There is no doubt that Microsoft has made some serious strategy blunders in the past. Of course, all companies have blundered before; the key is that they learn from their mistakes and make the proper adjustments.
For 2015, Microsoft seems to have learned a great deal from its past mistakes because, from a strategic standpoint, the company had a good year. Here are five strategic moves that Microsoft got right in 2015—followed by two things it got very wrong.
Five things right
1: Ballmer strategy
Former Microsoft CEO Steve Ballmer looked at the information technology industry as a game that must be won at all costs. Ballmer's strategy implied that there could be only one winner—the rest were losers. I find that approach, in any competitive situation, to be sophomoric and unrealistic.
Under the new CEO, Satya Nadella, Microsoft is taking a subtler strategic approach. Microsoft wants to sell the best productivity software available for any device running on any operating platform. Using Windows 10 has advantages but it is not mandatory. Under this strategy, companies like Google and Apple are no longer rivals. They are now partners.
2: Windows 10
One of the reasons 2015 will be considered a turning point year for Microsoft is the release of Windows 10. For users of Windows 7 and Windows 8, the upgrade to Windows 10 is free until July 2016.
At first glance, it may seem like Microsoft is killing one of its cash cows, but actually it is a brilliant move. By getting most of its customers to move to Windows 10, Microsoft is committing them to an ecosystem - specifically the Microsoft ecosystem. Windows 10 becomes the free framework that will support future applications—applications we are willing to pay for.
3: Office 2016
The other reason 2015 will be considered a turning point for Microsoft is the release of Office 2016 and its emphasis on collaboration for a modern workforce operating in a mobile-first, cloud-first world. Microsoft has taken the old stuffy office productivity suite and made it the hub of enterprise communication.
No matter which version of Office 365 an enterprise subscribes to, the 2016 version emphasizes collaboration using shared documents and shared virtual meetings. And most important, it doesn't matter what device you are using nor what operating platform it is running.
For Microsoft, the fact that you are using Office 365 is all that matters. This flexibility means Office 365 is now the unifying ecosystem factor, not Windows. This is a subtle but powerful change in the company's overall strategy.
4: Surface Pro
Probably the most unexpected strategic move Microsoft made in 2015 was the release of the Surface Pro 4 and Surface Book computers. The surprise was not in the release, but in the quality of the products. Microsoft raised the bar for what a notebook computer could and should be.
This is especially true for the premium Surface Book, which establishes itself as the luxury productivity computer you would buy if money were no object. Few expected Microsoft to produce a computer in the luxury category, but it was a stroke of genius—it is the portable computer all others are compared to.
The fifth thing Microsoft did right in 2015 was purchasing Havok from Intel. The strategic importance of this deal may not be self-evident right now, but the purchase is an investment in the future.
While the obvious strategic emphasis for Microsoft in 2015 is the ecosystem anchored by Office 365 and Windows 10, the future of those products, and possibly even more than that, could be virtual reality technology. The keyboard has been the primary computer input device for years, but technological advances may render it obsolete in the future—and if that happens Microsoft wants to be prepared for it.
So while the Havok 3D engine will earn some revenue for Microsoft with licenses for games in the near term, its real value may be in future-proofing the company from changes in the computer interface. Microsoft thinking strategically that far into the future is unexpected.
Two things wrong
1: Access 2016
Microsoft wasn't perfect in its decision making in 2015. One example of this was the exclusion of Access from many versions of Office 365. I know many users don't really care about Access, but that is why leaving it out is so wrong.
Sometimes the best solution to a business problem is a database. But instead, many users—especially in smaller businesses—use Excel or some other less-than-satisfactory method. In the long run, the lack of a database limits scalability and productivity. If Access were more available to these small businesses, maybe it would get used more often. The small business world would be better off for it.
2: One Drive
Perhaps the most embarrassing thing Microsoft got wrong in 2015 was the fiasco surrounding OneDrive and unlimited storage. When first announced, OneDrive had unlimited storage and, low and behold, some users decided to use it. Apparently, a few customers stored in excess of 75TB on their OneDrive. That's a heck of a lot of data.
In November 2015, Microsoft decided to repeal the unlimited storage and move it back to a limit of 1TB. Capping the storage on OneDrive to 1TB wasn't the problem. 1TB is enough cloud storage for most of us. No, the problem was in the way it was announced and implemented. Microsoft implied that users had abused the system, so it was the customer's fault, which is always a bad public relations move.
There is a simple rule that all companies should know and follow: If you offer customers something as unlimited, at least one customer is going to take you up on it. If you can't meet the demands of "unlimited" don't offer it in the first place.
- Microsoft purges Ballmer strategy for one that works
- How to upgrade to Windows 10: A step-by-step walkthrough
- Which deployment option for Microsoft Office 2016 is best for your organization?
- Surface Book: Microsoft just made the PC cool again
- Microsoft buys Havok and looks to dominate a virtual reality future
What do you think Microsoft got right or wrong in 2015? Share your thoughts with fellow TechRepublic members.
Mark W. Kaelin has been writing and editing stories about the IT industry, gadgets, finance, accounting, and tech-life for more than 25 years. Most recently, he has been a regular contributor to BreakingModern.com, aNewDomain.net, and TechRepublic.