Last Tuesday, Microsoft made the announcement that it was going to kill off Groove Music Pass, its home-grown competitor to Spotify and Apple Music.
The demise of Groove Music Pass wasn’t a big surprise — Microsoft never disclosed specifics, but it was widely understood that the service wasn’t particularly popular, despite the Groove app coming pre-installed on Windows 10.
But it’s caused a stir among Microsoft fans, who are taking the cancellation of Groove Music Pass as the biggest sign yet that the company is shifting its focus away from making technology for consumers, and exclusively towards the lucrative market for selling software and services to businesses.
Indeed, over the last few years, it’s been the Microsoft Azure cloud and Office 365 productivity suite that have driven Microsoft’s growth, as the Windows business largely stagnates and the hardware business goes up and down.
Over at OnMSFT, Microsoft fan Kareem Anderson makes some points echoed by many others on Twitter: “software giant Microsoft doesn’t want you or me as customers.”
Anderson points out that over the almost four years since Satya Nadella took over as CEO of Microsoft, the company has all but gotten out of the smartphone business, with the Windows 10 Mobile operating system stagnating into obscurity. Microsoft has also killed off products like the Microsoft Band fitness tracker.
Meanwhile, at PC World, senior editor Mark Hachman notes that this isn’t new, and much of what Microsoft considers its consumer line is just as much for businesses.
For example, though the Microsoft Surface laptops and tablets are sold through big-box retailers and the like, they’re very much pitched at working professionals and road warriors. And that split focus means that, yes, Microsoft “seems almost bipolar” as it tries to address the needs of both the consumer and the business, Hachman writes.
“[…]Microsoft’s inexorable move toward the enterprise leaves its consumer businesses vulnerable, with the exception of the Xbox. And as its customers wake up to that reality, it’s hard to see how the situation will improve,” writes Hachman.
On the other hand…
From my perspective, I think it’s a little more nuanced than that.
Microsoft CEO Satya Nadella has long made his rallying cry that the company should only focus on markets where it can do better than anybody else, and partner up with outsiders for everything else. And Microsoft has signalled that there are things it can do better in the consumer space — especially, but not only, in video games.
Remember, when Nadella took the reins, it was amid calls from analysts and investors for Microsoft to sell off the Xbox unit, along with the Bing search engine. Nadella resisted, calling Xbox and gaming a core part of Windows, and thus Microsoft.
For years, Microsoft Windows has been the premiere platform for serious video gamers, with no sign of that changing any time soon. And while the current Xbox One console is currently losing out to the Sony PlayStation 4 in terms of sales, Xbox itself is still a widely-recognised consumer brand.
It was Nadella who signed off on Microsoft’s $US2.5 billion acquisition of “Minecraft” developer Mojang. In fact, Phil Spencer, the Xbox boss who spearheaded the Minecraft acquisition, was recently appointed to executive VP — meaning he answers directly to Nadella himself. This fall, Microsoft will release the more powerful Xbox One X, too.
And as Windows pushes into mixed reality, its wonky term for virtual reality and augmented reality, it’s signing deals with gaming giants like Valve to make sure that the platform stays appealing to gamers. Oh, and as a postscript, Bing is now profitable, and growing.
So, on the one hand, I get the angst. Under Nadella, Microsoft is definitely willing to kill its darlings in the name of growth, which will always alienate some users. And it’s not going to stop its relentless push into the enterprise, either.
Ultimately, though, it’s just another case where Nadella is willing to cut the company’s losses when it finds a market it can’t compete in, while driving hard when it finds one that it can. Xbox and Bing are slowly finding their grooves; maybe virtual reality will be the next one, or something else entirely.
Get the latest Microsoft stock price here.