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Analysis: Microsoft To Shift Its Focus to Tablets and the Cloud

Echoing Microsoft CEO Steve Ballmer's declaration in October that Microsoft is now a "devices and services company," a newly published report indicates that Microsoft's product strategy for 2013 will be focused on tablets and cloud-enabled software.

The findings of the report from Directions on Microsoft, "Tablet and Cloud Lead Priorities in 2013," also were summarized in a recent webinar. Essentially, Microsoft has been experiencing a business shift. In the last three years, revenue from its Business Division and Server and Tools Division grew, while it decreased for its Windows Division. The company is responding to the mobile threat posed by Android and iOS devices by putting its Windows 8 and Windows RT operating systems on tablets, with the Microsoft Surface Windows 8 Pro device expected to arrive on Feb. 9. The company is also revving up a faster software release cadence, especially for its Office 365 cloud-enabled products.

As part of this faster release cadence, we may see Windows 8 and Windows RT R2 interim releases this year, as well as R3 releases in 2014. The next Windows and Windows RT releases (possibly Windows 9) may occur sometime in 2015, according to a webinar slide from Directions on Microsoft. All of that is pure speculation on the part of Directions on Microsoft, however.

As for Microsoft's Office 365 online service offerings, updates likely will be more frequent than the typical three-year cycles seen for Microsoft's premises-installed servers. For instance, SharePoint Online releases already happen quarterly, and that pattern is expected to continue throughout 2013.

The Mobile Play
Directions on Microsoft is predicting that we may see business intelligence apps for iOS and Android devices that can tap into SQL Server Reporting Services, possibly in the second quarter of this year. Another possibility is that Microsoft Office 2013 may land on iOS and Android devices in the second quarter, particularly Excel, Word and PowerPoint (Lync and OneNote are already available for the iOS platform, according to the report). The report speculates that Microsoft could impose technical or licensing restrictions on Office used on the iOS platform to limit the competition.

Microsoft CEO Steve Ballmer recently suggested to Bloomberg that getting Office on the iPad wasn't a big concern as "we do have a way for people always to get to Office through the browser, which is very important." However, Microsoft's Office Web Apps currently lack offline editing capabilities, according to Rob Helm, managing vice president at Directions on Microsoft.

"As Steve Ballmer observes, the Office Web Apps can work with mobile devices," Helm commented via e-mail. "However, they don't work offline. Real file editors with offline capability for iPads and Android tablets would help Microsoft bring in more revenue from tablets than it gets now from Windows tablets, and from client licenses for server products (like the Office Web Apps) and services like Office 365. Longer-term, the editors would also help slow down competitors like [Google] QuickOffice being incubated in tablets."

Right now, Microsoft is likely calculating which approach would generate more revenue for the company, Helm added. That could mean either providing Office support on various tablets or making money off servers and services instead.

On the mobile device management front, Microsoft has already released the January Windows Intune, as well as Service Pack 1 of System Center 2012. This service pack allows management of Windows 8, Windows RT and Windows Server 2012 operating systems. Meanwhile, the cloud-based Windows Intune service supports the management of iOS and Android devices, as well as those running Windows 8 and Windows RT. Microsoft has been pressing the idea that both Windows Intune and System Center Configuration Manager 2012 SP1 are essential for mobile device management.

Cloud Moves
Windows Azure, Microsoft's cloud-based operating system, has been launched as an infrastructure-as-a-service (IaaS) offering, offering potential competition to Amazon's Elastic Compute Cloud services. Organizations will be able to tap into a production-grade IaaS Windows Azure service this year, according to the report. The IaaS architecture allows users to install and maintain an OS and applications on Microsoft's cloud-based servers.

"With the production launch of Windows Azure Virtual Machines, customers will be able to run their own instances of Windows Server 2012 on Windows Azure, which is the integration feature that a lot of customers want," Helm commented.

Other Expected Product Updates
Directions on Microsoft expects to see a SQL Server 2012 Parallel Data Warehouse update sometime this year. Plans include updating Hekaton, a Microsoft in-memory processing technology, plus releasing another Hadoop integration. However, the updates just will be for the Parallel Data Warehouse edition; other editions of SQL Server might get updates in 2014 or 2015. Microsoft also will update Power View to work with Analysis Services cubes.

This year should see some sort of Yammer enterprise social networking integration into SharePoint Online. Some sort of Skype and Lync integration is also part of Microsoft's plans. Microsoft acquired the Skype voice-over-IP telephony service back in May 2011.

Microsoft will release various compatibility updates for its software products released in 2012. For instance, the report expects to see such updates for Exchange Server 2010 and SharePoint Server 2010, allowing them to run on Windows Server 2012.

Directions on Microsoft is a Kirkland, Wash.-based independent consultancy that's been tracking Microsoft for about 20 years. It publishes reports and conducts webinars, along with offering workshops, particularly focused on Microsoft licensing.

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