Microsoft's quiet triumph
Get ready for Windows 11
The smartest insight and analysis, from all perspectives, rounded up from around the web:
A "rejuvenated" Microsoft is finding new ways to grow, said Jordan Novet at CNBC. After announcing the upcoming release of its first new version of Windows in almost six years, Microsoft saw its market capitalization reach $2 trillion last week — the second corporation, after Apple, to reach that milestone. The pandemic undoubtedly "bolstered demand for products such as the Teams chat app that kept organizations functioning." But it's not just the pandemic; Microsoft's share price has surged "more than 600 percent since Satya Nadella replaced CEO Steve Ballmer in 2014." While Ballmer failed to recognize the coming mobile-phone boom, Nadella's formula has been "looking beyond its dominant Windows operating system." He's acquired LinkedIn, the code-storage service GitHub, and videogame developer Mojang, the maker of Minecraft. And Nadella has put Microsoft's cloud business, Azure, on track to be the company's largest source of revenue by 2022.
The rivalry with Apple goes back "to the formative days of the personal computer era," said Tim Higgins and Aaron Tilley at The Wall Street Journal, and tensions are heating up again. Last month, Apple accused Microsoft of "pulling the strings" behind a high-profile court case involving the video-game developer Epic Games. The iPhone maker tried to discredit the testimony of a Microsoft vice president Epic called as a witness to discuss "her failed attempt to bring a bundled video-game service" to the App Store. And last week, Microsoft announced it was "lowering the cut it takes on content sold on its new app store," a move some observers saw "as a swipe at Apple."
Despite all of Microsoft's other lines of business, a lot is still riding on Windows 11, said Ina Fried at Axios. It "still runs on nearly three-quarters of the world's computers," but has been steadily "losing ground to MacOS and Chrome OS." That's a problem, since "the company's 'more personal computing unit', which includes Windows, Surface, and Xbox," made up 31 percent of its revenue last quarter. The company's biggest future bets rely on Windows as well. "HoloLens, the augmented-reality headset, is at its core a Windows PC on your face." Microsoft said in 2015 that Windows 10 "was going to be the last version," said Bob O'Donnell at USA Today. "Clearly, things have changed." With Windows 11, Microsoft is making "an incredibly strong statement about the ongoing importance of PCs." Enabling Android apps to run on Windows "shows that Microsoft has adjusted its thinking on how people use PCs."
Microsoft was the subject of the first major tech antitrust fight two decades ago, said Robert Hackett at Fortune, but in recent years it has developed a "seemingly uncanny ability to fly under the radar." This may be because it is "the rare Goliath that does not tend to dominate its main markets." Yes, Windows is the leader for operating systems, but "Amazon Web Services eclipses Azure; Facebook tops LinkedIn; Sony PlayStation beats Xbox; Zoom beats Teams." If Microsoft were a country, "its athletes would reign as Olympic silver medalists." After almost getting broken up once, Microsoft seems happy with duopolies — and that has served shareholders very well.
This article was first published in the latest issue of The Week magazine. If you want to read more like it, you can try six risk-free issues of the magazine here.