HoloLens Can Thrive Because it Passes the “AACO” Test (Premium)

Don’t understand how Microsoft can make a thriving business out of a niche product like HoloLens? You’re not asking the right questions.

While I’m still not necessarily comfortable with the new Microsoft, this strange new company led by Satya Nadella, I can at least logically explain what it takes for any product or service the company makes to survive and even thrive in this organization. Indeed, it’s a fairly simple formula. It needs to pass what I call the AACO test.

Which, yes, stands for Accessibility, AI, Cloud, and Open.

With that in mind, consider HoloLens, a product that the old Microsoft would never have released as quickly and in such incomplete form as did Nadella’s Microsoft, if at all. But with four years of experience behind us, and a correspondingly better understanding of the thinking that drives the new Microsoft, HoloLens suddenly makes a lot of sense. Indeed, it has emerged as one of the key new products that the firm has released under Mr. Nadella. Is, in many ways, a key example of his leadership.

That might be confusing to some. Many people point to Microsoft’s release of Office on iPad as the first major signal that things would be different under Nadella. But that is incorrect: Office for iPad was well underway under Steve Ballmer, Microsoft’s previous CEO, and it is just a coincidence of timing that Nadella was the person who introduced the product.

But Nadella latched onto HoloLens very early as CEO, seeing it as the embodiment of the drive and innovation of which Microsoft was capable. This is important on a number of levels, not the least being that Microsoft is only infrequently regarded as an innovator of any kind. But Nadella saw the potential of HoloLens, a product that is both unique and uniquely Microsoft.

Of course, in 2014-2015, we didn’t necessarily know what “uniquely Microsoft” even meant in the context of Satya Nadella. Today, that is far clearer. Microsoft is a company that has turned its back on the Windows-centric “embrace and extend” strategies of the past and is now far more open, transparent, diverse, and inclusive. I joke about this, but Microsoft really has replaced “embrace and extend” with “embrace.”

Despite my personal discomfort at some of the changes he’s instituted, the one thing I really do like about Nadella’s Microsoft is its decisiveness. It requires businesses to internally justify their existence. And it has shown little remorse for those that cannot.

For example, Nadella and his Senior Leadership Team (SLT) quickly killed off Surface mini, despite the fact that it had already begun manufacturing, a bold step that many new CEOs would never have made. And he killed off Windows Phone, a product that the old Microsoft would have kept floundering uncertainly in the market for many more years, a decisive and expensive move that better positioned it for the future. Both of these products were failures, and Nadella moved quickly to put them in the rearview mirror.

And yet he also immediately embraced HoloLens, a product that was arguably years away from a successful commercial launch when he first saw it, and he pushed to have it released far more quickly. Here, again, the old Microsoft would have behaved quite differently, and it’s possible—if not likely—that HoloLens never would have seen the light of day beyond a few concept videos discussing technologies of the future.

How Nadella decides whether to create or destroy rests largely, I think, in any given product’s ability to past the AACO test. And if you rewatch yesterday’s HoloLens 2 announcement with this test in mind, you’ll see that accessibility, AI, cloud, and openness are all central to how Microsoft is positioning this product. Are, in fact, exactly how Microsoft is positioning it. HoloLens 2 is, in many ways, the perfect Microsoft product.

You can almost imagine the exact thinking that went into OK’ing this product. Will this make technology more accessible and inclusive? Is this a good example of Microsoft’s AI prowess and its ability to deliver it responsibly? Does HoloLens offer unique value as an intelligent edge to Microsoft’s growing family of Azure-powered cloud services? And can we open up HoloLens so that others can meld it to their own unique needs, and make it their own?

Yes. Yes. Yes. And yes.

HoloLens will never be the firm’s next billion-dollar business. But it doesn’t need to be. Instead, HoloLens is a foundational pillar that supports multiple billion-dollar businesses within Microsoft. And like its hybrid cloud offerings, HoloLens is a uniquely Microsoft offering that forms a part of a cohesive whole that really differentiates the software giant. It’s a puzzle piece that can justify its existence at every turn.

It helps that HoloLens is aspirational, too. Whether you find its familial similarities to Windows Mixed Reality to be tenuous or not, there’s always been this sense that HoloLens is the future, but available today. By releasing it in stages, essentially, it is publicly testing out the theory that HoloLens will eventually make sense for ever-broader audiences that, yes, will one day include consumers as well. Comparing HoloLens 2 compared to the original, you can see a major progression. The future just keeps getting closer.

We’re nerds, so we’ll obsess over details like its field of view. I certainly will. But looked at more broadly, HoloLens has found a home within Microsoft specifically because it passes the AACO test, and it does so both comfortably and effortlessly. It is an overt display of innovation, and of Microsoft’s ability to realize future technology and make it viable in the present. And it is nothing less than a proof point for Satay Nadella’s ideals, and how they can make sense at the corporate level.