2016 Year in Review: Microsoft

Posted on December 21, 2016 by Paul Thurrott in Cloud, Dev, Hardware, Microsoft Consumer Services, Microsoft Surface, Microsoft-Band, Mobile, Office, Office 365, OneDrive, Outlook.com, Skype, Social, Windows 10, Windows Phones, Xbox, Xbox One with 41 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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