Company / division: Microsoft
Images Leak of New Microsoft Surface Pro (May 19, 2017)
Weekly Narrative Video – AR vs VR (May 12, 2017)
This week’s Narrative Video covers the “AR vs VR” narrative, and is available now to subscribers on the AR vs VR narrative page. In this video, I discuss the debate about terminology between AR, VR, and Microsoft’s preferred “Mixed Reality”. But I also talk about the current state of both VR and AR and how I see both playing out over the rest of the year. The narrative has been in the news this week, with Microsoft making announcements about mixed reality at Build, and Magic Leap both reaching out to developers and creatives and allegedly readying another round of funding. If you’re not yet a subscriber, you can sign up for a free 30-day trial to see this and other Weekly Narrative Videos, all this week’s posts and the narrative essays, which are exclusive to subscribers.
The UK National Health Service and many other corporate and government systems around the world are being attacked by ransomware which is enabled by NSA hacking tools for targeting Windows leaked earlier this year. Though Microsoft issued a patch for the affected vulnerability in March, many organizations haven’t applied those patches, which is not uncommon especially in large distributed organizations with many computers not “owned” by a particular end user or subject to any blanket policy on such updates. Though the motive appears to be financial – the hackers are demanding bitcoin in return for unlocking the affected machines – its immediate impact has been disruption, as operations have been canceled and medical centers closed, among other things. It’s a salutary lesson on the importance for both individuals and business of applying OS upgrades and patches in a timely fashion, but also of the vast reliance on aging machines and software across the corporate world. It’s also the kind of thing that’s dramatically less likely to affect web-based or more locked down systems like ChromeOS, Apple’s iOS or macOS, or even Microsoft’s new Windows 10 S. But given the prevalence of older versions of Windows in enterprises and government departments, that’s not going to help much anytime soon.
Microsoft Announces Details Around Windows 10 on ARM (May 12, 2017)
I’m at Microsoft’s Build developer conference this week, and got a little preview of some of what’s being announced in a private session for analysts yesterday. Today’s day 1 keynote is focused on Microsoft’s broad vision for this year’s event and its cloud and AI business. Many of the things I cover most closely will actually be in tomorrow’s keynote, which will cover more of the consumer-facing parts of the business. But there were still several notable announcements today that are worth talking about, even on a site like this that’s more consumer tech-focused. Firstly, it’s worth noting CEO Satya Nadella’s philosophical intro, which emphasized the ethical and other responsibilities tech companies have as well as the limits of tech in solving the world’s problems. That’s an admirable stance and a theme we’ve seen more from Nadella than any other tech leader in recent years.
Secondly, Microsoft’s big push this year is a shift from Nadella’s earlier mobile-first, cloud-first vision to a new vision around intelligent cloud combined with intelligent edge. What that means is that Microsoft sees the cloud as being less centralized and more distributed, including in edge devices, and its new Azure IoT Edge concept takes cloud computing functionality and puts it in potentially tiny devices at the edge of the network. That’s a somewhat unique vision for the cloud, especially from a company that’s also strong in the core cloud context. If Microsoft is right about this vision, and I suspect it is in the industrial world especially, then that raises interesting questions for other vendors and their ability to push that capability into edge devices, where operating system companies are strong but others tend not to be.
Thirdly, Microsoft is pushing what it calls its Graph, which is a sort of backend for its own services but also opens up to developers, and began as an agglomeration of data about users and is expanding to include those users’ activities in apps and across devices. The idea is that this Graph will power continuity between apps and other activities for users through both first-party and third party features. It’s a good concept and in some versions is reminiscent of what Apple does with Handoff and Continuity in its operating systems. But the big challenge for this vision at Microsoft is that it’s got a huge gap in its Graph around mobile, because people spend the vast majority of their mobile time outside Microsoft devices, operating systems, and apps. I can’t see it changing that, and that’s going to reduce the value of the Graph significantly, especially in the consumer world. I’ll have more commentary on some of the consumer-focused announcements in tomorrow’s keynote.
