Photo: Matt Rosoff
Forget Windows. The real future of Microsoft is Office.For the last year, the Windows business has been shrinking, while the Business Division (which is mostly Office and related apps) has been growing.
There are lots of macro trends to explain why Windows has been shrinking — netbooks have been utterly destroyed by the iPad, floods in Thailand created component shortages which meant the PCs people really wanted weren’t available for Christmas, and some consumers may be waiting for Windows 8 to come out next year before buying a new computer.
But here’s an anecdote that illustrates the problem in a nutshell.
Peter Levine, who is a partner at Andreessen Horowitz, is a technical person and a long-time tech industry veteran — he played a big part at Veritas (a storage/backup company bought by Symantec for more than $10 billion in 2005) and XenSource (a virtualization company snapped up by Citrix).
Until recently, he was a die-hard Windows PC user. But about a year ago, he switched to a Mac. He says he doesn’t miss Windows at all.
He misses Outlook, Microsoft’s email client. He uses it every day.
(He actually runs Outlook in a virtual machine on Windows, so Microsoft sold him a Windows licence, too. He thinks the native version of Outlook for the Mac is not nearly as good. But that’s a problem with Outlook for the Mac — not a credit to Windows.)
He also occasionally uses the Mac versions of Excel, PowerPoint, and Word, which are pretty much as good as their Windows equivalents.
This echoes our own experience at Business Insider: We use Google Apps for most day-to-day work, but were forced to buy Office because we needed Excel to do serious charts.
This is the future.
People are relying less on Windows. They’re bringing iPhones, Android phones, and iPads to work. Mac sales are growing in the U.S., while sales from the other top PC makers are shrinking. (Gartner has the stats.)
But Office is like an addiction — we can’t give it up. It’s often criticised for trying to be all things to everyone. But that one feature you might think is totally absurd is absolutely critical to somebody else.
If Microsoft is smart, it will make sure this continues by building first-class native versions of Office for every single popular platform out there. That will ensure companies keep signing long-term licence agreements to cover all those Office seats, which Microsoft can then use to pull through back-end products like Exchange (email), SharePoint (collaboration), Lync (videoconferencing), Office 365 (cloud-based versions of these severs), and so on.
We’re not saying that Microsoft should give up on Windows — the profit margins (consistently above 70 per cent) and volume (350 million PCs per year) is too great to ignore. Windows 8 is a valid attempt to claw back some of the market that the iPad and Mac have taken.
But the top dog has changed. And Microsoft should think about changing with it.