Microsoft is a company with a new cloud focus, a new CEO, and new re-org, and a massive new hardware business that brought in around $3.5 billion in revenue in its most recent across two device categories alone. So if you aren’t completely sure what the hell Microsoft is, I don’t blame you.
The company’s CEO, Satya Nadella, speaking to the media last week at an event on its Redmond campus was notably clear on what the new soul of his company is: Windows, Office 365, and Azure. Here’s the full quote [Emphasis: TechCrunch]:
I just think about three things. There are a few other efforts we do, and I’ve been very clear about those efforts and why they exist and why we are proud of them. But, there are three products in all of this. There is Windows, there is Office 365, and there is Azure. That’s it. Everything else to me is, of course, you can call them features, you can call them parts of that, and even there there’s complexity. Do we need to tame it make sure that we’re not inundated by lots and lots of things? But, from a business model, from what moves the needle for both usage and our revenue, those are the three big things that we are very, very focused on.
It’s not a surprising comment, but it is illustrative. Windows is the company’s core platform that businesses and consumers interact with, Office 365 is the future of its productivity efforts, and Azure is the engine that powers the two. So It’s Office 365 and Windows on top of Azure, if you want to be simplistic.
The comment also helps put Microsoft’s efforts in other categories like gaming, and hardware into perspective. Gaming is a huge developer and app category. Windows needs both developer attention and more apps. So, Microsoft has to be good at gaming. Xbox, Minecraft, and other work fits into that part of the picture, helping to support Windows in a non-technical sense.
Hardware can be thought along related lines. Microsoft thinks that the Surface Pro 3 is the best Windows 10 device, I think it is fair to guess. In its view it makes Windows better, again I presume, given the company’s positioning of the product, and therefore it makes a fine component of its larger, three-point plan.
So, Microsoft will pursue things that will help its core offerings. However, work that doesn’t directly tie into one of the three likely won’t have a future. There is grey area, of course, between what does in fact support Office 365, say, or not. But I think that any product that plugs into two of the three is a pretty sure bet. Bing, for example, fits into all three, making it essentially an un-killable product at the company. And one that will not be sold, to hit that point again.
Office 365 is a service, as is Azure. Nadella said that he wants the company to think of Windows 10 “as a service,” as well. So that’s three services, each of which can also be called a platform. I think that that fact is why the company switched from its self-ascribed label of being a “devices and services” company to one that is “cloud-first, mobile-first.”
As a final point, Azure might be the single most important thing at Microsoft at the moment. Here’s Nadella on the importance of the cloud:
“The notion that the control point is somehow in one device family is a very short-lived thing…For us it’s clear that the control point is in the cloud, Windows is a subset of devices that can rendezvous with our cloud very successfully.”
You can read that a few different ways, but Nadella’s point as best as I can understand is that Windows, as a service in the future, depends on an under-platform. This also helps explain Azure’s work to support other, higher-stack platforms, like Linux.
The above is the rubric by which Microsoft’s investment choices will be made. So let’s play the game: What company would be a great to support at least two of the three? And how badly does Microsoft want it?