Lastly, one kind of consumer-focused announcement today, which has been subtle on stage but covered somewhat in the press regardless based on pre-briefings is Cortana Skills, which were announced way back in December but are now going more generally available to developers. What’s interesting here is that unlike Amazon’s Alexa Skills, at least some of these third party capabilities will be built in even if users haven’t explicitly installed or enabled the apps, including weather app Dark Sky and Domino’s Pizza. We’re still in the very early days here, but it will be interesting to see how skills on a PC-centric assistant like Cortana evolve differently from those on speaker- or phone-centric assistants like Alexa or Siri.
via Techmeme (and about a thousand articles on different announcements made today which you’ll find linked there)
The Verge has been talking about a future Windows feature called HomeHub since December, but this week has some images that are designed to show how HomeHub will work in practice, and it’s likely we’ll see this revealed officially at Build this week. HomeHub is a somewhat family-centric virtual assistant for Windows 10, which will combine Cortana voice features and more visual features on a sort of always-on home screen. It looks like Microsoft sees this feature both as something that PCs will offer and as something that will be available on dedicated devices. The Verge is that it suggests Microsoft sees all these devices being effectively full Windows 10 PCs, which feels like a huge mistake given how streamlined these devices can and should be. Even though Microsoft has evolved in its culture and strategy in very positive ways over recent years, things like this make you realize how tied to its past strategy of putting Windows everywhere it still is. At the very least, this ought to be running the more streamlined Windows 10 S it announced last week. But I’m all for tech which helps families stay organized – something I’ve argued more tech companies need to be working on. Given the launch of Echo Show this morning, Microsoft will have a concrete competing example of the same concept to go up against, which will likely raise the bar for whatever it announces. It’s also possible we’ll have Apple’s version of this to look at by the time the next version of Windows ships in the fall, further raising the stakes.
via The Verge
Back in December, Microsoft announced its equivalent of Amazon’s Alexa platform for third parties in the form of its Cortana Skills Kit and Cortana Devices SDK. A week later, Harman Kardon announced its was working on a speaker that would feature Cortana, and said it would launch in 2017. Five months later, the two companies have provided a name (Invoke), pictures, and some capabilities for the device, but there’s still no specific launch date (beyond “Fall 2017”) or pricing. On paper, the Invoke looks a lot like Echo in both its design and its capabilities (it even has an Echo-like 7-mic array), and the main difference is that it will do Skype voice calls, which is something that’s been rumored for both Echo and Google Home but isn’t yet supported by either. One advantage Harman would have over Amazon or Google in this space is that it’s a speaker maker, so it may well have better audio quality in its version than those companies have in theirs, something that’s been a shortcoming in this category so far. And of course, it’s interesting given Samsung’s ownership of Harman Kardon that this speaker is running neither of the assistants Samsung itself supports – its own new Bixby assistant or the Google Assistant – though this partnership obviously began before the Samsung acquisition closed. Pricing is an interesting question: whereas Google and Amazon both have broader ecosystems which benefit from such a device and therefore justify subsidizing or selling it at cost, Harman obviously needs to make money on it, so it may end up being priced higher (as Apple’s version likely will be too). Lastly, we might see other ecosystem devices using Cortana announced at Microsoft’s Build developer conference this week.
Microsoft today held an education-focused event in New York City, at which it announced a stripped-down version of Windows, new end-user and teacher/administrator apps, and new hardware for the education market. This is by far the biggest and most comprehensive education push we’ve seen from any of the three big OS vendors, and is clearly intended to reassert Microsoft’s pre-eminent position in the education domain. What was evident from the first part of the event was how committed Microsoft is to making this work, and it began with an impassioned and personal talk from CEO Satya Nadella about his own family background and how education made a difference. Just as Microsoft’s AI mantra has been about democratizing the technology, so he now talks about democratizing educational opportunity. That’s a worthy goal, and Microsoft’s new announcements are a great way to try to bring that about, but Microsoft was also admirably realistic about the role technology plays in education: it assists and empowers but can’t replace committed teachers and parents or educational institutions. I have separate posts about Windows 10 S (here) and Surface Laptop (here). But I like the way Microsoft is introducing education into many of its existing products, including Office, Minecraft, Intune, and so on. Treating education as a first party audience alongside consumers and enterprises makes perfect sense, and is the route others have already taken. What Microsoft announced today feels like it will move its story forward in education considerably. Both Google and Apple have developed more comprehensive stories in education over the past couple of years too, but Microsoft’s arguably goes further, though developer events from the other two in the next six weeks could redress that balance a little.
