Microsoft, Nokia and RIM

Apparently, Microsoft and Nokia had spoken about buying RIM. So far, it is just talk, but it got me thinking about what a deal could look like, and what it would mean for the various players.

First, I don’t see the point of Nokia participating, because I don’t think MS buying RIM would be about the RIM handset or operating system business. This would be a deal to benefit Microsoft. The main goal: incorporate RIM’s enterprise technologies into the Microsoft portfolio of products and services. RIM has 3 pieces that I think Microsoft could use to their advantage. But, this presumes Microsoft is prepared to wake up, smell the coffee and capitulate to the inevitable: they aren’t going to be a major player as a mobile operating system. What I see is a future for Microsoft to continue to have a useful influence in the technology world, and a way for some parts of RIM to carry on. What this plays to is Microsoft’s current strongholds, specifically office suites and enterprise technology. I see this as a two-part strategy involving Office and Exchange.

A (Slightly Altered) Strategy for Office

Office is still the dominant technology for word processing and spreadsheets, but it is under attack by Google Docs, and losing some ground as a result. Microsoft’s biggest challenges here are that Google Docs has been proven to be “good enough” for enterprise users, and it is free to most people. That doesn’t mean people, or more importantly enterprise users, wouldn’t be willing to pay for it. But small businesses and individual users find it attractive because it helps keep costs under control.

So how does Microsoft counter this? I see a 3-part strategy for Office, involving the traditional desktop/laptop space, mobile and cloud. First, the desktop and laptop space: Microsoft needs to offer a “lite” version of Word, Excel and Powerpoint for students, casual users and small businesses. This version needs to be cheap, more along the lines of Apple’s pricing for the iWork components (Pages, Numbers and Keynote) at around $20.00 each. Microsoft could charge a higher price (maybe closer to $50), but not much more. I don’t see the need for a free offering for the desktop/laptop version, because people in this market space are willing to pay for something. But what would a “lite” version look like? Well, that would depend on what people use. If they haven’t already, Microsoft needs to instrument their current versions and understand, in detail, what people use and don’t use, and focus on the features that the 90th percentile use. Strip out anything else, and make that as a downloadable (for purchase) extra.

The second part is mobile: Microsoft needs to get versions of Word, Excel and PowerPoint (and maybe Outlook) on Android and iOS. Windows Phone is, for all intents and purposes, dead. It has been mired at 2% of the market for the past year, and hasn’t budged from that point. The first Nokia handsets have been out for a couple of months now, the current buzz is that they haven’t moved the needle for Windows Phone. So, rather than continuing to flog a dead horse, and be left out of the computing revolution that is currently under way, Microsoft needs to ride the wave or risk being left behind. That means versions of Office on iPhone, iPad and Android. Yes, we all know that Windows 8 is coming, and as per usual, there is a ton of hype from the Microsoft camp how it is going to take over the tablet and Ultrabook space. Ultrabooks I’ll give them. Netbooks didn’t have their day in the sun until the Windows versions of them started to hit the streets. Windows will also be a significant part of Ultrabooks, given that the only non-Windows “ultrabook” with any serious volume is the MacBook Air. I expect Ultrabooks will become the defacto standard for laptop/notebook computing, because there are times when you need a real keyboard, and you need it attached to the screen to be useful but still portable.

But in tablets, I just don’t see it for Windows. Despite claims about the “massive Windows software library” being available, the reality is only a tiny, tiny fraction will be touch-enabled. Mouse-and-keyboard applications just don’t work well in a touch world. They depend too much on the keyboard being available 100% of the time and depend on mouse activities (like hovering) which don’t exist in tablets.  The targets on toolbars are too small, again assuming a highly accurate pointing device (a cursor controlled by a mouse) rather than a less accurate fingertip. Simply running an existing Windows application on a tablet is a less than satisfying experience. People will figure this out, and will stick with the two platforms (iPad and Kindle Fire) that have solutions built for the device.

The last part for Office is the cloud, and this involves Office365, but with a twist. Microsoft needs to offer a free version of Office365. Like the “lite” version I discussed for the desktop/laptop version of Office, this would have a subset of features. It would offer some limit in terms of storage (by space, not by the number of documents). It may not have access to enhanced enterprise features. A free version would help keep previous users of Office in the fold that are striking out on their own (either as self-employed contractors or in smaller startups). It would be attractive to students and people who want something for home use, but don’t want to spend money to get it. GoogleDocs is capturing some of that right now. It’s free. It comes with Google’s array of products (gmail, reader, finance, docs) to form a reasonably complete productivity and news/information processing platform. A free version of Office365 would be a useful answer to that. The key points in Office365’s favour? It’s “real Office”. You aren’t working with something “compatible” with Word, you are working with Word. You aren’t using something that is “similar” to Excel, you are using Excel. These are brand names that carry weight. They are easy to adopt because everyone else is using them too.

