2016 Year in Review: Microsoft

Posted on December 21, 2016 by Paul Thurrott in Cloud, Dev, Games, Hardware, Microsoft Consumer Services, Microsoft Surface, Microsoft-Band, Mobile, Office, Office 365, OneDrive, Outlook.com, Skype, Social, Windows 10, Windows Phones, Xbox One with 38 Comments

2016 Year in Review: Microsoft

2016 was in many ways a watershed year for Microsoft, with the software giant taking decisive steps away from its traditional roots and embracing a more open future in the cloud.

Of course, for the traditional Microsoft enthusiast such as myself, 2016 was also a bit unsettling due to its hard but often necessary strategies on the client, especially with Windows 10 and mobile. But it’s important to look past our own personal desires and view Microsoft in a broader light, I think.

But I still focus primarily on personal technology and thus my view of Microsoft’s 2016 will be somewhat skewed as a result.

So what was Microsoft’s biggest moment of 2016? Inarguably, it was the $26.2 billion acquisition of LinkedIn. And while it is still far too early to judge that acquisition a success, we can all at least agree that LinkedIn’s customer base and customer data ties neatly into Microsoft’s broader cloud-based ambitions. LinkedIn came at a heavy price, yes, but the deal makes sense.

Microsoft’s word—or meme—of the year was “transformation.” Company executives recited this term so much in 2016 that it turned into a drinking game, but it makes sense: Here is Microsoft, transforming itself for the new marketplaces of the 21st century, and in doing so, it is helping and teaching its customers how to make the same steps forward. This is leadership by example.

And since we’re on the topic, I’ll just point out that some cloud-based technologies that I’m not personally very interested in likewise represent big steps towards Microsoft’s future. I’m talking about the machine learning, artificial intelligence, and bots and cognitive systems that will form the basis for a new Microsoft stack. Yes, it’s plumbing. But these are areas where Microsoft can lead and see great success, and 2016 was the coming out party.

Windows 10 had a mixed year, thanks to an overly-aggressive Upgradegate strategy in the first half of 2016 and the embarrassment of having to admit that it would not meet its goal of 1 billion active Windows 10 devices within 2-3 years. And of course, the tortured rollout of the Anniversary Update didn’t help either.

But Windows 10 is still a success, despite those black marks, with well over 400 million users in just its first 15 months of availability. Microsoft tied Windows 10 to Xbox to enhance its gaming platform, made it easier than ever to remove crapware from your PCs, has seen dramatic improvements to the quality of its in-box UWP apps, and is even seeing a tiny bit of momentum with Windows Store.

But the biggest and best news for Windows 10 came right at the end of the year: After years—decades, really—of frustration with Intel and its inability to compete in mobile, Microsoft finally pulled the plug and announced that it would bring full Windows 10 to PCs based on ARM chipsets. This is a game changer that could forever change the PC market for the better, and while we won’t see the first fruits of this work until late next year at the earliest, it all started in 2016.

(Note that I already wrote about Windows 10’s 2016 at great length in 2016 Was a Monster of a Year for Windows 10.)

Looking past Windows 10 on PCs, the results are likewise mixed.

Windows 10 Mobile is a disaster, and the market for Windows phone collapsed to unimaginable lows despite the entry of HP with its enterprise-class Elite x3.

HoloLens never got out of first gear, but perhaps by design, and the announcement about how partners will fill out the VR/AR/Mixed Reality story with less expensive Windows Holographic devices takes out some of the sting.

And maybe I’m missing something, but Windows 10 on Internet of Things (IoT) devices, courtesy of Windows 10 IoT Core, seems to have little in the way of momentum. Hopefully that changes in 2017, and perhaps with the help of a little Cortana love.

Surface Hub, by contrast, was far more successful than anyone could have anticipated. And while our attempts at calculating unit sales were probably misguided, the facts remain: Surface Hub was sold out throughout 2016, backorders extend forward for months, and Microsoft is selling an average of 50 units per customers, an astonishingly high number.

