Earlier today we reported on Microsoft Chief Marketing Officer Chris Capossela discussing the future of Windows revenue flowing through Bing and Cortana usage. However, Capossela’s discussion this year at Citi Global Tech Conference covered more than just Windows 10 and Bing.
Capossela answered several questions asked by Citigroup Analyst Walter Pritchard regarding Microsoft’s stance on mobile, its re-established partnerships with companies, Premium SKU’s of Office 365 and how Azure is as important as Windows.
As a lot of businesses focus on the immediate markets of mobile, Pritchard, bluntly ask Capossela about Microsoft’s future position in mobile. "I'm wondering if you were too fast-forward three to five years from now, we have you guys on stage, what is your -- what does Microsoft's footprint look like in the phone market? Again, let’s call them the standard phone, not a hybrid, not just – just a plain old phone."
Parts of Capossela’s response harkens back to Microsoft’s CEO, Satya Nadella’s reaffirmation of the company’s future in mobile, but with added clarity this time.
We're going to build phones for our Windows fans. If you love Windows 10, if you love your Windows 10 tablet, or Surface, or laptop, we want to have a beautiful phone for you, something you'd be incredibly proud of that's going to have the same experience across your devices, the same apps will run on the phone as run on your Windows 10 laptop or tablet. And it's going to feel incredibly natural. And we really think the Windows fans really want a wonderful Windows Phone that will be a premium flagship phone.
We're also going to build phones for businesses. We know business customers want a very, very secure phone that's incredibly good at calendar management, at e-mail, at productivity, and Skype for Business, etc. And so we think those two segments are segments we can focus on and build a much, much better solution and much better business than we have today."
While Satya Nadella’s answers to Windows reporter Mary Jo Foley were similar, he left many Windows observers scratching their heads as to 'how' Microsoft’s new approach to mobile would differ from its old. Judging from Capossela’s response, it would appear Windows 10 Mobile may be akin to Outlook. While casual Outlook.com users enjoy a cruft-free email experience, enterprise Outlook users receive a more robust and business-ready tool of the same name.
After Capossela’s answer on mobile Pritchard segways into Microsoft’s collaborative efforts with, "I think we hear this from other partners of Microsoft, you had the Win8 generation where it was a little bit confusing as to what Microsoft was looking to do, and now you've clarified that to some degree. What does that enable Microsoft to do or to do with partners that you weren't able to do in the Win8 generation with devices and the consumer experience?"
[pullquote align="left" cite="" link="" color="" class="" size=""]"We're not going to worry about D, we're just going to compete. But in the meantime, let's do the best we can with A, B, and C."[/pullquote]
Pritchard's question lingers from an arguably cancerous position Windows 8 and the Surface put Microsoft in with its partners. As the industry looked to Microsoft to help keep it afloat through declining sales, Windows developers were silently experimenting with an untested OS that seemed to accelerate the decline of the PC. With Windows 10 however, relationships appear to be mending through mutual understanding and communication.
I think the partnership with Intel, as well as Dell, and HP and Lenovo, and Acer and ASUS, and the whole Windows ecosystem has been far more collaborative. It's been far more building the work, the product, together much earlier. So working with Intel on SkyLake, working with I think you folks saw maybe a Lenovo device earlier today, or whoever it was, we've just been partnering earlier in the design process and the engineering process than we did with Windows 8, and even Windows 7, frankly."
As far as OEMs continuing to build competitive Chromebook alternatives to Windows PCs and Microsoft’s slowly growing Surface business Capossela had this to say, "Satya has really done a wonderful job showing that there's more upside to partnering in areas A, B and C where we can work together, and just let's compete in D and it's okay. We're not going to worry about D, we're just going to compete. But in the meantime, let's do the best we can with A, B, and C."
Beyond competition in mobile and hardware efforts, Capossela also sheds some light on how Microsoft plans to continue the recent Office 365 momentum. During another segway Pritchard acknowledges the success Office 365 has garnered over the past couple of years. However, the question remains, what’s Microsoft’s value proposition after establishing a subscription model. What keeps Office 365 users, subscribers over the long haul?
Capossela believes, "Getting them out of the drudgery of having to roll out updates and figure out how to keep machines refreshed and up to date and safe and secure, there's a real benefit to the cloud in just making sure people have the latest and greatest of everything we have to offer."
As for enterprise users, Microsoft’s plan is position security and broaden focus on fringe work cases as a 'premium' for Office moving forward.
A premium SKU. And then the last thing I would say is there's a whole bunch of workers who are not office workers today that we haven't really done a great job penetrating. You think of somebody who drives the delivery truck and has a tablet that they're carrying around on their route. We haven't really licensed Office 365 today to them. When you think of contract workers who might work seasonally for maybe tax season in a finance department, we haven't really done a good job reaching those people.
So I would say there's a whole set of workers that don't have the same needs as a full-time employee who comes to the office every day, and we think there's opportunity for us to reach those -- there's a broader set of workers that we haven't done today, probably at much, much lower price offerings, doesn't have nearly the full functionality of what you and I might use on a daily basis. But, there are some new -- I think there are some addressable types of users that we haven't gotten to."
[pullquote align="right" cite="" link="" color="" class="" size=""]"We actually think cloud as much as we think Windows."[/pullquote]
Lastly, Capossela talked about how Azure is or has become as important to Microsoft as Windows once was. For a time, Microsoft developed most of its software to feed the beast that was Windows. If didn’t benefit Windows somehow, it didn’t get developed. Microsoft now sees cloud computing as the next frontier for the company and Azure is its leader.
And that's where I think people start with the cloud first mentality, and you're looking to build on Azure or AWS, and the device becomes quite secondary. You're going to have a bunch of different front-ends, depending on what they want to target, but it's really the back-end, the cloud platform that's critical.
So for us getting line of business apps on Azure, getting big ISVs targeting Azure, making sure their stuff will work phenomenally on Azure, that's really important to us, and that's a major, major focus in the company. I think most people think developer and they think Windows. We actually think cloud as much as we think Windows."
With regards to its competition in the cloud space, Amazon Web Services (AWS), Capossela believes that while Amazon does lead, Microsoft can offer a better value proposition. Leveraging assets such as Skype, and Office is something AWS can’t provide a small business just starting out.
The Citi Group Tech Conference Q&A with Microsoft’s Chief Marketing Officer was long but refreshingly informative. Perhaps, Microsoft is finally getting a grasp on effective communication.