Company / division: Microsoft
Microsoft is bringing its Cortana virtual assistant to Skype, over a year after it first demonstrated some of the features at its Build developer conference in 2016. Whereas Cortana does act in some settings as a voice assistant like Siri and the Google Assistant, it’s worth remembering that Microsoft uses the Cortana name to refer to all the underlying AI capabilities too, and that’s what’s being implemented here. The integration is text- rather than voice-based and limited to messaging rather than voice or video interactions, and Cortana will offer up smart replies in messaging conversations and also offer useful information like movie and restaurant reviews. In some ways, this is a different spin on the Context Cards Snapchat added today, and very much along the same lines as Facebook’s current implementation of its M assistant within Messenger – offering context-based suggestions within existing human-to-human interactions. This is part of Microsoft’s broader push to get its AI into every corner of its products and services, but will hampered by the overall stagnation of Skype as a communication platform – though it clearly has some messaging users, it isn’t the default messaging platform for the vast majority of the population, at least in their personal lives.
Microsoft Exec Debunks OEM Rumors About Killing Off Surface (Oct 10, 2017)
A bizarre story did the rounds last week based on executives from several Windows OEMs saying that Microsoft would likely kill off its Surface line at some point in the near future. It should have been obvious on the face of it that (a) these OEMs compete directly with Surface and likely rather resent the way it’s quickly gained lots of positive attention in the premium segment, and (b) Microsoft has just this year expanded and updated the Surface line, an odd thing to do if it’s thinking of killing it off. And yet the rumors persisted to the point where Panos Panay, who runs hardware at Microsoft, felt the need to specifically address and debunk them. One of the reasons the OEM execs gave for Microsoft’s likely exit from the space was poor margin performance, but of course low margins characterize almost the entire consumer electronics industry and PC vendors are no exception. Microsoft hasn’t commented on Surface margins for a while now, but did say on an earnings call in January this year that its Surface gross margin dollars had grown, and it had said previously that the business was gross margin profitable. Now, none of that it to say that this is a scale business or that it’s an enormous contributor to Microsoft’s business overall – it’s just 5% of revenue and likely a tiny fraction of profits – but it’s clearly strategically important to Microsoft and performing well enough financially to be worth the continued investment.
via Business Insider
This feels more like a confirmation of how I think many of us were already thinking about Microsoft’s approach to Windows 10 Mobile, but we do now have official confirmation now from one of the erstwhile champions of Windows Phone and Microsoft’s smartphone hardware that the platform is essentially dead in terms of future development. Yes, there are companies that have deployed devices on the platform, and Microsoft will support them, but that’s about it. Notably, Joe Belfiore, an exec in the Windows team and for quite some time the face of Windows on mobile devices, says he’s now using an Android device. This outcome has seemed inevitable for a long time now, and Microsoft arguably took far too long to make it official, giving a small number of fans false hope that the platform would somehow live on. The actual number of users must be absolutely tiny at this point, while Microsoft’s main focus in mobile for the last several years has been making or acquiring really good apps that could run on iOS and Android, albeit without an obvious strategy for monetizing most of them.
via Windows Central
I haven’t seen an official announcement around this, but Windows Central reports that Microsoft has quietly added support for four smart home vendors – Nest, SmartThings, Hue, Wink, and Insteon – to its Cortana virtual assistant. On the one hand, this is good timing with the Harmon Kardon speaker apparently getting ready for launch, but on the other it’s odd given the recent voice assistant partnership between Microsoft and Amazon, a big selling point of which was being able to control smart home gear through Alexa. In fairness, the latter still has much broader support for smart home ecosystems than Cortana, but Microsoft’s assistant now talks to several of the largest, and these plans must have been in the works for months now, certainly before the Alexa partnership was announced. At any rate, it’s going to be much simpler to control these devices directly through Cortana than through the awkward two-step process the Alexa partnership would require, and this is a good addition ahead of the launch of Cortana-based speakers.
via Windows Central
At its Build developer conference earlier this year, Microsoft laid out a vision for an ecosystem that would bridge its first party Windows operating system running on PCs and a variety of software experiences running on the two major mobile platforms, iOS and Android. At the time, it wasn’t entirely clear how that would work, and on iOS in particular there are major barriers to third parties providing deep integration. But it was a novel concept, and intended to offer an alternative to Apple’s hardware-based ecosystem lock-in and Google’s software-and-services-layer lockin by combining some of the best of both while offering more neutrality and flexibility.
