Microsoft's future lies in the enterprise

By focusing on the enterprise, Redmond will bounce back from its failed flirtation with the consumer market

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Microsoft's future lies in the enterprise If Ballmer were still in charge, both investors in and customers of Redmond would be extremely worried
By  Tom Paye Published  August 2, 2015

If you look at the history of computing, and its proliferation into the mainstream, you could argue that Microsoft has done more than any other company to shape the industry.

Its domination of the worldwide PC market through the 1980s and 1990s, which saw it achieve its goal of "a PC on every desk", cannot be understated, and nor can the affects that this had on the wider IT industry.

Microsoft has been cashing in on the success it reaped during the early days of computing for decades now. But today, in an age of pervasive mobile computing where the user is king, the company has been losing its way a little. Its disastrous foray into consumer electronics, culminating in the purchase of Nokia's handset business under former CEO Steve Ballmer, led to one of the company's biggest fourth-quarter losses in recent memory - thanks largely to a $7.6 billion write-down for the Nokia purchase.

If Ballmer were still in charge, both investors in and customers of Redmond would be extremely worried. However, under the current CEO, Satya Nadella, it's clear that change is coming, and the smart money is on Microsoft bouncing back by concentrating on its real strength - the enterprise.

Nadella might have been lumbered with Ballmer's mobile blunder, but he has shown plenty of strength in attempting to tackle the problem. In July, before the company's quarterly earnings were announced, he restructured the business, shedding up to 7,800 Nokia-related jobs and tucking the group away into a sub-category of the devices business. It was bold, given that, only 18 months previously, Nadella had publicly endorsed Microsoft's acquisition of Nokia's devices group. But what really impressed was the clarity with which Nadella made the announcement.

"I want to discuss our plans to focus our talent and investments in areas where we have differentiation and potential for growth, as well as how we'll partner to drive better scale and results. In all we do, we will take a long-term view and build deep technical capability that allows us to innovate in the future," he wrote in an internal memo.

As the former head of Microsoft's cloud business group, Nadella knows where Microsoft's differentiation and potential for growth is coming from - its enterprise services, including the Azure cloud, Server, and Office/productivity software. Sure, other lines of business like Windows are handy from a cash-flow perspective, but as the world turns increasingly mobile, it's clear that the operating system won't always be the cash cow that it has been for the last two decades.

An enterprise-focused strategy will make up for this. Expect more from Windows Server, the Dynamics ERP suites, and bigger investments in the Azure cloud and the Hyper-V virtualisation platform. This is where growth lies as these products improve. Of course, enterprise customers of Microsoft are already aware of the strides that section of the company is making. What's impressive, though, is just how quickly Nadella has been able to tune the rest of the company's focus to enterprise needs.

Microsoft has endured a tough past few years, thanks largely to its flirtations with the consumer market. But as the company shifts back to what it knows best, its relevance to the IT world is only set to grow.                 

423 days ago
GoodThings2Life

You're right, their future lies with the Enterprise... but... it lies EVERYWHERE.

Windows 10 isn't just the future of the desktop in business, it's the future of mobility too. When your apps and data follow YOU from your desktop to laptop to gaming consoles to tablets to phones to holographic projections, you start to realize that it's not TECH that is mobile, it's the user. You can use whatever you want and still have your stuff with you, and Microsoft is the company that makes that happen in ways Google and Apple can't match.

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