Microsoft presented its quarterly results last week. Being Microsoft, the numbers where bad. The sacrifice the company has done changing the Windows (and the Office) business model while facing the competition of Apple and Google has crippled its results. A 6% YoY revenue decline and 20% YoY operating income decline is probably not what CEO Nadella envisioned as the result of the “Cloud First, mobile first ” strategy. The problem of Microsoft is that the company is probably doing everything right, but too late. The lack of an installed base of mobile phones with Windows is making it very hard to create an ecosystem to thrive and grow in. The fact is that the iPhone (and later Android OS ) not only disrupted the mobil industry. It also and foremost disrupted the PC industry. It was a full convergence with the disruption theory of Clayton Christensen. For many years most people bought a PC as their only possible access to the internet and basic home office functionality, but hey were indeed over-served with functionality they didn’t need (how many functions of Word do you actually use) and/ or lacked the mobility functionality they needed. Microsoft reacted too late and the price it is paying is becoming increasingly higher. For a series of mission critical numbers on Microsoft this quarter, read them here. The lesson: Don’t laugh at disruptive products and services like Steve Balmer did when the iPhone got released. Monitor the industry, identify future rivals and be prepared to fight them and win from day one. Later on you may find yourself finally doing the right things… and still lose.
I’d say PC has born mainly as a working tool. Mobiles are a kind of toy too.