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Microsoft in a Flux

On July 11, 2013 Microsoft’s CEO Steve Ballmer, in a long mail to Microsoft’s employees, set in motion a broad corporate shakeup. An overhaul of the corporate strategy in Microsoft had been under speculation a few months prior to this announcement. In his mail, Ballmer unveiled a plan aimed at restructuring the software giant and repositioning it as a “devices and services” firm. The message was not new, but the urgency had been intensified. The announcement came on the heels of a decent fiscal fourth quarter in which Microsoft reported quarterly sales of $19.9 billion. The software giant’s revenue for the period ending June 30 was up 10% year over year, a result that seemed to buck the sluggish sales trend affecting the global PC industry.

Sanchit Vir Gogia,  Chief Analyst and CEO, Greyhound Research, agrees that collaboration will increase as a result of this organizational shift. “With the simplification of entire portfolio that Microsoft is undertaking, we shall see more symphony and conjoined efforts between their hardware and OS divisions. Another thing working for Microsoft here is that their Office 360 can sit beautifully in a mobility scenario. There are bigger bets placed on Windows 8.1, and though it will see traction, that’s not likely to happen very soon.”

Windows to mobility
The acquisition of Nokia’s device and services business, according to Gogia, is not merely about phones, it is about having a footprint in hardware. “It is not about revival of a brand, it is about supply chain management for Microsoft.” 

“Phones today are no longer a hardware story. They are an experience and applications story. So when Symbian ship was sinking, Microsoft came up with a robust platform. With this acquisition, the platform as well the hardware supporting it will belong to the tech giant. Microsoft already sits pretty within the enterprise market- from a data center as well as a Windows stack perspective. With this deal giving it control over back-end hardware management, it could expand its share in the mobility pie,” elucidates Gogia. 

What Microsoft did wrong, according to Gogia, is that it invested a lot of money in mobility prior to this acquisition. “But if they do get the hardware correct, then this deal can be a very compelling story. When it comes to the application ecosystem, Microsoft has the resources and means to build it.” 

Gogia of Greyhound believes that with this restructuring, which clearly centers around Windows OS and mobility, Microsoft cannot afford to sideline emerging markets. “Emerging market story will be big for Microsoft and it can’t afford to leave India out of their corporate story, as they have done in the past. India has been weak for Microsoft primarily because of its cost points. That will change.”

To read the Full Article, click here: Express Computer

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