Today, Microsoft announced two new mobile products intended to further that vision: a version of its Edge browser for iOS and Android, and an Android launcher that builds on an earlier, subtler effort. The Edge browser offers integration with the PC version, in a manner very similar to what Chrome and Safari already offer when used across platforms. The launcher, meanwhile, takes advantage of Android’s flexibility to integrate third party experiences directly into the operating system and offers some clever integrations for hopping between Android and PC experiences. This is the closest Microsoft is going to come in the near term (or probably ever) to having its own platform on mobile again, though of course it’s absent on iOS. Although Apple obviously offers tight integration between Macs and iPhones, the vast majority of the iPhone base doesn’t own a Mac, and many use PCs for work, school, or in their personal lives, so there’s clearly a need here Apple itself hasn’t worked all that hard to meet. That opportunity is likely even larger on Android, where an even higher portion of the base uses a Windows PC. These are early steps, and they certainly don’t execute on the vision Microsoft laid out at Build in its entirety, but it’s a good start.
A listing for Harman Kardon’s Cortana-powered speaker, which has been teased for nearly a year by Microsoft and its partner, has shown up on the Microsoft online store, priced at $200 and listed as going on sale on October 22nd. The marketing materials emphasize quality audio, with 360° sound, smart home control, and the ability to make hands-free calls using Skype, though that feature will cost money after an initial 6-month trial of Skype’s outbound calling feature. At $200, the cost is the same as the speaker Sonos announced yesterday, but since neither has been formally reviewed yet we can’t know how the audio quality compares, while Sonos differentiates in a big way by being part of a multi-room system. The price point, though, is indicative of the challenges of competing in this market if you can’t monetize in ways other than through the hardware itself, something that certainly applies to both Harman and Sonos. Amazon, on the other hand, and to a lesser extent Google, can afford to sell devices at or below cost because their ecosystems will benefit in other ways and through other revenue streams such as e-commerce or advertising. HP also has a Cortana speaker coming out soon, and I wouldn’t be surprised if that was priced similarly high.
via The Verge
Microsoft today held what it called in its unique terminology a mixed reality event, at which it made a number of announcements. Perhaps the biggest announcement was that Samsung is making a Windows VR headset, which will cost $499 and therefore land towards the higher end of the spectrum of Windows VR headsets, and well into the territory covered by the premium VR rigs from companies like HTC, Oculus, and Sony, a problem that I outlined a while back in this column. It and other headsets will be available in the next couple of weeks from a variety of vendors and at a variety of prices, though none of them at the $300 price point Microsoft originally touted for the space. That’s reflective of the fact that no-one wants to be the Google Cardboard of PC-based VR, as they all want to provide something of a premium experience. Also announced today was the quiet acquisition of most of a company called AltspaceVR, which was backed by Comcast and was effectively shuttered over the summer, and provided a social angle on VR, something Microsoft itself hasn’t had but which Facebook has made an obvious focus with Oculus and Facebook Spaces. Lastly Microsoft announced the number of apps available on the Microsoft Store for VR – 20,000 – and the fact that a basic Halo game will be coming to the platform this month too.
Overall, it feels like Microsoft is finally getting to the point where its VR push is bearing fruit after a lot of talking about it over the past year or so, and that’s a good thing given how marginal its AR push still is outside of very limited commercial and educational deployments. Its mixed reality terminology isn’t going to do it or its partners any favors from a marketing perspective, and it remains to be seen how many PC owners really want VR experiences enough to spend hundreds of dollars on new hardware rather than going the mobile VR route and buying a $100 add-on for their smartphones. Samsung’s entry into the market certainly creates an interesting opportunity for it to take its so far mobile-only strategy further up-market, and based on the response to its headset, it seems it may be one of the best on offer right now for Windows VR.
Microsoft has today announced that it’s killing off its own streaming music service, Groove Music, and will be partnering with Spotify instead as the latter builds an app for Windows 10 and the Xbox One. This isn’t a huge surprise – Microsoft’s various incarnations of music streaming services have never done as well as its base of Windows users should have enabled them to – but it’s an admission of how completely Microsoft has failed when it comes to consumer content services, where it’s basically a non-player. That, in turn, is indicative of Microsoft’s continued challenges as a consumer ecosystem, especially relative to Amazon, Apple, Facebook, and Google, which dominate much of consumer time and content consumption. Microsoft’s consumer presence is largely limited to its de facto standard status as a maker of paid productivity software and increasingly free standalone productivity apps on mobile platforms, alongside its search and gaming platforms. None of that engenders much positive loyalty to Microsoft from consumers, and it generates very little revenue for the company on the consumer side. And yet it continues to try to straddle the consumer and enterprise worlds in a way few have ever managed to do successfully. Giving up in music is a logical and sensible step, but it’s certainly not going to get Microsoft any closer to cracking the consumer market. Meanwhile, it’s yet another channel – albeit likely not a big one – for Spotify to sign up more streaming music subscribers.
