Company / division: Windows
Microsoft Begins Bundling Windows and Office for Businesses (Jul 10, 2017)
Microsoft Announces Dell, Asus, and Lenovo VR Headsets (May 31, 2017)
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)
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 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.