’t need Windows anymore. This seems controversial, and is sure to draw a lot of ire from the fan boys. But he’s on to something, and while I think it’s a bit premature to write off Windows, it’s fair to say that Windows is no longer at the center of Microsoft’s existence.

And if your knee-jerk reaction is to come down hard on Mr. Knorr, or me for not completely disagreeing with him, please put down the keyboard for a moment. There’s a sane discussion to be had here. Seriously.

First of all, Knorr is not critical of Microsoft at all. In fact, he expresses great respect for Microsoft’s “stamina.” “As a Microsoft marketing exec once asked me, right before Windows Vista shipped: ‘Do you have any idea what it looks like to test the compatibility of 600 printers in one big room?’ This is not the sort of work that advances anything. It’s whack-a-mole on a planetary scale.”

And his comments about this incident are correct: That kind of attention to detail made sense when Windows was the be-all/end-all of personal computing, but make far less sense today, when Windows PCs are a small and shrinking part of the personal computing experience.

Consider this week’s Gartner forecast: Of a total devices market of 2.3 billion units sold in 2016, only 265 million, or just 11.4 percent, will be PCs. And while there will be slight adjustments upwards as enterprises finally start replacing aging PCs, the overall trend is clear: The market for PCs is shrinking.

That said, here is where I will break a bit from Mr. Knorr’s assessment, because the PC’s decline happens quite slowly, even though the past 4-5 years have been brutal. That is, after a sharp drop in PC sales in recent years, PCs are expected to keep dropping as we go forward, but more slowly.

As important, there are areas of growth, too. PC makers like HP and Lenovo, and, yes, Microsoft, are focusing on the premium segments that Apple has ridden to great success over the past decade and a half. So while the market for PCs will keep getting smaller, it’s not necessarily a horrible business in some ways. Assuming, that is, that these firms can attract customers to their higher-priced offerings.

What Mr. Knorr gets very right is his assertion that “nobody writes new applications for Windows anymore.”

That’s a fact. And this is a topic for which I have much insider information: When Windows 8 flamed out badly, I was told by sources at Microsoft that the software giant had had to take the drastic approach of “mobilifying” Windows 8 for this very reason: No major new Win32 applications had been created in several years. Worse, of the top 10 applications that Windows 8 customers were actually using, the top two—Chrome and iTunes—were literally designed to steal customers from Microsoft. And the other 8 were all utilities to make Windows 8 work more like Windows 7. That’s not a healthy ecosystem, and the Universal Windows Platform (UWP) hasn’t solved this problem for Windows 10.

Knorr writes that, “at last count,” Windows only accounted for 10 percent of Microsoft’s revenues. Since there’s no way to actually know the revenues that Windows now generates thanks to changes in the firm’s accounting, I was curious where that figure came from. So I looked at Microsoft’s most recent annual report, from mid-summer.

The word “Windows” appears in this report 148 times, so it’s pretty clear that Microsoft isn’t yet ready to walk away from its one-time cash cow. But looking at the actual numbers, anyone can discover that Microsoft earned $85.3 billion in revenues during the 12 month period that ended on June 30, 2016. $40 billion of that—or 47 percent—was generated by the “More Personal Computing” business, which includes Windows. And Windows phone, Surface, Xbox, and other hardware and services.

The last time Microsoft posted results for a “Windows division,” at the end of FY13, it generated $19.2 billion of Microsoft’s $78 billion in revenues. That’s about 20 percent. And while we can assume that Windows revenues have only gone down since then, given the drop-off in PC sales, I’m not sure where the 10 percent figure comes from. Let’s just agree that it’s definitely less than 20 percent.

Mr. Knorr brings up the mobile threat, especially from Android, and from a presumed Android and Chrome OS platform merger that will result in Andromeda. This is a clear and present danger to Microsoft, as are Chromebooks, Macs, Android and iPad Pro today. I’ve been meaning to write a “compete report” (yes, “compete,” not “complete”) about Windows’ platform competitors and will likely still do so soon. But if you’ve been following along with reality, you know that the following two statements are true and back up Knorr’s assertions:

• People have moved en-masse to simpler, more mobile devices like smartphones and tablets, and many get real work done on them.
• The number of people who still need PCs to get real work down is smaller than before this shift, and many of these people only use PCs in an ancillary role or in certain situations. (To write the occasional longer paper, perhaps, or to print.)

With that in mind, I recently compared the PC to a lawnmower: When you need one, only that tool will do. But most of us don’t need one every single day.

He concludes like so.

“It will take a long time for Windows’ 90-something percent market share to shrink drastically, but the trouble of maintaining Windows is more than it’s worth. Microsoft is in the cloud and app business. It doesn’t need Windows anymore.”

The first half of this is inarguably correct. Thanks to basic inertia and the slow-moving enterprises that are Microsoft’s core customer base, the move away from Windows will indeed take a long time. But then I made that case right up front.

The second bit—that “the trouble of maintaining Windows is more than it’s worth”—is somewhat subjective, or at least assumptive, but I think it’s incorrect. For now. Microsoft will do the same calculations here that car makers make when they compare the cost of adding safety technologies to their vehicles vs. the cost of the lawsuits that will arrive because they did not. And at some point, they may very well arrive at a decision that many readers here will find undesirable.

That day is not today. Yes, it is inevitable. But it is not happening anytime soon.

To be clear, I am with many of you in the sense Windows—on PCs and PC-like devices—is the center of my personal computing experience. But I’m a writer, and I need powerful tools to get real work done. Most people do not. And while we can argue for this thing based only on our own needs or wants, we need to be realistic about where the world is heading. And Windows—sorry—is not the future. It’s the past. And, for many, the present. For me, certainly.

The assertion that “Microsoft is in the cloud and app business” is obviously correct. But I’d say that’s still more future than present, as well. In fact, I did say it: Last year, in Microsoft Owns Productivity And That Should Be Enough, I argued that Microsoft’s future was purely in the cloud. Everything else will become incidental over time.

Point being, yes, Windows will eventually fade. Everything does. But let’s not nail that coffin shut just yet. Windows still has plenty of life left in it, and still has much to give to those people I call “the doers.” You know, the people who get real work done today, and not in some fantasy future that may or may not pan out the way we now imagine.

Look, everything doesn’t have to be a three-alarm fire. A platform as big and pervasive as Windows won’t disappear quickly, regardless of where the industry takes us. And let’s not kill the messenger just because we don’t like the message: I may quibble over a few small points here, but Mr. Knorr has a pretty clear grasp of where things are heading. We need to learn to embrace, or at least accept, reality.