via The Verge
Microsoft Announces Non-Cloud Office 2019 to Release in 2018 (Sep 26, 2017)
Today’s Ignite announcements appear to be far less notable than yesterday’s, but there’s still one biggish one: Microsoft has announced that its non-cloud version of Office will have its next major release next year, and will be called Office 2019 (apparently borrowing from car manufacturers’ tendency to decouple model years from calendar years). Microsoft refers to this version of Office as “perpetual” because it still uses the old perpetual licensing model associated with boxed and downloaded software rather than the subscription model associated with Office 365. The latter is now the main way Microsoft wants to sell Office, but in recognition of the complexity and sluggishness of many corporate IT departments, it has to continue to sell using the old model as well, and this release is really just a way to package up many of the incremental improvements made in Office 365 into a single version for those customers. That highlights some of the challenges of straddling the legacy and cloud worlds in software, and of course of the fact that Microsoft is the only major company now charging for productivity software, while Apple and Google offer their suites for free to individual users.
Apple has quietly switched the search back end for its Siri voice assistant and what used to be called Spotlight search to Google, after relying on Bing for several years. Bing will continue to provide the image search results in Siri, but is otherwise being replaced by Google. That’s a fascinating turn of events after several years of Apple removing Google from various elements of its built-in systems, from switching to its own maps to elimination the YouTube app to offering a variety of alternative default search providers in Safari, to this use of Bing behind the scenes. Although there’s obviously been some speculation that money was a factor here, and it may well have been, I suspect this ultimately comes down to wanting to provide the best possible experience in these various settings, and that means using Google. That’s ultimately the same reason that Apple hasn’t switched away from Google as the default search engine within Safari in Western markets – Google is the gold standard, and everything else still comes up short. I do wonder if this is part of a quiet renewal of the longstanding relationship between the two companies, which always prompts speculation about Apple replacing Google as the default. That certainly seems less likely now, as Apple in its brief public statement on this news has emphasized the need for consistency across experiences within iOS and macOS, suggesting that Google is here to stay as the default search option in Safari. That’s a big win for Google and a big loss for Microsoft, for which Apple’s partnership was a rare bright spot on mobile, while it continues to take decent share on the desktop by virtue of Windows’ dominance there.
Microsoft Makes Set of Announcements at Ignite Partner Event (Sep 25, 2017)
Microsoft kicked off its Ignite partner event in Florida today, and made a set of announcements during the opening keynote. The Microsoft blog post linked below gives a quick run-down of the big ones, which included new versions of the Microsoft 365 as-a-service Windows-Office bundle for education and “first-line workers” (roughly, workers who don’t sit behind desks but still use computers), new Azure partnerships with hardware vendors to enable hybrid cloud deployments, enhancements to Azure’s machine learning capabilities, and a push around quantum computing. Microsoft CEO Satya Nadella also launched a new book about his turnaround of Microsoft, and this was a theme throughout the day’s presentations. Lastly, it appears Microsoft is killing off Skype for Business in favor of its new Slack-like Teams product, which represents yet another in a string of changes to Microsoft’s enterprise communication software over the last few years – I’m hoping this strategy finally sticks. There’s nothing that significant here for the consumer technology market I spend most of my time covering, but the announcements are indicative of the big focus areas Microsoft has at the moment: cloud, AI and machine learning (as much as enablers of third party developers as within Microsoft’s own products), and openness and partnering.
Microsoft Confirms Plans for First UK Store (Sep 21, 2017)
Microsoft’s retail presence is about to add another country: the UK. Microsoft confirmed plans for its first UK store after some reporting over the last couple of days about an imminent lease for property in London’s Oxford Circus area, after years of rumors and apparent attempts and failures to secure appropriate space. Microsoft has just under 90 full stores worldwide and ten or so additional kiosk-type stores in the US, with all but one of its stores in North America (most in the US, with a few in Canada and one in Puerto Rico), with just one in Australia. Apple, by contrast, has just under 500 stores globally, including over 270 in the US and 38 in the UK, which was for a very long time its second largest retail presence, eclipsed by China only in the past year or so. But Microsoft’s retail presence has in general never been nearly as successful as Apple’s, in part because it’s never had enough of its own hardware to show off there, and has to rely instead on a mishmash of first and third party gear, with store employees often poorly informed about the details of individual products. The key driver behind the stores, though, has been wanting to pull all of the products based on Microsoft’s platforms together in one place in a more compelling way than big box retailers, which tend to do a terrible job ranging and displaying premium Windows laptops in particular. Just launching a new store in a new country is therefore not really what Microsoft’s retail strategy needs – instead, it needs a rethink of its entire purpose and role in Microsoft’s broader strategy.
