To the surprise of many seasoned IT industry observers, Microsoft has successfully managed to pivot towards being a service company, rather than a seller of software licences. A significant part of this change has been moving its Windows and Office products away from a one-off purchase model, to an ongoing subscription concept. This means that each individual version of Windows is now less important than it used to be, and that the company now chooses to focus instead on continually updating the core software, rather than waiting for major new releases to introduce new features.
Microsoft’s move into building its own hardware has also raised many eyebrows among industry observers. This initially caused some alarm among the original equipment manufacturers (OEMs), who buy the vast majority of Windows licences. However, after several years of production of the Surface and other Microsoft branded laptops, the two parties appear to have got over this potential issue.
For the vast majority of consumers, who never upgraded from one version of Windows anyway, and only started using the latest version when they got a new computer, this will make little difference. However, for IT professionals who oversee vast networks of machines, Microsoft’s unique way of working, has caused several changes to the way that they have to carry out their tasks.
Firstly, they now have to support users through updates that change the way certain parts of the operating system work every few months. Previously, this situation only arose when they took the decision to deploy a new version of the operating system, a set of circumstances that only occurred every couple of years at most, and gave them plenty of opportunities to prepare users for any upheaval. Because going through this type of upgrade is generally a process that most IT managers want to avoid, there are a few companies that may be putting off otherwise necessary updates, to prevent this experience.
Despite all these potential drawbacks, the future for Microsoft looks very strong. By locking in many of the world’s biggest companies to these types of long-term support arrangements, it now benefits from a far sturdier revenue base and is at far less risk of its significant customers defecting to other products and operating systems. It also makes it far more comfortable for the company to start bundling pieces of its software together again, to create greater customer loyalty; a strategy which caused the company huge problems with regulatory bodies, back in the late 1990s and early 2000s.
Of course, the world of technology is always fast moving, and there is still the possibility that a new competitor could come onto the market, and usurp Microsoft from its once again dominant position. However, the company’s new business model makes this much less of a risk than it once was. The future looks bright for Microsoft, and the only question for the company now is, in the words of its famous slogan from the 1990s: ‘Where do you want to go today?’