One of the hallmark differences between Microsoft’s new CEO Satya Nadella, and his predecessor Steve Ballmer, is that Nadella understands how to make a deeply symbolic gesture. While Ballmer relied on shouting ‘Windows’ very loudly, Nadella has produced a series of turn-ups designed to convince the world that this is a new Microsoft, not just a new CEO with a snappy if vague motto (mobile first, cloud first). The first was to release the new mobile Office for iOS before Windows itself; the most recent is to jump straight from Windows 8 to Windows 10.
There may have been pragmatic reasons for that (too much confusion with previous releases with ‘9’ in them, like Windows 95 and 98). But Nadella certainly turned the leapfrog into a clear message – the next release of Windows will be two steps ahead, not just one; it will bear no relation to the troubled Windows 8 platform. Indeed, reading between the lines of his comments in the context of all his recent speeches, we might extrapolate that it will hardly be Windows at all.
Instead, Nadella badly wants us to believe that this will be an all-encompassing platform supporting apps, web services and a common experience across PCs, mobile devices and the internet of things (IoT). Microsoft has played around the edges of this single platform idea for years but without the courage to take on some of its darker implications for the Windows heritage – the need for significantly more openness, and indeed open source and open licensing, in the diverse world of mobility and IoT, where any OS will have to work happily with Google, and derive most of its power from being a viewing window to the cloud.
Those are concepts which were just too alien for Ballmer to adopt, but which Nadella feels comfortable with, given his pre-CEO focus on cloud platforms at Microsoft. Almost immediately he took the reins he cast off Ballmer’s last big idea, to become an integrated device/software company, Apple-style. Stuck with the Nokia devices purchase, at least for now, the new chief nevertheless made it clear that he was moving towards a world where Windows would be one client-end OS among many – a valuable asset, still, in the enterprise and among loyal PC users, but one with an end-of-life program, in case of the day when it become more hindrance than help (as it has always been in the mobile services world). He stressed the point in his conference appearance, saying: “We have to think about mobility as the user and app experiences not the devices.”
Details of Windows 10 are sparse so far, and it is not clear whether other strands, like Windows Phone, will be completely subsumed into it, or whether that will wait for later generations. But undoubtedly the big challenge is for Microsoft to make it relevant for the IoT, something Nadella insists is on the roadmap. He told the Gartner Symposium ITxpo conference last week that Windows 10 was the first step to creating a fully unified platform for multiple screens, and was insistent that it was not just about screens, but also IoT form factors with sensors but no displays.
“Windows has gone through a rearchitecture to one core Windows that runs everywhere. We architected the right Windows in the right devices with the right features,” he told the conference audience, saying the idea was to have a platform sufficiently flexible to adapt “to whatever computing shift emerges”, whether that is based around sensors, wearables or other concepts. “Windows 10 is a very important step for us. It’s the first step in a new generation of Windows as opposed to just another release after Windows 8. General purpose computing is going to run on 200+ billion sensors. We’ve architected Windows where it can run on everything,” he proclaimed.
Of course, Nadella is not Ballmer. His eyes are not lighting up at the idea of the Windows spinning blue circle appearing in every smartwatch, or connected appliances sporting a rebooted Windows paperclip – nor at the number of licensing fees all those billions of devices could generate. It is clear that in the IoT, the OS will be invisible, free and, thanks to emerging web technologies, even irrelevant. Its function for Microsoft will be to provide a sufficiently useful engine that it gets embedded into consumer and industrial ‘things’, particularly controlling hubs and larger items like cars, and then delivers large amounts of data to the Azure cloud platform for the analytics which will underpin real revenue streams.
Nadella said: “The internet of things endpoints will need an operating system that’s manageable and secure. I feel Windows will be a fantastic operating system to run on the edge.” But he added that Azure predictive analytics are “really our IoT strategy … We’re in IoT today.”
The discussion might have been about Windows 10, but Nadella didn’t have to talk for long before it became clear that Windows is no longer the crown jewel, and may even bring in dwindling direct revenue in future as Microsoft is forced to change its licensing policies (see inset). Azure was mentioned repeatedly, but one platform trumped even that – Office 365. Nadella said the Office API (application programming interface) even outdoes Azure’s in strategic importance. Office extensibility and data has driven billions of identity transactions in Azure Active Directory, he said, and that Directory is perhaps the company’s greatest asset, acting as the identity keeper for the cloud. “We’re making significant investments in it,” said Nadella.
