Microsoft Indirectly Admits That It’s Not a Consumer-Shaped Company

The company talked about its enterprise efforts in a meeting with analysts

By Bogdan Popa on September 20th, 2013 14:41 GMT

Microsoft has often been accused for not listening to consumer feedback and paying much more focus to its enterprise product lineup, especially since the Windows 8 operating system got to see daylight in October 2012.

The company, on the other hand, hasn’t talked too much about the way it looks into users’ opinions until it actually had to, as Windows sales have dropped so much that Microsoft really had to reverse some of its decisions and tweak the operating system in order to address complaints.

Ever since June when Microsoft officially announced Windows 8.1 Preview at the BUILD developer conference in San Francisco, the Softies started talking about consumer feedback, saying that users’ requests are much more important these days. Hence the return of the Start button and the integration of an option to boot directly to desktop and skip the Modern UI.

The truth, on the other hand, is that Microsoft remains mostly a company that’s based on the enterprise business, and the company indirectly admitted it during a meeting with financial analysts on Thursday.

Let’s begin with a statement of outgoing CEO Steve Ballmer who said that although Microsoft tries to remain a consumer-shaped company, it all comes down to the enterprise business.

“One of the things that we have really kind of taken note of from a profitability perspective: we will be led by our work in the enterprise services and devices. We think that the greatest profit growth, it doesn't mean the greatest innovation; it doesn't mean we won't do ‘consumer services,’ because they are important,” he said.

“They're important to the customer. They're a path to enterprise services. They're a path to device success. But, in some senses we will lead as we go to market and we will certainly lead in terms of how we hope to generate profit, through devices and through enterprise services.”

Terry Myerson, Microsoft's executive vice president of operating systems, went to explain that Windows is also the right choice for enterprises and many of the features that are now included in the operating system are aimed at this industry sector.
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Microsoft is trying to appeal to enterprises not only with Windows, but also with powerful cloud services incorporating its key products. “With everything we do in Windows we have this focus to making sure that Windows is that great enterprise desktop for productivity work, as well as any other form of desktop deployment that an enterprise might have for data entry kiosks, whatever it might be. We want Windows to be that most secure, most manageable, lowest TCO way to deliver that desktop experience,” he pointed out.

Truth is, every single Microsoft executive that took the stage on Thursday also tried to emphasize that Redmond is also paying particular attention to the consumer side of the market. This is clearly part of Ballmer’s new vision, as several company products have been tweaked in such a way that they address customer feedback.

Here’s what Ballmer said only a few minutes later during a Q&A session:

“We've been selling to consumers and enterprises basically since about 1985. It used to be people thought we were better at the consumer side and worse at the enterprise side. Now people think we're better at the enterprise side and worse on the consumer side. I'd love everybody to say you're good at both sides, but I don't see the fundamental disconnect. I really honestly don't feel it even in the culture of the place.”

And then, we got to see this chart.
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As you can see for yourselves, Microsoft’s very own statistics prove that 55 percent of the company’s revenues come from the enterprise industry. And that’s quite okay, but consumer products are way behind with only 20 percent. OEMs account for about 19 percent, which is almost as much as the consumer share.

Windows currently generated only 25 percent of the company’s revenues in fiscal year 2013, less than server and tools – 26 percent and the Office division – 32 percent.

But Microsoft’s strategy seems to be make sense. At least for shareholders, as lots of users out there are quite frustrated with the way Redmond tries to address customer feedback. Let’s have a look at this table:
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As you can see, Microsoft claims that it is currently the most profitable company on the market, having a bigger profit than Apple, Google, Amazon, Oracle, IBM, and Salesforce.

“We have been very successful,” Ballmer said. “We make a ton of money. We're very proud of that... I'm proud that we've made more money than anybody on this list in the last 10 years.”

In the end, in doesn’t really matter whether you like it or not, but in case Microsoft isn’t listening to customer feedback, it’s because either way it makes a lot of money. So nobody seems to actually care if you can’t get used to the Start button or not.

As a conclusion, here’s what John Sculley, former CEO at Apple, recently said in an interview with Bloomberg:

“Where they had not done a good job is where it has to do with consumers. They’ve been totally tone deaf. You have to start with the vision that Ballmer has laid out. The question is: do they have any evidence that they can do well in that. I don’t think they’ll ever be like Apple. Apple is a culture as much as it is a product technology company. There’s nothing inside Microsoft that suggests they’re going to be a consumer shaped company.”
Microsoft continues to bet big on enterprises
   Microsoft continues to bet big on enterprises
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