Microsoft Hires Head of Privacy and Data Security from FTC (Apr 28, 2017)
This is a great move from Microsoft, which has been at the forefront of recent legal cases over data privacy and security, as it reinforces its commitment to these issues at a time when threats to both security and privacy are increasing. Putting a high profile individual explicitly in charge of this area is a great symbolic move, but if done right should also ensure that these issues are examined in every aspect of Microsoft’s business. So far, Apple has been arguably the strongest champion for privacy as a guiding force among the major tech companies, but this move could see Microsoft become a more prominent advocate too. Worth noting: Brill won’t start at Microsoft until the summer.
Microsoft was one of numerous big tech companies that reported Q1 2017 financial results (its fiscal Q3 results) this afternoon, and the only one of the big three to miss on revenue. That revenue miss was largely due to a shortfall in hardware revenue as Surface had its first big year on year decline in a year and a half due to a lack of new mass market hardware, and phone revenue dropped to essentially zero. However, these two businesses together make up just 4% of Microsoft’s revenue, which continues to be dominated by software and to an increasing extent services, while growth is dominated by the move to the cloud. Microsoft’s cloud revenue run-rate is now at an annualized $15.2 billion, compared to Amazon’s $14.5 billion in actual annual revenue, though Microsoft’s definition of cloud here is far more expansive than Amazon’s. The productivity business had a particularly strong growth quarter at over 20%, while the Intelligent Cloud segment also improved a little to just over 10%. But margins continue to fall overall as the newer cloud services generate less profit than Microsoft’s old massively profitable software business did, and that picture isn’t likely to change. Microsoft is growing again after both lapping the introduction of Windows 10 and the revenue deferral associated with the new business model, and also getting past the biggest drops in the phone business, but it’s mostly doing so by doubling down on enterprise products and services while its consumer and hardware businesses mostly continue to struggle to find growth.
ARM-Based Windows 10 PCs to Arrive in Q4 2017 (Apr 21, 2017)
Yesterday, we had IDC’s PC numbers for Q1 2017, and today we have Gartner’s. As usual, they show pretty different trends (IDC the first growth in five years, Gartner the lowest total shipments since 2007), because the companies define the market in different ways. Whereas those IDC numbers were for “traditional” PCs, these Gartner numbers include what some call “detachables” and Gartner calls “ultra mobile premiums” such as the Microsoft Surface. Interestingly, though, whereas in the past those detachable and convertible devices have led Gartner’s numbers to grow faster than IDC’s, the situation now appears to be reversed. That’s interesting, given how hot this category has been and how much it’s helped the overall PC market in the past couple of years. My guess is that the trend will go back to its previous pattern the rest of the year. The two companies do agree on some trends though: HP had a great quarter, particularly in the US, and component shortages are driving some interesting trends. However, whereas IDC saw the latter driving higher shipments in Q1 to get ahead of price increases, Gartner focuses on the downward pressure on shipments the component shortage is likely to cause in the rest of the year due to price increases. IDC and Gartner also agree that the “other” category is suffering badly as the big names consolidate share.
