CES Showcases Big Changes Coming At Microsoft

A powerful change is taking place in how Microsoft approaches consumer markets, a move which may fully develop over the next couple years.


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Posted January 10, 2008

Rob Enderle

Rob Enderle

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Part of the problem with CES is there is so much going on that figuring out what the big messages are just isn’t very easy. With announcement coming on top of announcement – and a huge focus on just surviving the week – it is incredibly difficult to see a major portion of the trees, let alone the forest.

However, in stepping back this year and simply looking for big trends I think I’ve come up with several that have been missed. The big one is the change in Microsoft approach to the consumer market, which will have a big impact on how they compete with companies like Apple and Sony going forward. Let’s chat about that this week.

Microsoft’s Changing Face

This was Bill Gates last time speaking at CES as a driver of technology. From now on he’ll be more of a consumer but, as Bill Gates, he’ll still get a disproportionately large vote as to what the future will be simply because of who he is.

Historically one of Microsoft’s greatest and least talked about assets was their sense of self depreciating humor, which you only see at events like CES. In the video showcasing Bill’s last day this aspect of the company was once again showcased. It is my belief that had they taken this aspect of their personality and reflected it more in their marketing and internal culture, the company not only would be much better liked, it would be much more successful, and a better place to work.

I worry that this may be one of the things that will go away once Bill steps fully away from Microsoft; much like the critical practices Thomas Watson Jr. brought IBM that folks took for granted and were subsequently lost when he retired.

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But, also historically, Microsoft only built parts of things, and seldom built the entire solution. Early attempts to build complete products (the initial Microsoft Phone comes to mind) weren’t particularly successful. But with the success of the Xbox and Xbox 360 they discovered they could do complete products successfully. The original Zune set them back a bit, yet in thinking through this, I believe CES showcases that they’ve begun working on a third, blended path that could generate dividends for them in the future.

Surface, IPTV, and MSN Direct: A Future for Microsoft CE Efforts

I think MSN Direct was actually the first indication that Microsoft was thinking of a blended approach to CE, and Surface will be the first big test of that approach from scratch. With MSN direct, Microsoft first created a soup-to-nuts solution focused primarily on watches and then rotated it out to partners.

However, the design work wasn’t initially really cooked and the end result on watches didn’t meet expectations. Currently MSN Direct is the wireless power inside some of the top wirelessly connected GPS systems but the watch effort has dropped to the back burner (kind of a shame because they were my favorite watches). However, it was close enough so that Surface appears to be going down a similar path.

Microsoft’s IPTV effort is actually very similar to this in practice but leapfrogs the “Microsoft does it first as a Microsoft branded product” part and moves directly to license. Microsoft’s biggest customer in the U.S. for this offering is AT&T. And it may turn out to be the biggest competitive asset AT&T has to hold off a really motivated Comcast that appears to be gearing up to kick AT&T’s butt if it isn’t already. Cable solutions in the DVR space have pretty much sucked and the IPTV solution Microsoft has licensed to AT&T appears to be vastly better.

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