Speaking of Surface, Microsoft’s PC business had a mixed year as well. It started off badly with Surfacegate and an endemic of reliability problems for Surface Pro 4 and Surface Book. But Microsoft rebounded, and then some, with the release of Surface Studio in late 2016. This device was so well received that it’s been used—unfairly, I think—to pile abuse on Apple for its own lackluster hardware designs this year.

To me personally, the most gratifying thing that Microsoft did in 2016 was to right the Xbox ship and pave a great path forward for the future. The successes were many. Xbox One S is, as I wrote, a “perfect thing,” and by making it both gorgeous and affordable, Microsoft rocked Sony again and again through the second half of the year.

The software giant was likewise right to explain its strategy for the 4K-capable Project Scorpio, and to expand its Xbox platform more fully to Windows, including a great cross-platform Xbox Play Anywhere initiative that really blurs the lines between PCs and consoles. The future of Xbox is bright. Hell, it’s great right now.

Microsoft continues to have trouble getting developers to buy into its modern developer platforms—to be fair, I believe this started with Longhorn over a decade ago—but it worked hard to overcome this problem in 2016. The biggest news here, I think, was Microsoft’s acquisition of Xamarin, which gave it a leg up in the mobile space and, as important, brought long-sought genius Miguel de Icaza into the fold. Excellent.

I’ll throw a few more items in the loss column for 2016: Windows 7 and 8.1 updating remains a nightmare, and that is inexcusable. The Microsoft Band failure is unfortunate. Skype is a disaster of epic proportions. Cortana and Edge remain underused, and there’s no clear way to fix either. And Microsoft continues to do a terrible job of getting its most important products to customers outside the U.S. and Canada.

But there were other successes too. Office continues to demonstrate Microsoft’s utter dominance of software productivity, and that group’s mobile efforts are a model that the rest of Microsoft should follow. Products like OneNote and Outlook have made wonderful transitions to the cloud era. And seriously, even OneDrive got much better, and did so very quietly, in 2016. That was a disaster in 2015.

Ultimately, the reasons I care for Microsoft and its mission were on display to great effect in 2016. This is a company with great products and services, sure, but it’s also a company of great integrity. It doesn’t base its business on advertising, like Google. And it doesn’t limit its audience to the one percent, like Apple. Microsoft is for everyone, and I’ve always liked that. And while there have been some rough spots, for sure, its continued focus on people, and on making life better through technology, is laudable.

2016 was a great year. I’m looking forward to 2017.

 

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Comments (41)

41 responses to “2016 Year in Review: Microsoft”

  1. Avatar

    335

    Great article, Paul!  I am really looking forward to 2017 to see what else Microsoft has in store for us!

  2. Avatar

    8741

    Did he just infer that Google has no integrity because it generates revenue from advertising? How does his website generate revenue?

    • Avatar

      5530

      In reply to mystilleef:

      um....Thurrott Premium subscribers?

    • Avatar

      5485

      In reply to mystilleef:

      :) So true.

      I think integrity has nothing to do with Paul's preferences. It's more of a rational intertwined with emotional bias that looses that sometimes just feels weird. For instance here is what he said about the Surface Pro 2 (I have that unit. Bought it out of curiosity):

      "I feel compelled to add, not for the first time, that some may find the small screen on this device to be a bit off-putting, and I'd really like to see a bigger-screen Surface Pro device, even if it has to be a touch-screen Ultrabook instead of a real hybrid. But Surface Pro 2 offers the same very high quality as its predecessor, and if you're looking for a highly-portable device that can handle both work and play but with an emphasis on work, Surface Pro 2 is the right tool for the job. Highly recommended."

      With 256GB with 4GB if they used to cost $1300 (for the masses?).

      Now see him bashing away the new MacBooks Pro's far better specked at $1500 not to mention better keyboard, display aspect ratio so on and so forth for the 1%. Now this one, seams to be a total disaster with an impossible keyboard :)

      He also does not seam to like Samsung but they sell to anyone too.

      I like MS. For me its the company that bring computer to every home, smashing away Atari, Commodore so on and so forth. But they did it, BG vision.

      But Microsoft today ... the only reason they sell to everyone is because someone else does the thing and take the low margin heat. Someone's like Samsung, Lenovo, Acer, Sony ... Because when its time for them to do it ... It's a hard science ... throttling like a maniac, lousy wifi experience, ... so on and so forth. By the way, 1.5 years after ... the touch stopped working.