At a press preview of Windows 10, operating system chief Terry Myerson was sticking closely to the Nadella songbook, also emphasizing that this would be a brand new Windows which would support cloud, mobile and big data efforts rather than being an end in itself. “One way to look at it is that Windows is at a threshold,” he said. “It’s time for a new Windows. This new Windows must be built from the ground up for a mobile first, cloud first world.”
Free Windows Phone starts to pay off, with 50 new vendors:
Earlier this year Microsoft took the belated, but still radical step of removing licensing fees for most Windows Phone supporters, to encourage wider uptake of its operating system.
Fees were waived for devices with screens of less than nine inches, and at the launch of Windows 10 last week, Microsoft’s operating systems chief, Terry Myerson, said the program was showing strong results. No fewer than 50 new companies have started making Windows Phone models since the fees – a significant barrier for low cost handset makers, especially when compared with Android – were removed in April. Many of these are targeting the high growth, but low margin market for phones priced under $200.
However, there are some other downsides to using Windows Phone, notably that there is still only one choice of processor supplier – Qualcomm, whose close relationship with Microsoft saw it leap into the place occupied by Intel in the PC space, and bring the first (and still only) Windows Phone SoCs to market.
Myerson said he expects the free Windows program to continue. Microsoft still makes royalties on laptops and tablets over 9-inches, but if it plans to eschew mobile licensing fees for the foreseeable future, it will need to recoup those device royalties one way or another, either through paid Microsoft services or fees from the Windows app store.
Microsoft is not saying how much it will charge for Windows 10, which will span mobile and desktop platforms, but Myerson said he expects the company will continue its policy of giving the platform away for free to makers of smaller devices. “It’s going well,” he told Re/code. “I expect we will continue it.”
Microsoft CEO Satya Nadella has also praised the April decision, saying earlier this year: “We looked at what it made sense for us to do on tablets and phones below nine inches, and we felt that the price there needed to be changed.
However, Windows Phone may be growing in unit terms, but it still lost market share in the second quarter, according to IDC – down to 2.5% from 3.4% a year ago. Of course, the new licensees’ models will not be hitting the market until after that period, so the impact of the free licensing will be felt in the current quarter and beyond. And Microsoft’s real challenge is to see OEMs adopting Windows Phone as a primary OS, not a sideline, and giving their Windows devices as much marketing support as they do for Android. That will get harder, in the sub-$200 sector, with the ramping-up of Google’s Android One program to push devices based on low cost reference designs into countries like India.
Microsoft is also expanding its reference design program to encourage low cost OEMs and has been working with Qualcomm on integrating the latter’s low end Snapdragon chips and reference platforms. New Windows Phone OEM and ODM partners include Foxconn, Gionee, Lava, Lenovo, Longcheer, JSR, Karbonn, Micromax, Prestigio and ZTE.
Samsung paid Microsoft $1bn a year for Android:
The terms of Samsung’s Android patent licensing deal with Microsoft have emerged in court filings, and show that the Korean firm has been paying $1bn a year in royalties.
Microsoft sued Samsung in August, claiming the handset giant had made payments late and therefore still owed it $7m in interest. Samsung argues that Microsoft invalidated their agreement when it acquired Nokia and is refusing to make further payments for this year or the rest of a term of the deal (supposed to run from late 2011 to late 2018).
Naturally, Microsoft says its Nokia acquisition does not breach the agreement and that the terms included “explicit provisions” for the acquisition of other companies. It also emerged that Microsoft had offered to sweeten the agreement if Samsung continued to develop Windows Phone devices alongside Android (the Korean firm did have a Windows range but has gone quiet on that in recent times).
Meanwhile, some experts think the handset vendors should not have been so quick to sign licensing deals for the patents Microsoft claims in Android (which brought it more revenue than Windows Phone itself, at least before the Nokia purchase). According to Foss Patents, Microsoft has lost two-thirds of the court cases it has fought over Android IPR.
Meanwhile, Samsung is embroiled in another IPR-related bout of litigation, with Nvidia. The US International Trade Commission is launching an investigation into allegations by Nvidia that several Samsung cellphones and tablet PCs contain graphics technology that infringes on its patents. The graphics specialist also lodged complaints in September with the US District Court in Delaware.
The phones in question are the Galaxy Note Edge, Galaxy Note 4, Galaxy S5, Galaxy Note 3 and Galaxy S4. Three tablets were named – the Galaxy Tab S, Galaxy Note Pro and Galaxy Tab 2.
“Instead of developing its own graphics processing technology, Samsung purchases and uses Qualcomm’s infringing processors and GPUs, as well as other processors and GPUs that infringe the claims of the asserted patents,” Nvidia said in its Delaware complaint. It said it had attempted to negotiate a license with Samsung, but had been repeatedly rebuffed.