The current reality facing Nadella is that Microsoft’s mobile strategy in hardware and software failed and tying everything to Windows for a boost didn’t help. But Microsoft’s Azure cloud business is booming, as is the growing revenue from business software subscriptions like Office 365 and Dynamics 365. In its most recent quarter, the three months ended Dec. 31, revenue from Office 365 increased 41%, Dynamics 365 rose 67% and Azure sales jumped 98%. At the same time, revenue from Windows commercial products dropped 4%, Surface computer sales gained 1%, and Windows sales for PCs rose 4%.
The new idea for 2018 is to tie everything more closely to the cloud and the fast-growing Azure unit. The WDG is being disbanded and band leader Terry Myerson is retiring from Microsoft. When the WDG was formed under Myerson, he took over mobile efforts from Stephen Elop, who left the company. It will be interesting to see if Myerson’s directions are erased as quickly as he moved away from Elop’s failing strategy.
Much of the Windows software effort, called the Windows Platform Team, will move under cloud and enterprise software leader Scott Guthrie’s group, along with several AI initiatives. Guthire also gets charge of AI speech, vision, augmented and virtual reality (what Microsoft calls mixed reality) efforts. Putting those teams, which face fierce competition from the likes of Amazon (amzn, +0.94%), Google (googl, +3.46%), and Apple (aapl, +1.00%), together with Azure could help them catch on as cloud services.While Fortune make a special point to reassure folks that Windows 10 is doing "just fine," I don't think there are too many ways to read Microsoft's latest moves as anything other than an admission that their prior decades' Windows strategy is a failure. Microsoft have repeatedly tried to leverage Windows' dominant position on desktops and laptops into a dominant market position in, basically, every aspect of our data/information age lifestyles, only to find little to no traction with consumers, and only slow uptake from businesses.
Microsoft are not going to be Apple, or Google, or Amazon, and it looks like they may be tired of trying. Exactly what cutting their losses might look like, or what that might mean for consumers who, let's face it, mostly don't want to and/or can't afford to convert their bought-and-paid-for PCs into expensive-subscription machines. Whether MS are now planning to stop pushing Windows 10 so damn hard, and start adopting a more consumer-friendly stance with Windows, generally, will be interesting to see.
Just remember, folks: Linux is an option here, and ChromeOS is also coming.