      Anyway, partial views. 

      PS: I do agree that Apple is loosing it, especially when they leave the extension cord of the power brick out of the box, but its all relative really.

  3. Avatar

    1570

    "And Microsoft continues to do a terrible job of getting its most important products to customers outside the U.S. and Canada."

    Thank you - this doesn't get called out enough. I'd love to read a Premium article solely about this, and yours and Brad's thoughts on why Microsoft struggles with this so much, whilst Google and Apple seem to handle worldwide rollouts with ease.

    I'm in the UK where we actually do get access to most hardware/software reasonably quickly compared to the rest of the world (we're usually a few months behind the US here), but - with functionality in Bing and Cortana (and some in Windows 10 and Office 365, even), for example, we're literally years behind. And this is the UK - an English speaking country (so localisation is, surely, trivial or at least easier). Other countries, even in the EU, are much worse off - I've used Bing whilst travelling and it's almost unchanged from the Windows Live Search days in many ways.

    • Avatar

      205

      In reply to AliMaggs:

      Living in Sweden I can only second that. No Cortana at all, no Surface Book, never saw the band, no info whether any of it is coming or not. We are comparatively small but a world leader in tech infrastructure and "IT-companies" per capita. Deserve a little better I think.

  4. Avatar

    5530

    Xbox One was a disaster at launch, but how quickly the tables have turned. These days it looks like Sony has been making the missteps like the omission of 4k Blu-ray support on the PS4 Pro, and really, just the general promise of 4k gaming on the PS4 Pro by upscaling lower resolutions or lowering the framerate seems like a huge misstep by Sony. Xbox's backwards compatibility is also a huge pro-consumer feature that is a huge win for MS, and really, consumers too.

    Windows 10 this year has been rocky, but from a mile high view, the announcement of Windows 10 on ARM almost absolutely guarantees a brighter future for Windows devices. If Windows on ARM works well, we can expect nothing short of a revolution in Windows PC devices at the low or mid-end. From standby times, to battery life, to pricing, and cellular capabilities, Windows 10 on ARM will be the kick in the ass that Intel needs.

    The new Outlook.com is seriously pretty awesome.

    Office 2016 is sick. PowerPoint got co-authoring which is almost certainly going to be a game-changer for me.

    Surface has somehow outshined Apple's laptop/desktop lineup this year, which I didn't expect. But the real deal is the Surface Dial. It is a true innovation in being a compliment to pen+touch input. I really, really, really hope it takes off.

    I'm still kinda mad that Cortana isn't available in my country, but, whatever.

    I would conclude by saying that Microsoft had a mixed year, but then looking at it from the outside-in, tech has had a mixed year overall right? Google's hardware ventures has yet to pay off, the Google Assistant isn't exactly widely available yet, they basically gave up making their own self-driving car....and YouTube continues to shit on creators. Facebook faces a moral dilemma of either trying to remain a neutral social network or a media company with a stand. Apple has been bitchslapped with constant memes with their "courage" Freudian slip and #donglelife, Twitter continues to be in turmoil with poor product planning, Samsung accidently made - and sold - bombs.

    I guess that leaves Amazon without any prob- nope.
    The Grand Tour became the most pirated show on the internet, losing millions in revenue, because Amazon Prime Video had poor international availability.

    • Avatar

      5486

      In reply to FalseAgent:

      XB1S was a knee-jerk reaction from MS to try and regain some momentum in the XB. They knew Sony were planning a mid-term console upgrade, so it was easier (and quicker) for MS to make a couple of small changes and get the console out faster than Sony could completely re-engineer the PS4 Pro. In reality, the XB1S is a very minor upgrade, and probably quite easy for MS to push out. Having also 'dropped' the Scorpio teaser, that could have worked for or against them (not sure which it was at the moment - it's vaporware after all). Sony have at least a years lead over the Scorpio, and are still killing the XB is sales globally. I know where I'd put my money.

