If a key to success is learning out of your mistakes, Microsoft must be well positioned for 2014.
This was an up and down year for Microsoft.
January opened with Microsoft still licking wounds suffered the former fall, when Windows 8 arrived with a thud and the much ballyhooed Surface RT somehow managed to fare even worse. After holiday sales did not lift sagging computer shipments, many critics rang within the new year by blaming Microsoft for the computer industry’s woes.
In retrospect, this criticism was somewhat overblown. Windows 8 didn’t do any favors for Microsoft and its partners, but falling PC sales have had more to do with consumer preference for tablets than with desktop users’ disdain for Win 8’s Live Tiles. Nevertheless, Windows 8 and its struggles remained the dominant Microsoft narrative for many of the year.
In fact, the OS overshadowed the truth that certain Microsoft ventures were having one hell of a year. Windows Azure not just grew right into a formidable and reasonably open cloud platform, but additionally matured because the backbone for loads of successful ventures, including Office 365 and Xbox Live. It’s no coincidence that Satya Nadella, the chief who oversees Microsoft’s cloud business, is usually named as a number one candidate to be its next CEO.
Investors started to take notice as Microsoft’s cloud divisions continued to accrue business from enterprises and governments. The company’s stock started to inch higher as winter turned to spring, and when CEO Steve Ballmer announced a companywide reorganization, most commentaries emphasized the upside. But then Windows 8 reared its head again.
Even though investors became optimistically cautious, Windows 8 adoption remained weak. The poor performance didn’t occur in Microsoft’s base line until July, when, per week after confirming the reorganization, the corporate missed Wall Street estimates and took a virtually $900 million writedown on unsold Surface inventory.
Microsoft had positioned the outside line because the Windows 8 standard bearer, and critics called the tablets’ failures an indictment of both Microsoft’s device strategy and Win 8 regularly. Goodwill among investors disappeared overnight. “We built a number of more [Surface] devices than shall we sell,” Ballmer would later concede.
Ballmer caused the subsequent big wave when he announced in August that he would retire in the next three hundred and sixty five days. Investors immediately signaled their approval, sending the fill up.
Since then, the ups and downs have continued. Windows 8.1 garnered better reviews than its predecessor and restored faith among some longtime Windows users. Still, Win 8.1 adoption hasn’t exactly soared, and the beginning button still doesn’t have an actual Start menu. The outside 2 and Surface Pro 2 seem like performing better than Microsoft’s first-generation tablets, but it’s still obvious they’re getting killed by iPads. If this weren’t the case, Microsoft surely would have trumpeted about a Surface sales figures, love it has for recent Xbox One milestones.
Most commentators have agreed that the corporate needs fresh leadership, but should it’s someone who can facilitate Ballmer’s vision or someone who will talk about enterprise customers? Was the Nokia device business acquisition a mistake or an indication that Microsoft is finally getting excited by mobility? The Microsoft board has indicated that the subsequent CEO will follow Ballmer’s One Microsoft blueprint, but some influential shareholders are reportedly wary of the company’s strategy. No less than just a few allegedly have called Bill Gates a corrupting influence within the CEO selection process.
Luckily for Microsoft, it is a very rich company, and that lets it weather storms that could bankrupt lesser companies. How much the corporate has learned from the aforementioned missteps turns into clear in coming months and years. Will it beat Amazon within the cloud? Will it’s ready to build an ecosystem that competes with Apple or Google? Will Office remain the dominant productivity platform? What are Microsoft’s plans for wearable devices? Will Microsoft unleash disruptive advances in voice-controlled natural language technology? What about Cortana, Windows Phone’s rumored answer to iOS’s Siri and Android’s Google Now?
For each of the uncertainty, though, most of the lessons are clear. Click the picture above for a slideshow of 7 things Microsoft learned in 2013.
Michael Endler joined InformationWeek as an associate editor in 2012. He graduated from Stanford in 2005 and previously worked in talent representation, as a contract copywriter and photojournalist, and as a teacher.
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