Phil Wainewright is clearly excited in this piece entitled Office Graph is Microsoft’s new secret weapon in the cloud wars. He takes a cloudy view of the topic. I’m excited for two reasons that can be found buried deep inside his article but enhanced by some things I have learned at Convergence 2014.
Towards the end of Phil’s article, he says:
This was a different Microsoft than the one I’m used to: using an iPad to demonstrate OneDrive on stage during the keynote; announcing a mobile toolkit for Android and posting the code on GitHub; and pushing an uncompromising cloud first message.
In an email conversation with Phil, he posited that in recently retired CEO Steve Ballmer‘s day, the appearance of an iPad on stage would have been considered a hanging offence. In the new Microsoft, all religious beliefs appear under question. This may be a horror of horrors for the Windows party faithful but it represents an enormous step change and one for which everyone should congratulate Microsoft.
Over at Convergence in a closed analyst meeting, one senior Microsoft executive suggested the company knows it needs to reach any device, anywhere in the context of how people work. Phil’s observations confirm that.
In meetings with senior Microsoft executives, I was impressed with the relaxed manner in which they discussed different device platforms. When I showed them things we do on my Samsung Android, there was no demonstrable aversion to the device, just a quiet querying and faintly smiling ‘Nice’ comments. When I said I struggle to get on with Windows 8, there was no indignant defence, simply a demonstration of what works best for Microsoft employees. And that’s the point.
Microsoft no longer has to defend its franchise to those who think they’re dead. It is ready to embrace where it makes sense.
Now before wiseacres and other armchair quarterbacks come piling in, this doesn’t mean the company is capitulating on the acquired Nokia franchise or Windows. Instead, we should see this as a recognition that co-existence is a reality too often blindly ignored by vendors wedded to a glorious past.
The fact Bill Gates is NOT making any public or reported statements to the contrary suggests that like many wise founders of yore, he knows what needs to happen if for no other reason than to protect his $72 billion personal war chest. Instead, he is concentrating upon the need for speed in catching up and overtaking in the areas where Microsoft can add demonstrable business value.
For more evidence, check out the Delta story I wrote earlier where I noted the company is operating a hybrid device tactic today but will standardize on Microsoft Surface in the near future. Pragmatism always wins in the enterprise and it is good to see Microsoft effectively disrupting itself in this way. But it doesn’t end there.
Pricing – the next shoe drops
Elsewhere in Phil’s piece, talks about pricing:
Fighting back against incursions by cloud file sharing vendors, Microsoft announced OneDrive for Businessas a standalone service, while introducing a low $1.50 per user per month price tag for customers who already have Software Assurance or ProPlus contracts. Teper emphasized the significance of this move:
“We will have the most aggressively priced document storage offering.”
Repelling the cloud interlopers is one battlefront, but the bigger campaign Microsoft has to win is persuading the installed base to bring all its content and collaboration into the cloud and onto the Office Graph.
In quiet corners among the cognoscenti, questions have been raised about the long term viability of the file sharing service operators. Some have gone so far as to say ‘It’s a feature not a product.’ Maybe. Microsoft’s aggressive pricing for what amounts to a commodity solution is one of the key blocker removers that will likely force reaction from the Box and Dropboxes of this world. In those kind of wars, those with the deepest pockets win.
Back office beware
But what of other commodities?
As we move into the second day at Convergence, it is clear Microsoft is channeling its expansive CRM strategy rather than bloviating about the whole Dynamics suite. It is equally clear that Microsoft’s vision for CRM is way way beyond the siloed SFA and field/call center service solutions that have dominated the cloud CRM conversation for so long.
Microsoft implicitly acknowledges the world of omni-channel commerce and all its detailed derivatives is where the action is, relegating functions like finance and HR to their commoditised back office. And while Microsoft does not today talk about commodity pricing for those solutions, it only has to be a matter of time before buyers demand a shift in spend such that back office solution pricing gets cannibalized in the cloud. Put bluntly, who in their right mind wants to pay $400-800 a year per user maintaining legs and regs when that spend could go to improving revenue and margin?
As a grizzled observer of too many years I know that you should never ever write off a huge incumbent with a massive cash cow. They may stutter and struggle for a while but sooner or later, market pain prevails, ushering in a disruptive future that often looks messy but which has genuine change at its heart.
My sense is that in the ‘new’ Microsoft, we are seeing the first indications of that happening and only a few days after a changing of the guard. That’s powerful stuff.
Anyone who bets against this as something to ignore is plain mad. Other vendors who scoff at these signs do so at their peril.
Disclosure: Microsoft paid part of my travel and expense to attend Convergence
Image credit: marching to a new beat – dah at Convergence