      Windows 10 hasn't reached anywhere near Microsoft's ambitions. Infact, in real terms, only a small percentage of people took the 'free' upgrade offer, which means those who didn't had extreme reservations about Win10 (and maybe still do). Microsoft's handling of the whole 'upgradegate' situation was appalling and inept. Maybe they just hope people have short memories. Win10 on ARM is interesting, but no guarantee of success. A bold move - yes (Intel will not be happy), but a successful move? The jury is out on that one. Win10 is still very heavyweight compared to Android/Linux (and getting heavier with all the features they keep chucking in), so how it actually runs on ARM is an unknown (don't believe the MS video's!)

    • Avatar

      5553

      Never forget the rootkit fiasco and Playstation network hacking and being offline.reply to FalseAgent:

       

    • Avatar

      1377

      In reply to FalseAgent:

      Re Office, if PowerPoint is developing nicely, that's good news for people whose jobs are producing presentations, problematic for the rest of us. Excel hasn't developed as nicely. Yes, there's Power Query, but that's not really part of the spreadsheet but an outside companion model like MS Query. But Excel still has too much functionality mired solidly in the 1980s. At this point there are some common tasks which are much simpler and quicker to implement with Google Sheets than with Excel.

      • Avatar

        5530

        In reply to hrlngrv:

        Yeah, I too would like to see improvements in Excel, but I wouldn't say it's behind. I really like the sparklines that they introduced in Excel 2016, and they also added the Ink Replay feature that both Word and PowerPoint got, so they're definitely not letting it wither. From what I can tell, most of Google Sheets' advantages come from just by virtue of it running on the web, stuff like Protected Range and the scripts that are based on javascript

        • Avatar

          1377

          In reply to FalseAgent:

          Excel behind as in lacking 3D support, as in COUNTIF(A:B!C1:D100,criterion) doesn't work because COUNTIF expects a RANGE as 1st argument while 3D references aren't ranges, strictly speaking. Stupid! Then there's Excel's own DCOUNT and similar functions, which require criteria ranges as 3rd arguments. Compare it to Google Sheets's FILTER function (something Excel lacks).

  5. Avatar

    289

    On the developer front, Microsoft should be pouring millions and millions of dollars every year into training opportunities for (and recruitment of) bright young minds around the globe. Give them everything they need to get interested in programming and get them using Microsoft tools. Continue grooming them for several years, paying for school and other living expenses.  Seriously, they should have academies around the globe; just like Major League Baseball teams have academies in the Caribbean and South America.

    They're clearly not getting anywhere with the current crop of developers, so they should be actively building the next generation.

  6. Avatar

    5539

    "Skype is a disaster of epic proportions." I really don't get that assessment. We use Skype internally and externally at work every single day. The Business version of course. I have participated in Podcasts that use the personal (free) version to great success. I watch Windows Weekly and What the Tech each week, which I understand are done via Skype. I participate in Skype meetings with dozens of participants periodically. It has allowed employees to participate in meetings from home or the road, on virtually any platform, that once would have been impossible without significant VTC hardware and dedicated connectivity. No, it isn't perfect and there have been glitches, but "disaster of epic proportions"? That sounds like Windows Phone market share. 

    • Avatar

      661

      In reply to SvenJ:

      and Skype was used to broadcast the Hololens demo from Amsterdam! magic.

      you have to read Paul's article on the skype annoyances and they are real. There is work do to in the cloud to make sure devices are synchronized and I need not be alerted by a symphony per each message especially while in an active skype session

  7. Avatar

    412

    Despite being bitten by Microsoft for far too long on products that I loved and used, I am adjusting to this new Microsoft. I am still Microsoft centric even with Android Phone and a lot of Amazon Services. My home file/media server is Windows 10 running Plex. We have two XBOX One's for media centers. Between my wife and daughter and I, we have a Surface Book, Surface Pro 4 and 3. Daughter still uses an un-activated Lumia 640 for fun. 

    My wish for 2017. FINALLY, FOR REAL, fix Hot Bag/Not Sleeping Surface Book issues. So tired of waking up each day to a dead battery. :( 

    I'm hopeful we'll see some stability and growth on the consumer end in 2017. 

