In a recent Vanity Fair feature on Microsoft that you should certainly read, a comment from former CEO Bill Gates is worth considering: “[T]he original idea of having great software people and broad software products and Office being the primary tool that people look to across all these devices, that’s as true today and as strong as ever.”
What’s fun about the Gates quote is how correct, and historically fraught, it is; Microsoft built Office for Mac for years, but when it came time to release the productivity suite for iPad and Android tablets, those efforts didn’t reach fruition in the first case, or appear to race to market in the second, until new CEO Satya Nadella took the reins.
Perhaps even more interesting is how Gates puts Office squarely in the middle of the company, perhaps even more so than Windows. That might seem like a semantic point, but it slides right into Nadella’s “platforms and productivity mantra.”
Now that we’ve entered the era of Windows 10, it’s worth keeping in mind the following two things: The cost of Windows on a per-PC basis is declining, and Office has shown massive early potential to monetize on a recurring basis in the cloud and mobile era.
As such, Microsoft has to win on both fronts, but the financial success of Office will likely float Windows’ transition to a service-supporting product.
Caveat to the above is that what Gates said does not diminish the importance of Windows to Microsoft. A healthy Windows is one way Microsoft retains the enterprise market share that partially drives Office incomes. Unsurprisingly, at a platform company, things are intermingled.