Microsoft Promotes Xbox Head to Senior Leadership Team (Sep 19, 2017)
Satya Nadella has appointed Phil Spencer, who runs the Xbox team at Microsoft, to the company’s Senior Leadership Team, which now comprises 16 individuals. I just spent some time breaking down that SLT and there are 10 individuals in functional roles, from the CEO to the CMO and heads of HR, Legal, Finance, etc.; plus six individuals who run product or customer segment organizations, now including Spencer. Looked at that way, Spencer has been an odd omission from this team, given that gaming has generated 9-12% of Microsoft’s revenue annually for the past ten years, certainly up there with other groups like Windows and Devices (15% this past year), and LinkedIn (3%). But the Xbox has always been a bit of an oddity at Microsoft, a company which has always been much more geared towards business than consumer markets – indeed, Spencer is the first explicitly consumer-focused executive on the current SLT. More broadly, gaming is one of the bigger individual chunks of revenue, and as Mary Jo Foley points out in the piece linked below, even beyond Xbox hardware gaming is an increasingly important part of Microsoft’s strategy to monetize its consumer efforts, many of which today are free to the user. Arguably the next logical person to add to the SLT would be whoever is running Bing today, since advertising contributed 8% of Microsoft’s revenues last year and it’s another important chunk of its consumer business, albeit with a much lower executive profile (despite spending some time searching, I can’t actually figure out who that is, which tells you something).
Bing Adds Fact Check Summaries to News Search Results (Sep 18, 2017)
I saw this story first thing this morning and originally eliminated it as a candidate for inclusion on the site because it felt so marginal – it sometimes seems as though Google is the overwhelming leader in search and Bing such an also-ran that it doesn’t merit covering. But the reality is that Bing has somewhere over 20% market share in search in the US through a combination of apathy from users of Microsoft operating systems or browsers and active preference, so it’s not as marginal as it might seem, for all that Google gets massively more attention in this space. At any rate, the news is that Bing is adding a little fact checking feature to its news search results, but in a somewhat unsatisfactory way. Rather than flagging potentially false news itself, it will instead highlight the conclusions of fact checking articles from sites like Snopes when they happen to appear in search results. That’s a pretty tame and potentially not very helpful way to flag fake news, and I’d hope that Microsoft eventually goes a little further and puts links to fact-checking sites directly in the preview for dodgy news articles. Google’s version of the feature goes a little further but putting the fact check article at the top of the listings for at least some searches, and that seems like the right way to go here.
via The Verge
★ Amazon and Microsoft Announce Cortana-Alexa Integration (Aug 30, 2017)
Microsoft and Amazon have officially announced that their respective assistants will begin working together later this year, news broken by the New York Times along with interviews with the companies’ CEOs. Of the four major voice assistants, these two are arguably the weakest, for all that the prevailing narrative is that Amazon is ahead in voice. As a reminder, Amazon has perhaps 15-20 million users of its Alexa assistant today, while Microsoft has 145 million regular Cortana users, Google has hundreds of millions of Android devices in the market with some form of its voice assistant technology, and Apple has nearly a billion Siri-enabled devices in use, with 375 million monthly active users as of June. More importantly, both Amazon and Microsoft are bound to a single category of devices today: home speakers for Amazon and PCs for Microsoft. Yes, both have smartphone apps too, but they’re very much second class citizens behind the built-in assistants available from the lock screen on the two major smartphone platforms. So the coming together here makes a certain amount of sense on that basis.
However, this doesn’t solve that fundamental problem of getting first party status on smartphones, and the integration the companies will offer will at least at first be both awkward and limited. Users of either assistant will have to invoke the other using double commands (“Cortana, open Alexa…” or vice versa) before even speaking their request. The integration itself will likely focus on smart home control from Cortana and personal information management through Microsoft’s apps from Alexa, filling an important gap in Amazon’s portfolio given that it lacks its own broadly-used calendar, contacts, reminders, or other PIM apps. In theory, the integration will get less awkward at some point down the line, with each assistant deciding on the fly which underlying AI to use to process a request, but in practice that seems challenging.
For today, it’s relatively straightforward given that the two assistants excel in different domains, but Microsoft’s partners are about to launch the first Cortana-powered speakers and other home devices that will compete more directly with the Amazon Echo, and the overlaps between their capabilities will only grow over time. So who will decide which AI handles which requests? Will this integration only live as long as the companies can agree on that? Or will the lead assistant in each case grab the tasks it wants and leave the dregs for the other? Meanwhile, both Google and Apple will make inroads into the home speaker space in the coming months, allowing them to provide more ubiquitous voice assistants and erode Amazon’s early lead in the home voice market. To summarize, though the logic behind a deal here is reasonably sound, it’s likely to be strained over time and less relevant as the two larger voice platforms expand in the home.
Note: for non-subscribers, I’ve temporarily opened access to the “Amazon is Ahead in Voice” narrative evaluation linked below, so you can go and read (or watch a video on) the broader context for this move and why I say above that Amazon is one of the weaker rather than stronger players in this market.
via New York Times