CXO

Why Microsoft's consumer 'flakiness' could be its key to enterprise success

Microsoft has been killing off failing consumer products, which has brought loud complaints from some. Here's why those critics are wrong.

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Image: iStockphoto/wellesenterprises

Remember that one Groove Music user you knew? Pity her.

After all, as recently announced, Microsoft has decided to shutter the struggling service, moving Groove users on to Spotify. Spotify makes sense, given Microsoft's support for the service through Xbox and, well, because Spotify isn't Apple Music, the no. 2 player in streaming music.

Where it doesn't make sense, Andrew Orlowski opined, is in how far this could go toward damaging Microsoft's reputation. In Orlowski's mind, the problem isn't so much its reputation with consumers, but rather with the businesses that employ them: "A reputation for flakiness risks long term damage to Microsoft in the enterprise."

I believe the opposite effect is likely. Here's why.

Unraveling this mess

As hard as it is to build, ship, and sell a product, it's even harder to kill a product, either while still gestating it or after it has shipped. Apple founder Steve Jobs once famously said, "Deciding what not to do is as important as deciding what to do," and regularly spiked product ideas that might end up good but defocused.

Or, quite simply, not good enough.

SEE: Microsoft to shutter its Groove Music service and migrate users to Spotify (ZDNet)

In fact, in a nod to Microsoft, Jobs told Google co-founder Larry Page that Google needed to simplify and streamline its product portfolio:

It's now all over the map. What are the five products you want to focus on? Get rid of the rest, because they're dragging you down. They're turning you into Microsoft. They're causing you to turn out products that are adequate but not great.

"Turning you into Microsoft...." A damning indictment for Jobs and, apparently, for Microsoft CEO Satya Nadella.

In his time, Nadella has killed its Windows phones. Mobile Windows? Gone. Zune? Kaput. Wanderlust? Ciao, baby! And so on. While Nadella has kept the Xbox alive, he has regularly demonstrated a willingness to shutter consumer products or services that can't muster market share. (Groove numbers weren't publicly reported, but they were a far cry from Spotify's 60 million users or Apple Music's 30 million users.)

I'm sure this has left some consumers unsettled and unwilling to trust Microsoft to stay the course. It has also, however, dumped underperforming liabilities from Microsoft that have set its stock price free. Just look at the effect Nadella (named CEO in early 2014) has had on the company's valuation over his tenure:

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Microsoft stock price during the Nadella years

Good business

If you're a CIO, you care a lot more about Microsoft's financial stability and enterprise product direction than you do its Groove Music service. If you've invested heavily in Windows and other Microsoft products, you want to make sure Microsoft is focused on getting them right, rather than dabbling in travel apps. You want, in other words, for Nadella to ruthlessly focus on making Microsoft back into the enterprise powerhouse it used to be.

And he has.

SEE: 50 time-saving tips to speed your work in Microsoft Office (free PDF) (TechRepublic)

Look at Gartner's recent numbers on cloud market share. While Amazon Web Services continues to dominate all but SaaS (where Microsoft reigns), Microsoft is the most credible challenger to Bezos' throne. In IaaS, Microsoft has triple Google's market share (7.1% compared to Google's 2.3%). In PaaS, Microsoft sits third with 6.4%, but is gaining on second-place Salesforce. In SaaS, Microsoft tops the category with 16.3% share (growing share 32.6% year-over-year), even as Salesforce lost share (ending 2016 with 14%, down from 14.7%).

Orlowski complained that it is "hard to avoid the conclusion that Nadella doesn't value consumers at all." But it's not at all clear that, even if true, this is somehow bad. Sure, it's good to keep commitments to products, but not at the expense of company reputation or viability. During this same period in which Microsoft axed underperforming consumer assets, it has dramatically amped up Azure support for a host of home-grown and third-party, often open source, technologies. This, in turn, has led to ever-growing interest in Azure.

No, I can't listen to Azure on my iPhone. But I'm much more likely to have winning services built by others choosing to run on Azure precisely because of Nadella's focus. That's a win by any standard.

Also see

About Matt Asay

Matt Asay is a veteran technology columnist who has written for CNET, ReadWrite, and other tech media. Asay has also held a variety of executive roles with leading mobile and big data software companies.

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