Reinforcing the Enterprise

On the enterprise side, Microsoft could use RIM technologies to help bolster their offerings. The specific components are Blackberry Enterprise Server (BES), Blackberry Internet Service (BIS) and Blackberry Messenger (BBM). Microsoft is currently the most prevalent operating system in the server room. Technologies like Exchange and Sharepoint are the dominant components in their class. Microsoft still has minimal presence in the web server space, and Linux is still the king when it comes to the Internet-facing part of most companies. But behind the firewall, Microsoft is the leader.

But, there are some weaknesses, and RIM technologies and infrastructure could help plug those holes. The first, and key in my mind, is BES. If Microsoft should take it, incorporate it as standard in MS Exchange, and expand it to support iOS and Android. This solidifies Microsoft’s position in the server room. It means they can offer their customers secure and efficient ways for mobile devices to interact with corporate resources.  Right now, the only option is ActiveSync, which is okay, but isn’t nearly as secure as BES. It also isn’t quite as efficient, because it isn’t really “push” notification. Microsoft could change that, offering a way to integrate mobile devices into the corporate network in a way that is secure and simple.

BIS, offered as a free service, would give small businesses and individuals a way to get some of the advantages of BES, but without the cost. Again, offer a service with some limit in terms of the amount of storage or bandwidth used, and offer upgraded services (for a price) to those that want it, but don’t have the money or resources to set up their own infrastructure. In essence, make BIS a cloud-based version of MS Exchange, working with mobile devices as well as desktop clients like Outlook or Thunderbird. Again, small businesses want enterprise-grade services, but some don’t have the budget or people to set up and maintain their own instances of these things. By offering services for free, and for reasonable prices to gain extra space or features, Microsoft continues to play a meaningful part of the enterprise business for a long while. Give small companies a growth path (free BIS, paid BIS, hosted Exchange, in-house Exchange) that allows them a way to upgrade the back-end without having to change the front.

A New Focus For Microsoft

Needless to say, these suggestions would mean a slightly new direction, but most certainly a new focus for Microsoft. For nearly 3 decades, Microsoft has been the provider of The Platform. They owned and sold the operating system that ran the personal computing revolution, and that is the underpinning of a very large part of the corporate and personal computing world. Microsoft was at the centre of a shift in the technology landscape that saw the rise of the desktop and laptop. It changed the dynamic of computing, from people interacting with large machines in remote locations, to having local computing available for their own use. The big machines in the back are still there. They still have an important job, and Microsoft has also become a big part of what happens behind the scenes, behind the web site and IMAP connection. But a lot of computing shifted from the server room to our desktops and to our lap.

But we are in the midst of another shift in computing, one that started over a decade ago, but that has only started to gain real momentum in the past 3 or 4 years. Computing is moving again, from our desks to our pockets and purses. The Nokia N9, the Treo, Windows CE and Blackberry were the pebbles that signalled an impending avalanche. They were like the Osbourne, the Sinclair and the TRS-80 from the 1970’s, the first indicators of what was possible and what could come. Right now, Microsoft isn’t part of this mobile computing revolution, and their hold on their traditional desktop/laptop market is under some pressure. Windows once commanded nearly 95% of personal computing. Now, they are at 85% and falling as the Mac gains ground. But the desktop and laptop space is becoming less important as more and more people rely on smartphones and tablets for their personal computing needs. This has given rise to two things. The first is increased use of the cloud, to share data between these devices as well as to provide some computing resources. The second is a new generation of end-user software geared towards smaller screens and touch interfaces. Companies like Adobe and Autodesk have realized this, and have been moving their own products to this new space, forestalling new potential competitors. But new players are emerging, and a new crop of 3rd party software developers has been given a chance to flourish because of iOS and Android.

Microsoft, though, is largely absent, seemingly determined to continue down a path which is leading them away from the main body of the market. Windows Phone isn’t going to reassert Microsoft’s dominance of the smartphone space. A lack of touch-enabled apps won’t give Windows 8 much of a presence in the tablet space. People aren’t waiting for Windows 8. They are buying iPads and Kindle Fires now. They aren’t seriously considering Windows Phone, they are buying Androids and iPhones now. If Microsoft wants to be an important and meaningful part of the mobile computing space, they need to take the technologies they have that people do want (Office for the end user, Exchange and others on servers) and make them accessible to a bigger market.

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