The technology press is abuzz this morning after Bloomberg published an article concerning what Nokia's – and soon Microsoft's again! – Stephen Elop would do to reform Microsoft should he be selected as its next CEO. He is widely tipped as a leading candidate for that role as he is set to return to Microsoft as an executive vice president once the sale of Nokia's hardware business to the Redmond-based software giant is consummated.
The piece is interesting because it makes a number of claims concerning Elop's plans for Microsoft that seem slightly odd. Elop, 49, is not an idiot, of course. But if this is his vision, and it could be, I don't understand it.
Let's examine the largest claims of his leaked, rumored, or invented vision for Microsoft, via Bloomberg's unnamed sources that claim to know his thinking.
Office
According to Bloomberg, Elop has a radical plan for Office:
[Elop] ould consider breaking with decades of tradition by focusing the company's strategy around making the popular Office software programs like Word, Excel and PowerPoint available on a broad variety of smartphones and tablets, including those made by Apple Inc. and Google Inc., said three people with knowledge of his thinking.
Tradition here strikes me as slightly tricky, as Microsoft has built Office for Mac for decades. Word for Mac came out in 1985, so the company clearly has a history of selling Office, or at least making it available, on rival platforms.
I think that smartphones and tablets are too new to have software traditions of their own, so to speak. But, granted, Office has been slower than some anticipated to land on tablets and smartphones. Let's review where we are at the moment: Office for iOS exists, so if you are an Office 365 subscriber, you can Office all day on your iPhone, and according to the product page, iPad.
But you have to pay for that, so what about a free option? Microsoft has a free suite of Web apps called Office Web Apps that are, surprise, cross-platform. They are not quite good enough yet, and Microsoft knows it. In a piece detailing recent upgrades to Office Web Apps, journalist and general mensch Ed Bott pointed out that the apps
are relentlessly cross-platform [and] work on every popular browser in Windows, OS X, and iOS. (In a blog post announcing the changes, Microsoft says it's “still on track to enable editing from Android tablets, so you can access Office files and tools from even more devices.” That change is due “in the next several months.”)
So, Microsoft is bringing free Office to all platforms, and paid versions likely as well, if you need something more heavy duty. The gist here is that Microsoft understands that the landscape for productivity applications is changing. I am not saying that Microsoft will succeed with its current plans. It may fail. But to say that bringing Office to other platforms is a radical departure from its current strategy doesn't quite square with my understanding of the company's current positioning.
Bing And Xbox
Elop is said to be more than open to slicing off parts of Microsoft if they aren't core:
Elop would be prepared to sell or shut down major businesses to sharpen the company's focus, the people said. He would consider ending Microsoft's costly effort to take on Google with its Bing search engine, and would also consider selling healthy businesses such as the Xbox game console if he determined they weren't critical to the company's strategy, the people said.
This is reasonable until you think about it. It is fair to say that any new CEO should review business units, and excise where sensible. However, you can't extract Bing and Xbox from Microsoft, as you would a crouton from that damned salad you had at lunch. They are far more intertwined than that.
Xbox, for example, is now part of the Windows family. The Xbox One is partially run on the shared Windows core. This matters because Microsoft is working as fast as it can – not fast enough, in my view, but that's a separate story – to unify its platforms. Once the Xbox One is released, Windows will span, as I have said time and again, from your smartphone (Windows Phone 8), to your tablet, laptop, and desktop (Windows 8.1), to your TV and finally projector (Xbox One).
This is not an accidental result. Microsoft has made two massive platform shifts in mobile and the living room to get here. Windows Phone 7.5 was essentially left in the dustbin of mobile history so that Microsoft could move Windows Phone 8 to the shared Windows core. Xbox 360 games are not compatible on the Xbox One, I think in part due to the radical changes that exist between it and the Xbox One.
All told, Microsoft's work to create the largest, unified developer platform (not a PC on every desk, but Windows on every machine, form factor regardless) is not something that the company would, or should be willing to undo. Selling Xbox would be a blow to the strategy and harm Microsoft's ability too woo developers long-term - a material impact.
Also Xbox is a massive success for Microsoft and is key to its current device (the console) and services (Xbox Live) strategy. To sell it off for a short-term financial gain would be, in my view, idiotic.
Bing. Oh, Bing. Bing loses money, so far as we can tell. Who else wants to buy the money-losing firewall to Google's hegemony in search? Apple, perhaps, but why buy the weight that someone else is already carrying? Facebook can't stomach its losses. And while Microsoft wishes Bing were profitable, it tolerates its deficits because as a company it cannot afford to cede the organization and searching of the world's information to a rival; imagine Windows 8.1 without Bing. You can't.
The simple idea that Bing can be hocked is to me a fantasy. Moving on.
Windows
Best for last:
Elop would probably move away from Microsoft's strategy of using [Office] programs to drive demand for its flagship Windows operating system on personal computers and mobile devices, said the people, who asked not to be identified because the 49-year-old executive hasn't finalized or publicly discussed his analysis of the business. [...]
Elop's assumption is that Microsoft could create more value by maximizing sales of Office rather than by using it to prop up sales of Windows-based devices, said two of the people with knowledge of his thinking.
Windows revenue has been slipping, it is true, though not as much as was anticipated. Office is incredibly profitable and important for Microsoft. However, when it comes to the core of Microsoft, we've already established that instead of shifting away from Windows, Microsoft is currently in the process of re-betting its future on Windows.
If Elop thinks that maximizing short-term Office revenues at the expense of Windows is a good plan, that's his business. I can't imagine how he would accomplish that, however. If he cedes Office's focus on Windows (which it does have, to be fair), and cuts its price and ships it on rival platforms, would that drive more revenue? Or if Elop merely intends to bring it to more platforms, the company is already doing that, at whatever implied cost to Windows. I'm not following this argument.
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Microsoft, now focused on devices and services, wants to grow those components of its business. To say that it is going to sell off its most successful devices and services businesses is confusing.
Typically verbose Microsoft spokesperson Frank Shaw responded to the Bloomberg piece by saying “We appreciate Bloomberg's foray into fiction and look forward to future episodes.” If Frank is right and the above points are not representative of Elop's vision, he might make a fine CEO. If Bloomberg is correct in its portrayal of Elop's views on how to grow Microsoft, I don't see his selection as making much sense. It would undo much of what the company has spent recent years, and billions, to create.
