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With Windows Phone 8 and the Surface tablet, the Microsoft Giant Stirs from its Slumber

Over the last few years Microsoft has been kicked in the shins repeatedly by Apple’s success with the iPad and iPhone (not to mention the Macbook Air) and Google Android’s runaway success in the handset space.  However, with the recent introduction of the Surface tablet, Microsoft’s Windows Phone 8 software, integration of Xbox online gaming into Windows 8 and the forthcoming general release of Windows 8, I believe Microsoft is poised for a dramatic resurgence over the next few years.

In the enterprise, RIM used to be the phone of choice. Unfortunately for RIM they have made some huge strategic blunders over the past few years and committed the equivalent of corporate hari-kari. This leaves a large opportunity for smartphones in the enterprise. Yes, the iPhone is better than it was for mail integration, as is Android, but neither platform is really the IT managers dream OS for the enterprise. Enter Windows Phone 8. Nokia introduced a precursor to Windows Phone 8 including the Metro interface and users who have purchased the Nokia Lumina [with its Metro interface] have found it to be exceptionally usable. With Windows Phone 8 MS has improved Metro, brought forward the apps that ran on Windows 7.5, but far more importantly, they have also brought in to Windows Phone 8 much of the enterprise management capability that is in Windows 7 and in the forthcoming enterprise version of Windows 8. The ramifications are clear. For major enterprises that provide phones to their employees, Windows Phone 8 will become the dominant phone OS of choice because of its tight and relatively seamless integration with Windows 8 in the enterprise. But for the IT manager, it gets better. The new MS Surface tablet looks like a real winner.  With an integrated slim keyboard and a brilliant choice of tablet covers this becomes a real tablet for the enterprise market. Now when the sales team or corporate execs demand the IT department to supply them a tablet, i.e. when they ask for an iPad, the IT department will ship them a Surface instead.  Why?  Because it will integrate seamlessly with the company’s enterprise applications. The availability of Metro smartphones, the Surface tablet not to mention ultrabooks – all running versions of Windows 8, will cause the enterprise to become a bastion of the Metro interface. Volumes of Windows Phone 8 and Windows 8 tablets will surge.

All well and good you might say, but how about consumers?  Clearly Apple is cool, Google is pretty cool. Microsoft, at best, is thought of as stodgy and has become the middle aged IBM IT company they used to battle against.  Not so fast.  In the home today, the battle of the game consoles has narrowed down to Microsoft and Sony. Microsoft introduced the Kinect to great critical acclaim and sold 10 million units record time. Moreover, Microsoft has tons of cash in the bank and is vigorously working to improve the Xbox experience. They are currently #1 in game consoles and clearly have yet unknown plans to gain even more market share. Sony by contrast is not flush with cash and as a company is bleeding badly. In addition Sony has had major management changes over the last few years which inevitably will play out as a loss of competitiveness to Microsoft. So how does this help Microsoft in the consumer world? First, as MS brings Xbox LIVE applications into Metro they make it easier for consumers to choose a future Windows Phone 8 or Surface tablet because of the integration capabilities with Xbox LIVE. Second, as people bring their enterprise devices [Windows 8-based] home from work, more consumers will begin to standardize on just one kind of widget – Windows 8 – instead of 2 or 3. Third, the Windows Phone 8 and Surface introductions clearly demonstrate that Microsoft has broken down the classic hard walled business unit silos that commonly evolve in mega-companies in order to leverage their strengths in order to provide the integration they are demonstrating now with Windows 8. This is a very, very clear leading indicator that there are other future integrations yet to come that we haven’t seen yet between future Xbox products and the rest of the Win 8 products on the Redmond campus. I don’t know what these products are, but if the recent Microsoft announcements are any indication there are some compelling new applications and products coming over the next year or so.

How do these developments at MS change the future?  Who are the winners and losers? One of the winners will be both consumers and enterprise users. Microsoft will also benefit. Other winners will be Samsung and Qualcomm, they will certainly supply chips to these products. On the losing side will be RIM, though they are essentially dead already. Also losing something here will be Intel, Apple, Google and Sony. Huh? I am NOT saying that Microsoft’s strategy will dramatically hurt Intel, Apple or Google.  However in market share terms they will each lose some share in their dominant market space. Intel will be selling less CPUs because ARM based CPUs from Samsung, Qualcomm and Nvidia will be in many of the Windows Phone 8 smartphones and tablets. In addition, Microsoft’s OS in the future won’t be only tied to Intel’s X86. As Microsoft gains share in the smartphone and tablet enterprise market segments they will take share from the Apple and Google juggernaut. Finally, as the Xbox gains market share in the consumer market, whatever Microsoft is planning in addition to MS LIVE integration will certainly help them gain mind share with consumers.

Finally, what does this all mean for a future world of “Life without Wires”? I have some thoughts here – but let’s leave that for the next installment.

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