  8. Avatar

    5496

    Yeah, Skype is such a disaster, that millions of people use it. And you use it every week. And all of twit uses it. Yeah, so Skype is a disaster.

  9. Avatar

    271

    Paul a minor edit in the Surfacegate paragraph, endemic should be epidemic. Cheers.

  10. Avatar

    4295

    Hey Paul, great article. Can I ask you to comment what you had in mind when you said the Windows Store had seen a tiny bit of momentum this year? Are you thinking about the gaming aspect being available through the store now mostly, or has the app situation changed at all thanks to Windows 10, in your estimation? Just curious. I don't notice any real difference myself, but I spend little to no time checking in the Windows Store.

  11. Avatar

    514

    I would agree that phones based on W10M have not done well, but W10M the operating system, has been rock solid for me on my 950XL.  As I've pointed out before MS has plans for this operating environment that go far beyond phones.

    OTOH at Shenzhen Terry Myerson did talk about "cellular" tablets and laptops.  There are two ways to take this: One it represents a class of devices that will not need a Wi-Fi hotspot in order to get on the internet.  In a sense these devices will always be connected.  Another way to look at this is devices upon which one can make cellular phone calls.  These options are not mutually exclusive -- so we might see a few different kinds of devices running W10M.

    Most of these will probably be only of interest to enterprises.  I agree with you to the extent that MS has few ambitions for mobile in the consumer space (which is your wheelhouse), but mobile as supported by W10M is not dead -- far from it.

    On another note it is helpful to understand that Windows on ARM will not be exclusively emulated.  All the code from W10M that runs on phones is natively coded and will be carried over.  Also everything from Windows RT was natively coded and that will be carried over.  There will also other parts of the Windows desktop stack that will be hard coded rather than emulated.  How MS manages this will determine how well Windows on Arm will perform.

    I'm mildly hopeful.

  12. Avatar

    5860

    "This is a company with great products and services, sure, but it’s also a company of great integrity. It doesn’t base its business on advertising, like Google. And it doesn’t limit its audience to the one percent, like Apple. Microsoft is for everyone, and I’ve always liked that." I agree with your sentiments exactly! This statement about your reasoning for your Microsoft interest was a fantastic way to wrap your article up.

  13. Avatar

    5553

    Consumer Reports does NOT recommend the new MacBook.???

  14. Avatar

    5287

    Love your description of what makes Microsoft great. Say what you want about their competitive practices but they truly put a PC on every desk. I'm 30 and we had a basic system when I was kid and I grew up loving technology thanks to Microsoft. All Apple now and it makes me kind of sad to have moved so far from Microsoft., but years of poor hardware and clunky PCs had their toll. With Windows 10 and ARM I suspect I will be back.

    Full disclosure serious work is done on PC and Excel. SQL, VBA , Microsoft runs literally the entire worlds systems! 

  15. Avatar

    6660

    OneDrive is great? Just give me the placeholder files back, MS!

  16. Avatar

    5914

    Maybe it's a game changer Windows 10 on ARM. But for me it will be next year with AMD Ryzen for my next gaming rigs. Intel gonna have to wake up and stop making product with no so many features or enhancements.

     

  17. Avatar

    661

    when are OneDrive placeholders making a come-back?

     

  18. Avatar

    1377

    Window 10 IoT may suffer for the same reasons Windows CE suffered as an embedded systems OS: it's too big. Much bigger than alternatives. Then there's the awkwardness of existing manufacturers like Samsung and LG already being more familiar with Android and possibly Linux. Finally, if you buy an IoT refrigerator, how many 3rd party apps would you install on it? IoT may do nearly nothing for Windows Store and UWP.

  19. Avatar

    1583

    " It doesn’t base its business on advertising, like Google. And it doesn’t limit its audience to the one percent, like Apple. Microsoft is for everyone, and I’ve always liked that"

    This! Exact reason why I like MS. No matter what Apple do, I don't like the fact that they are in the business of encouraging the digital divide and MS is about bridging it. Nothing altruistic about MS' mission, but they somehow strike the right balance between Apple and Google.

  20. Avatar

    3109

    "Microsoft is for everyone, and I’ve always liked that." love that quote. Thumps up emoticon.

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