On 1 August 2016, Microsoft announced the joining of Anant Maheshwari as President, Microsoft India from 1 September 2016.
Anant will be replacing current Microsoft India Chairman Bhaskar Pramanik who has held this position for over five years. This announcement comes in close heels to another big ticket departure of Karan Bajwa who recently quit from his post of Managing Director of sales and marketing at Microsoft India to join IBM India to lead strategy.
While at Microsoft, Karan spearheaded both Microsoft’s Enterprise and Consumer businesses in India. With him on board, Microsoft India grew handsomely to become a billion-dollar entity. With Karan’s departure and now Bhaskar’s upcoming retirement, Microsoft India can well be expected to find itself at crossroads.
At Greyhound Research we believe here on the company can either treat this as a fresh beginning and infuse much needed new ideas under a new leadership or else choose to run business-as-usual and not challenge status quo. Below are two reasons why we believe Microsoft India must comply to the former:
Reason #1 – Increasing Competition In Enterprise Deals
At Greyhound Research we believe the recent announcement of AWS India Region heralds the beginning of the Public Cloud war in India. Albeit this announcement will considerably impact both global and local Cloud vendors, Greyhound Research believes Microsoft will bear the brunt most dearly. Microsoft India has spent considerable resources trying to outdo competition (specifically AWS, Google and IBM) on back of their local Data Centre investments. We expect this war to intensify in FY 17-18.
Our ongoing tracking of the market tells us that Microsoft India continues to struggle with articulating the value of Microsoft Azure and Office365 local instances to Large Enterprises, specifically highly regulated industries like BFSI and Government. Furthermore, the company continues to take a beating in the Small and Medium Enterprises (SME) & Startups segments where both Google and AWS enjoy dominant mindshare. Critical to note, both Google and AWS are also increasingly dedicating resources to sell to Large Enterprises – Microsoft’s home turf.
This concurs with the outcomes of a recent Greyhound Research Global, Independent study titled, Cloud Adoption Index 2016. As part of this study, we reached out to over 2,500 respondents including Independent Software Vendors (ISVs), System Integrators (SIs), Start-ups, Enterprises and Government. From the total sample, 1,000 were from the Asia Pacific including Japan (APJ) region – of these, nearly 30% were from India. While there were multiple findings from this extensive study, two particularly stood out. One, 95% respondents in APJ confirmed their plans to use Public Cloud in some manner between 2016-17. Two, 70% ISVs and Start-ups in APJ stated their intent to use (or continue using) AWS because of its strong ecosystem base which lends them more opportunities for monetisation.
Having said that, at Greyhound Research we believe Microsoft continues to be the leader in the Server Solutions category. Of the 10,000 annual global end-user enquiries that Greyhound Research handles, more than 50% state their plans for using Microsoft Server Operating System for their Hybrid Cloud strategy.
Greyhound Research is of the opinion that with fresh competition from the likes of AWS, Google, IBM and other local Public Cloud vendors, Microsoft India will increasingly find itself fighting a tall order. CIOs and other IT Decision Makers need enough and more reasons to exit their existing cloud vendor contracts and migrate workloads to Microsoft Azure. The competitive situation is relatively less complex in Private Cloud where CIOs are benchmarking Microsoft Server OS to solutions from its most formidable competition, VMware.
This competitive pressure is not limited to the Cloud alone. Ongoing tracking of the market tells us that the company has received lukewarm market response to their big ticket launches, specifically Windows 10 and Surface Pro 4. Our estimates also tell us that Microsoft India has only managed to sell the latter in a count of few hundreds, let alone thousands.
The situation is equally tough for Dynamics CRM and ERP. These offerings continue to be based on dated architecture and hold little relevance for today’s MobileFirst, CloudFirst era. The company continues to struggle amidst worthy competition like SAP, Oracle, Salesforce.com, Ramco among others who are investing aggressively to modernise their offerings.
Reason #2 – Consumer Business Adding To Woes
The company’s decision to ramp down its Consumer Business is further adding to their worries. By Microsoft Leadership’s own admission, the company’s Windows phone hardware business has seen only limited success. The company has lost critical ground to competition and written off in excess of USD 10 billion along with the need to reduce its workforce. In June 2015, the company approved a restructuring plan that eliminated approximately 7,400 positions in fiscal year 2016, primarily in their phone hardware business.
Despite these losses, the company claims to be focusing on value phone markets targeted at business buyers. They aim to offer better security and manageability driven on the back Windows 10 that is touted to be a device agnostic Operating System (OS). Greyhound Research believes while this sounds near ideal, it is still a theory based on one key assumption that business buyers buy mobile devices primarily for security reasons. Based on a recent Greyhound Research global, independent study titled, Global Digital Affinity Spectrum 2016, more than 90% business buyers globally (and in India) prefer to use a single device both for work and personal use and rate user experience as their primary driver.
The same study confirmed that more than 75% organisations globally (and in India) are already either using or considering Enterprise Mobility Management (EMM) vendors like MobileIron, VMware’s Airwatch among others to plug security gaps and better manage corporate devices and data. It might be worthy to note that these EMM vendors are increasingly spending muscle to help organisations manage a multi-OS environment spanning Google’s Android, Apple’s iOS and Windows Phone OS.
These along with other findings indicate a likely loss for Microsoft in their journey of focusing solely on business buyers for their devices business.
The company also continues to struggle with its flagship gaming offering Xbox. Despite offering the market various innovations like Microsoft Kinect and updates to help integrate various Xbox versions to a common Windows 10 OS, the company continues to lose revenue. In their Q4 2016 results announced in July, the company’s gaming revenue decreased by 9%.
Here’s hoping Microsoft India, under Anant’s leadership, will finally deliver the long-awaited Yorker.
Lead Analyst:
Sanchit Vir Gogia: Sanchit is the Chief Analyst & CEO of Greyhound Research, an Award-Winning, Global, Independent IT & Telecom Research & Advisory firm. He also serves as Chief Futurist, Founder & CEO of Greyhound Knowledge Group, a Global, Multi-Disciplinary Research & Advisory firm. Given his expertise and passion for Technology, Sanchit also doubles up as the CIO for Greyhound Knowledge Group companies and is building a technology-led Research & Advisory business. In his another avatar, Sanchit is an Advisor To The Board (for IT & Business decisions) of a US$100 Million+ organisation in the Metal Industry. To read more about him, click here.
Contributing Analyst:
Anshoo Nandwaani: Anshoo serves as a Vice President and Principal Analyst with Greyhound Research, an Award-Winning, Global, Independent IT & Telecom Research & Advisory firm. She also serves as Chief Human Resources Officer (CHRO) of Greyhound Knowledge Group, a Global, Multi-Disciplinary Research & Advisory firm. In her current role, Anshoo leads the research agenda for The Empowered Workforce theme. As part of this theme, she studies the impact of vertical-specific processes and workforce-centric technologies on workforce lifecycle and overall business alignment. At Greyhound Research, we refer to this as the Workforce Empowerment Systems (WES). To read more about her, click here.
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