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Posted by Tom Cheesewright on

The Future of Microsoft

Today Microsoft moves the bulk of its customers over from Windows Messenger to Skype, the VoIP and messaging company it bought for $8.5bn. It shows just how times have changed for the technology giant that rather than integrating acquired technology into its own services, it’s moving its own 100 million active users over to an acquired service.

Why? There are many good reasons. First and foremost Skype has a better structured revenue model, generating income from a proportion of the 2bn+ minutes of voice calls it carries every day. Skype also has more active users and is growing, compared to the declining Windows product.

Finally there’s the issue of brand. Windows? Not sexy. Skype will become progressively more integrated into the Windows/Office environment over the coming months. But I find myself wondering: will anyone care?

Microsoft remains a major power — if not the major power — in PCs. For all the talk of the PC’s decline, they remain the best platform for much of our computing work. I’m writing this on a Windows 7 PC and very happy I am with it too. But I am no longer tied to Windows. And I’m no longer tied to Office. In the last two years I have jumped happily and easily between a Macbook, a Linux laptop, and a Windows desktop. Dropbox, Subversion, Google Drive, and InSync keep all my files available. Office, OpenOffice, AbiWord, and Google Docs allow me to edit them anywhere I need to with near-equal capability. Microsoft may still dominate the PC market but it no longer owns it. If I buy another PC (this one has lasted probably four or five years), I’m not convinced I’d pay for a Windows licence. I almost certainly won’t buy another copy of Office.

Where does this leave Microsoft? Clearly the loss of my custom won’t trouble the company too much. But it’s what it indicates that might: they no longer have a de facto role in the tech marketplace. And nothing they have tried to do in the recent past such as cloud services or tablets looks likely to earn them back that position.

You could argue that Microsoft has been playing catch-up for 20 years now. The company was late to the internet market, late to the mobile market, and late to the cloud. Its sheer scale makes agility tough and it hasn’t manoeuvred its juggernaut-like weight with sufficient foresight to be in the right places at the right times. What has sustained the company until now has been the incredible power of its market position, one gifted to it by a company in a similar position in the late 70s to the one Microsoft is in now: IBM.

Microsoft’s market position comes in part from Bill Gates’ early decision to licence MS-DOS to IBM for the first PC, rather than selling it outright. Instead of a few thousand dollars up front he chose a small licence payment with the same of each PC. IBM was happy with this because it didn’t have Gates’ confidence in the success the PC would prove to be.

IBM had handed development of the PC over to a little ‘skunkworks’ group within the company because developing something through the usual channels would have taken so long that new competitors like Apple would have established an even more significant lead in the burgeoning personal computer market. In other words, innovation had begun to stagnate inside the giant IBM.

This seems to be the situation facing Microsoft today. Even its biggest announcements around tablets and Windows Phone recently only seem to have brought it to a ‘me too’ position with its competitors. Because it is struggling to innovate it has to acquire companies like Skype. And whereas in the past it would have bought those companies for technology and people, now it buys them for brand and market position.

When tech companies hit this stage of maturity, the chequebook can only take them so far. Microsoft may still be strong today but it is waning. In order to check that decline the company needs to innovate again, not delivering products that match the competition but reinventing the market faster and better than Apple and Google.

To finish on a positive — and I would like to see Microsoft stay in the race — now is a really good time to make a new market. I’m strongly of the opinion that we have hit pretty much the zenith of smartphone and tablet capability, if not sales. I think there is a big form-factor shift coming, backed by an evolved set of cloud-based services. Microsoft is a company with a big cash pile and a load of clever people. It could yet find a product that keeps it at the top of tech for another 20 years.

Posted by Tom Cheesewright on

The End of the Mobile Phone

Today is a slightly artificial anniversary of the mobile phone. One probably cooked up by Motorola’s PR team many years ago as it features Motorola employee Martin Cooper making the first call from an old DynaTac back in 1973. You could probably pick any number of test calls around that time, made by a number of different companies, as the real anniversary, but this story seems to have gained traction, leading me to appear on a few different radio shows commenting on how far we’ve come in the last 40 years.

So much as I recently did for Twitter on its 7th anniversary, I thought I’d take a look at the future of the mobile phone. And I find myself thinking that it may not have one at all.

Forty years ago the mobile phone was just that: a portable handset connected to the telephone network via the airwaves. It was for voice calls and nothing more. Fast forward to today and people rarely seem to list ‘making calls’ in the top things they do with their smartphone. It is a camera, media player, gaming device, web browser, email and social media tool.

Each of these functions, alongside the ability to make calls, places both functional and ergonomic demands on the design of the device. Demands that have first shrunk it down and then stretched it out to accommodate more hardware and larger screens.

The result is a compromise. However slick and pretty we make these little slabs of glass and plastic, they are not ideally shaped for any of their functions. What keeps the functions all packaged together into one place has been — in part — technological restrictions. If you were to separate all of the features out into individual units you would need to supply each with power and connectivity so that they could keep running and share their functions with each other. This adds cost and complexity; small batteries powering wirelessly-connected devices would not last very long.

But the price of technology falls fast, in direct opposition to its capability. Before long the cost and capability barriers to breaking all of the converged functions out of the mobile phone will be outweighed by the benefits.

Does this mean we will be left with an old-school phone just for voice calls? No. For exactly the same reasons. Is holding your hand up to your head really the best way to put a microphone and speaker in the appropriate places? Strip away the technological restrictions and the phone was never a great design for its original purpose. Our first attempts at replicating these features wirelessly — the Bluetooth headset — may make you look like a bit of a twonk, but they are improving. We seem to have much less of an issue with less sci-fi, more stylish headsets that allow us to use both our hands while making a call.

What will be stripped from the phone will be all the user inputs and outputs: screen, camera, microphone, speaker, movement sensors. These will be distributed around the body through connected clothing and accessories. What is left will be storage and connectivity — a little personal server/router that links together your devices and connects you back to the net. Will this still be a ‘mobile phone’? Arguably not: descended from it but so removed in usage terms that it doesn’t really count.

How fast will this happen? Well it has begun: look at the increasing prevalence of wearable health sensors like the Nike+Fitbug, and Jawbone Up. Rumours are rife about Apple launching a smart watch to bring you updates from your phone; Pebble raised over $10m from Kickstarter in order to bring similar technology to market. Battery technology and wireless connections have improved dramatically. Printable, flexible screens are just around the corner.

I think there’s a good chance that in ten years time we might be looking back at the passing mobile phone era, rather than celebrating another anniversary.

Tom Cheesewright