Traditional PC Market Was Up Slightly, Recording Its First Growth In Five Years as HP Recovered the Top Position – IDC (Apr 11, 2017)
This is an impressive rebound for the traditional PC market, which IDC had expected to continue to decline in Q1 but actually grew for the first time since 2012. One of the explanations, though is higher shipments that didn’t necessarily translate into sales, as companies locked in component inventories, so it’s not strictly speaking sales growth. However, it’s worth watching for whether this turns into a longer-term recovery for PC sales or just a temporary blip – my money is still on a long-term decline. When it comes to the individual vendors, Lenovo appears to be struggling despite a pretty decent recent history in PCs, which will further add to its woes given the collapse of its smartphone business over the last year or so. HP did very well, at least on paper, and it will be interesting to watch its next earnings release for signs of what drove the 13% growth it saw. Apple also seems to have done well, continuing the recovery it’s seen since launching new MacBook Pro models late last year. The other big story continues to be the decline of the “other” category as the top five or six vendors continue to scoop up more and more market share and growth, dooming the rest to declines much more severe than the market as a whole.
On the face of it, this could look like the in-app purchase model that so many other games have used so successfully over the last few years, which would look like capitulation on the part of Microsoft to the prevailing model. However, even though the article implies towards the end that that’s what’s happening here, this is actually something different. Whereas the classic IAP model often holds progress in the game hostage to the purchase of various items through the medium of in-app currency, Minecraft has always eschewed that model, instead charging a high up-front fee to purchase the game in the first place, with a small number of in-app purchases for specific items. It is now opening up that latter model to a small number of third parties, and while the use of in-game currency as the medium may carry echoes of the classic IAP model, this is something very different. Given the addictive qualities of the IAP model, that’s a very good thing, given that the game’s audience is largely children. The last thing Microsoft wants is for Minecraft to get a reputation for being a sort of Candy Crush for kids, whereas it’s currently known as a game that has at least some educational qualities.
Flipkart raises $1.4Bn from Tencent, eBay & Microsoft at $11.6Bn valuation, acquires eBay India – Economic Times (Apr 10, 2017)
There were recent rumors that Japan’s SoftBank might want to combine its investment in Snapdeal with an acquisition of Flipkart, but this funding news suggests that’s going to come later if it comes at all. The trio of companies investing here is intriguing. Tencent is perhaps the least surprising, as a company that invests heavily overseas including the US in minority stakes. eBay is apparently using this investment as a vehicle to buy into a bigger e-commerce business in India, as it’s transferring its own Indian operations to Flipkart as part of the process. Microsoft is the most interesting of all – though Flipkart recently switched to Azure for cloud services, Microsoft has no significant direct stake in an e-commerce anywhere else, so this is something of a departure for them, though of course major competitor Amazon already combines cloud and retail. Flipkart had in the past seemed to be the leader in the Indian e-commerce market, but has fallen from that role in the last couple of years as two overseas companies – Amazon and Alibaba – have made inroads there. This is a down round over the company’s previous valuation, but it and its new investors will be hoping the infusion of cash helps it get back into contention.
via Economic Times
For The First Time, Apple Drops Below Microsoft In J.D. Power’s Tablet Survey – Fast Company (Apr 7, 2017)
This is symbolically hugely important, because these are just the kind of stats that Apple likes to roll out on earnings calls and so on to highlights the strength of its products, far more so than market share or other statistics (though it often focused on percentage satisfaction rather than rankings per se). As the article makes clear, though, even though this is the first time Apple has dropped behind Microsoft, it’s not the first time it’s been beaten, as Samsung did so earlier. As is often the case with these rankings, you end up wishing the data were a little more transparent. For example, Microsoft apparently beat the iPad on Internet connectivity despite the fact that iPads offer 4G LTE as well as WiFi, which makes me wonder to what extent the ratings reflect the expectations people have of particular brands. In other words, are people pleasantly surprised that the Surface does certain things well, whereas others would expect the iPad to do those things well and therefore give it lower scores? Adjusting for those expectations would be tough, and I doubt JD Power does so. I also wonder to what extent Surface owners self-select into a much more narrow set of use cases for which the Surface is uniquely well suited, whereas the iPad is more of a general purpose device used by a far wider range of use cases, not all of which by definition it’s designed for. At any rate, it’s worth keeping an eye on this over time. Some of the other commentary in the article here is a little overblown – one thing is for certain: iPads massively outsell Surface computers of all shapes and sizes, so any idea that Surfaces are somehow displacing iPads in large numbers is nonsense.
via Fast Company