WASHINGTON, DC – Microsoft kicked off its annual Worldwide Partner Conference here by telling the assembled masses of the Microsoft Partner Network that it sees itself in a new light. While the company has long dominated the PC market, and continues to do so, in its new target market of “cloud first, mobile first,” it says it needs to view itself as an up-and-comer.
“Our past has been very successful, starting with the Windows client and then moving into Office and productivity, and then into server and enterprise. With our partner channel, we had an attach-and-license motion that was very effective. It was good for you, and it was good for us for a long, long time,” Microsoft COO Kevin Turner told attendees. “But in this mobile first, cloud first world, our world looks a lot different. It’s a new reality today.”
At the heart of that new reality is that Microsoft can’t throw its weight around quite the way its has historically done so. While it has historically owned 90-plus per cent of the PC market, and continues to do so, when you look out to the total devices environment on which it wants to play, including smartphones and tablets, it owns only a paltry 14 per cent of the total device market – and that’s including its stronghold in the personal computer space.
“We have a much bigger opportunity than we’ve ever had in the past,” Turner said. “But we have to rethink how we look at our business. We have to have a new mindset. When you’re in the 90 per cent share world, you look at protecting and preserving your market. When you’ve got 14 per cent device share, you have to be a challenger, and everybody at Microsoft, and in our partner community, has to adopt a challenger mindset.”
For Microsoft, that means focusing on disrupting its rivals, on differentiation against its rivals, and on moving with greater speed than it has ever done so before. Turner’s presentation still contained elements of its traditional form – it was filled with banter aimed at competitors including Apple and Google – but it also had a new humility to it, perhaps part and parcel of an overall re-imagining of Microsoft that’s going on under new CEO Satya Nadella, who closes the show with a Wednesday-morning keynote here. In a memo to Microsoft employees last week, and a similar memo to partners released this weekend on the eve of WPC, Nadella hinted of a broad reorganization and re-creation of the Microsoft corporate culture, saying that “nothing was off the table” in terms of reinventing the software titan.
Former Microsoft Canada boss Phil Sorgen, in his first year as the official host of WPC as corporate vice president of Microsoft’s worldwide partner group, touched on the changes, saying “people started taking a new look at Microsoft” with Nadella’s ascension to the CEO’s seat earlier this year.
“We’re a company that is willing to challenge its own history to embrace our customers’ needs,” Sorgen said of the modern-day Microsoft Nadella et al are architecting. “Today, we’re coming from a position of strength. Our brand is strong, and it’s a trusted brand – Windows and Office both have more than a billion users.”
Turner highlighted several key decisions the company has taken in its self-reinvention, especially the decision not to charge royalties on copies of Windows for devices with screen sizes of less than nine inches. He noted that on the very week that decision was announced, the company won 31 new contracts for Windows-based phones and tablets, areas where it will be vitally important for the company to gain traction if it is to meet Turner’s goals for increasing the company’s relevance in the overall device market, which is increasingly a mobile-centric numbers game.
“I want to take that 14 per cent to 18, from 18 to 25, from 25 to 30, and keep climbing the chart because this opportunity is bigger than anything we’ve ever seen in the past,” Turner told attendees. “That is exciting.”