By just about any measure, Microsoft had a pretty good 2018. I have five suggestions on how CEO Satya Nadella and his teams can keep customers happy and make money in 2019.
From a business perspective, Microsoft had a pretty good 2018. That’s especially true when you examine the company’s revenue, profits, stock price, and momentum against other giant tech companies, especially Apple, Google, and especially Facebook. Those three stalwarts of the once-mighty FAANG displayed rare weakness in 2018, while Microsoft looks poised to end the year with the largest market cap of any publicly traded company in the world.
That’s pretty good for a company that has been written off as a dinosaur multiple times since the turn of the 21st Century.
But 2019 is a new year, with new challenges and opportunities. In that spirit, I offer congratulations to CEO Satya Nadella on an excellent year, along with some suggestions for how to keep that momentum going.
My wish list might not pass muster with Redmond’s legions of MBAs intent on squeezing every last dime from the pockets of Microsoft customers. Instead, my suggestions are designed to earn the enduring loyalty of those customers. As Facebook proved this year, you can’t take that loyalty for granted.
On privacy, move to the high ground and stay there.
Privacy is the defining issue in technology today. Just ask Facebook, whose reputation is in tatters after a year of devastating revelations about its alternately incompetent and malevolent (and occasionally both) treatment of its customers’ data. Google has so far avoided the public tarring-and-feathering that Zuckerberg and Co. have earned, but their business model, tied to zealous collection of personal information, makes them a constant target.
That creates a rare opportunity to do the right thing, morally and legally, and reap long-term economic benefit from it.
Apple discovered this year that privacy is a winning argument, with CEO Tim Cook arguing that “[o]ur own information, from the everyday to the deeply personal, is being weaponized against us with military efficiency.” It’s an argument that Apple has been making for years, but in 2018 it finally hit home, especially after Facebook’s “dire” privacy blunders.
Microsoft’s history on privacy issues is checkered, to say the least. A decade ago, Microsoft’s developers were ready to implement an anti-tracking feature in Internet Explorer. Unfortunately, that feature never shipped; instead, it was killed by a competing faction that was convinced it could make billions from online advertising: Bad Microsoft defeated Good Microsoft.
And don’t get me started on the painful, self-destructive “Scroogled” campaign.
But this is a new era and a new Microsoft, and a genuine commitment to protecting the personal and business data of its customers across the board would be welcome. The company’s decision to extend the rights available under the European Union’s General Data Protection Regulation to customers worldwide is an excellent start. Please keep it up.
Make Windows 10 updates less painful.
After more than four years of development, Microsoft has settled into a rhythm with its Windows 10 development process. Alas, it’s not a “smooth jazz” rhythm but instead has all the aesthetic appeal of a jackhammer ripping up concrete outside your office window.
This year’s October 2018 Update was the definite low point, forcing Microsoft to take the unprecedented step of pulling the feature update from its servers and finally re-releasing the October update more than a month later.
There’s no question that the entire episode was an embarrassment, and Microsoft will no doubt learn some serious lessons from the entire affair. But as far as I am concerned the first and most important step is to eliminate mandatory twice-a-year feature updates.
Stop with the shovelware already.
Beginning with the release of Windows 10 in July 2015, every SEC-mandated 10-Q and 10-K report filed by Microsoft Corporation included this boilerplate statement: “[W]e anticipate that Windows 10 will enable new post-license monetization opportunities beyond initial license revenues.”
The first salvo included piles of crappy apps splattered onto your Start menu whether you want them or not, including Candy Crush Soda Saga, Bubble Witch 3 Saga, and March of Empires. That infestation even includes PCs sold with Windows 10 Pro, which seems to be a lousy way to treat your best customers.
When I wrote about Microsoft’s plans to milk more profits out of its Windows 10 cash cow early in 2018, I predicted that more details about those “monetization opportunities” would arrive soon. Sure enough, with its July 2018 annual report, that vague text became significantly more concrete:
Our ambition for Windows 10 is to broaden our economic opportunity through three key levers: an original equipment manufacturer (“OEM”) ecosystem that creates exciting new hardware designs for Windows 10; our commitment to our first-party premium device portfolio; and monetization opportunities such as gaming, services, subscriptions, and search advertising.
You know what’s not in that list? Stupid games like Candy Crush. Also not on the list are any kind of ads in Windows itself, outside of search-based functions.
That’s a good call. The appeal of advertising inevitably leads to temptations to weaken privacy settings, so reducing projections of ad revenue is a very good thing. And even in those places where ads are expected, there should be an easy ad-free option available.
Don’t repeat the XP mess with Windows 7.
The year 2019 will officially end on New Year’s Day, 2020. But Microsoft’s product planners are no doubt looking two weeks further into the future, to January 14, 2020. That’s when Windows 7 officially reaches its end-of-support date.
If you’re the glass-half-full type, that’s a good problem to have. After all, it means your customers are so loyal that they’ll stick with your products for a decade or more.
Unfortunately, out in the real world, the glass is at least half empty. The last time this happened was when Windows XP reached its end-of-life date in 2014. The number of laggards was painfully large, especially in the public sector, and they remained in the refusenik camp for years. The result, as every security professional remembers, was a massive worldwide ransomware outbreak that forced Microsoft to release an XP patch in May 2017.
In interviews, Microsoft’s executives have assured me that the migration from Windows 7 to Windows 10 is going swimmingly. But those assurances belie the inconvenient reality that when that end-of-support date rolls around a little more than a year from now, the percentage of PCs running Windows 7 will continue to be significantly higher than a few percent.
The good news for enterprise customers is that Microsoft has already announced it will offer continuing access to Windows 7 security updates (for a fee, of course) through January 2023, with access through partners and Microsoft corporate account specialists. The real question is how the company will cover small and medium-sized businesses, who are least likely to have partner arrangements and are thus most at risk.
When I was a little boy, every year I asked Santa for a pony. He never brought one. This suggestion’s probably in the same not-gonna-happen bucket, but I throw it in just because it never hurts to ask.
When Windows 10 was released, I noted that the lineup of editions was refreshingly simple. That, unfortunately, didn’t last long. There was Windows 10 S, which was a brand new edition and then turned into a feature. Three lineups of Microsoft 365 are making the decision matrix even more confusing for IT pros. And with a consumer edition of Microsoft 365 on the calendar for 2019, things are going to get more complicated, not less.
So, for my final wish, I ask Microsoft, please: Keep it simple.
Date: January 2, 2019