Understanding Digital Enterprise Thinking – the Microsoft 10 response example

Connecting the technology with the Software

Platform as a Service (PAAS) is the phenomenon of a cloud software development platform that has had a trend for several years where software programmers dream of “polymorphic programing” that means a software program can be written and compiled once but can run on multiple operating system environments. This “develop once and use many” has many back office devops benefits of efficiency in testing and code delivery, but it also means that from a front end User Customer experience is that the service can be potentially used on multiple devices and potentially access model markets and services as a result. This runs counter to traditional single platform developments that seek to exploit and lock in users into that operating environment. The Operating System (OS) has been a central role in this as it is the “glue” between the software and content and the hardware are, managing operating and enable each to “talk to each other” and run. The Microsoft early history has been based on this ability to define and own the Windows operating system platform environment and the software licences compatible to run on these. But that was the PC era, we are now in the mobile and cloud era and the emerging

Internet of Things multitude of sensors and devices.

Historically platforms such as Android and Apple iOS have also exploited this ability to link specific exclusive features of their hardware through the Operating system. For example, Apple iOS with its features to support secondary Mobile computational chip processor features in the iPhone for advance sensor movement and feedback features to specific user screen alert functions and haptic responses are all subtle and overt differences that the OS system architecture enables the developer community to connect and offer new and exclusive features for their environment. This matters when trying to differentiate and grow a developer community and therefore also a customer base seeking exclusive features in your own OS that only compatible code can access and use.

On the developer side, I recall a discussion five years ago that this trend this would cause the ninety or so PAAS code development platforms available then in the market to collapse in on itself with only three or four left as you no longer had to buy separate development platform for each OS version when you could get one and code for many. This has not happened because in truth all the platforms have moved in the same polymorphic direction anyway but also something else has been happening too on the customer side driving competition to the ecosystem level of connected things.

Direct revenue to an indirect revenue model shift

So why is Microsoft trying to be different in becoming a general purpose platform potentially compatible for any operating system? The PC operating systems share of windows and the Microsoft Internet Explorer browser have been steadily falling in recent years from at 90% to 70 and 40% depending on which survey you look at. But while this has been drive by a customer move to mobile devices it also has proven hard for the Microsoft market share of Windows Mobile in both smart phones and tablets has remained a stubborn 3% compared to the rising fortunes of the Microsoft azure and cloud infrastructure platform and its office 365 and xbox platforms. The Microsoft platform strategy has been much more successful than the legacy windows OS heritage and the cannibalization of the mobile market and is not hard to see that Microsoft want to drive traffic and data to their cloud services.

Responding to a new era of connected services

This relates to two strategies, firstly, being able to run the same software application on any of the Microsoft platform products. This makes sense on several levels being able to have a uniform user experience but also to maximize the potential revenue from multiple device use. And that’s the point , it no longer the exclusivity of the OS as a way to “hold onto your customers” , but the services that run on top of the OS that is driving the new monetisation model. By that we mean the subscriptions to Office 365 and xbox gold, the in app and in-game premium content services, and downloadable video, books and other services becoming the main revenue stream. This is what some observers call the “Direct revenue to an indirect revenue model shift”, its not about owning the assets but the services you can charge on them. Being able to spread this across multiple devices increase the surface area of how many times and places customers can use your services.

Secondly, the claim that the code can run on competitor Operating systems such as Android , iOS and by implication those google, Samsung , apple and other plethora of devices is interesting as historically interoperability has been fraught with compatibility issues of software being able to work seamlessly translating the I/O instructions between the software and specific hardware and with the chip instruction set architecture and the hardware operating system features. The normal response is to have a certification process to say “this device is xx compatible” but in recent years the ability to encapsulate a program to run on a different environment through virtualization or in the case of Windows 10 to compile and run for different operating environments has become more wide spread as PAAS platforms learn to be multi generational in both versions of operating system and alternatives. An interesting competitor response to Microsoft will be whether Google and Apple will do the same or seek to further enshrine their products and OS in a tightly coupled own brand ecosystem. Apple again has been famous for secret development of their hardware architecture such that exclusivity remains in their platform hardware and services.

The digital paradox of services and platform

This illustrates the first of two paradoxes emerging as a result of this revolution of connected devices and services. The idea of value in following one kind of service provider is rapidly falling down as the differences between specific mobile devices , sensors and other handsets are increasingly becoming the same. If you step back and make a high level material comparison between mobile smart phones from Samsung, google, Apple and Microsoft, while prices are different the actual underlying functionality isn’t really that different in truth. They all have productivity apps and APIs to the major social networks, they all have cameras, movement sensors and other features that are broadly the same. So what is the difference in being exclusive to the same operating system ? part of the answer is the value is in the services and new Internet of things type devices such as wearables they connect with and the size and scale of their user communities. The other part of answer is the second paradox of interconnectivity and network effects.

This second paradox is that while all these different OS environments have increasingly wider variety of features and connected sensors and services relating to their product set, then the benefits becomes how they can connect and work together rather than working as strand-alone separate entities. This is a truly radical concept in the shift in what is value in the early 21st century and how digital technology is driving a new economic model of connected value through associated “in-the-moment” services when you are walking about, in the car or at work. I see the idea behind Windows 10 is aiming to move in this direction more quickly and to focus on the services ecosystems that will drive the new digital economy.

Multi-OS as the fabric of the Internet of things driving the new economy

I predict what will happen is that we will see attempts to grow ecosystems of sensors and services on mobile devices either within a specific platform to direct data and traffic to their cloud infrastructure. We see this already with Apple moves on the mobile Health app market and connected Home market and in connected car technology. Google is also pushing on this wider expanse as well as chip manufacturers such as Intel and ARM and many others seeking was to connect devices with their services. An interesting illustration of this effect is the growth area of Digital payments such as Apple pay, Facebook and others seeking new subscription services to drive their ecosystem traffic revenue.

The problem is that no one supplier like Google, Apple, Microsoft or large scale cloud services such as FaceBook, Amazon or others can cover all the requirements of the Internet of things market predicted to be over 50 billion connected devices and $7 trillion in the next five years. As people become more intermeshed with their devices, wearables and sensors, the demand will rise for services driven by new personal data market platforms and device ecosystems that Microsoft hope will leverage its cloud infrastructure and all the connected devices include Microsoft and its competitors Android , iOS and others too.

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