Microsoft Is A Very Successful, Very Boring Company That Desperately Wants To Be Cool

When Microsoft celebrated Tuesday an introduction to Apple's product in New York, technology reporters yawned. "This event has lasted over an hour and so far I think the only news was the release of a new version of the operating system," Mike Murphy of Quartz tweeted.In addition to launching a new version of Windows, Windows 10 S, Microsoft also unveiled a $ 999 laptop called Surface Laptop. These products are not generating anything like the excitement that the new versions of Windows generated during the nineties. That's probably because PCs are now a mature technology.

There is simply not much difference between one version of the operating system and the next.Most of the excitement in the consumer market has shifted to a new crop of devices that are not for PC: Google Pixel, Apple Watch, iPad, Echo and Amazon Kindle, and so on.This might sound like ominous news to Microsoft as the company has struggled to gain traction in any of these consumer markets (it has had a modest success with the Xbox).

But the bets here are pretty low for Microsoft. Consumer sales are not very important to Microsoft's profitability, and that has been true for years.Modern Microsoft is fundamentally an enterprise software company. Sell copies of Windows and Office to companies, along with online services and technical support contracts. It is a lucrative and stable business that could generate healthy profits for the software giant of Redmond in the coming decades.

But it is difficult for a company that was once at the forefront of consumer technology to accept a future making profitable but obscure products for businesses. It is much more attractive to compete with Google and Apple than IBM and Oracle. So Microsoft continues to try to increase its consumer profile with little success, while the company's revenue and profits come disproportionately from the lucrative but unglamorous commercial customers.

Windows promoted a new desktop image as a feature. Really.

"The first thing you'll notice about Windows 10 S is a new default desktop image," said Microsoft's Windows chief Terry Myerson.It became more exciting from there, but not by much. The event focused on the education market, and Microsoft introduced several features designed to help school administrators, such as one that allows them to quickly reinstall software from a USB key. There was also new software for students, including a "mixed reality" application that projects virtual objects like the Mars Rover in a real-life scene and educational versions of the Microsoft Messaging Teams application and their Minecraft game.The strategic goal here is to compete with Chrome OS, Google's bare operating system built around the Chrome operating system. Chromebooks are simple, inexpensive and do not require configuration, so they are suitable for the classroom. Microsoft says Windows 10 S laptops will start at $ 189 each, making them a strong alternative.But students probably will not feel much enthusiasm about the mature platform, and Windows 10 S represents an incremental improvement - at best - over the previous version of Windows.

Microsoft has struggled to sell laptops

The other big announcement was the introduction of Surface Laptop, a $ 999 computer with Windows 10 S. It was completed with a promotional video similar to Apple that emphasized its elegant industrial design.

It's a nice device, but the reality is that your success or failure will not have a big impact on Microsoft's bottom line. There are a lot of other Windows laptops on the market, and Microsoft gets a license fee for each. If customers buy few Microsoft laptops and a lot of laptops from Dell, HP, Acer and Asus, Microsoft will do very well financially.

And it's fortunate for Microsoft, because customers have not bought many devices on the line of tablets and laptops from Microsoft. In 2016, Microsoft earned revenues of $ 4.1 billion, a slight increase from $ 3.9 billion in 2015. By comparison, Microsoft Office raised $ 23 billion in 2016, Windows earned more than $ 8 billion and products Of Microsoft's servers reached $ 19 billion. This latest figure includes Microsoft's Azure cloud computing service, which more than doubled its revenue between 2015 and 2016.

Microsoft’s business is boring but lucrative 

Microsoft's profit margins were also much larger for business products than consumers. Microsoft's "smart cloud" category, which includes Azure and Office 365, based on the cloud, earned $ 9.3 billion in revenue of $ 25 billion. By contrast, Microsoft's "most personal computing" category, which includes Microsoft's handsets and notebooks, Xbox, online services like Bing and other consumer-oriented products, earned $ 6 billion with revenue of $ 40 Billion. Overall, nearly 80 percent of Microsoft's operating revenue comes from its enterprise software business.
Fundamentally, the stereotypes in the old Apple ads "I Am a PC" are true: Microsoft products are ideal for business applications, but they do not always capture the imagination of consumers. Microsoft is best at selling heavy business software like Azure and Office competing in the consumer market.
And from a financial perspective, that's fine. Microsoft is a hugely profitable business and is unlikely to change soon. In fact, in many ways companies make better customers. Once a large company chooses a particular piece of software is likely to continue to use for years or even decades, providing a steady and reliable revenue stream.
But selling business software is not glamorous, and Microsoft is not a company accustomed to losing. So it's still trying to break consumer markets.