Some years back Microsoft was cashing in big sum of money from licensing of its patents.
The strategy to turn Microsoft’s patents into business was conceptualized by then its CEO #Steve Ballmer. He declared that Linux violated over 235 of Microsoft’s patents and though the company did not file many lawsuits, it was clearly hinted that Microsoft could start a suing spree. Lawsuits were filed but not many – the one against TomTom in 2009 and another against Barnes & Noble in 2011 – were both settled. Few in number but these lawsuits definitely did not go well with the Microsoft’s customers. So Microsoft began to license its patents and promised it would never sue. Since then company has been making big bucks from patent licensing.
However Microsoft – being a tech company – needed a better business model to continue being a successful innovator in the next decade. So when Microsoft’s Board Members decided that their strategy would be “Cloud First, Mobile First”, they chose #Satya Nadella, with his background running the “Azure” Cloud division in the company.
And standing true to the expectations, Satya Nadella has worked upon and brought all the desired changes to company’s business model. In its annual Build Conference on 2 April, 2014, Nadella declared that the following:
1. All versions of Windows, including PC, tablet and phone versions, would be free for devices with a screen of less than 9 inches to consumer manufacturers.
Will help challenge Google’s free Android operating system for smaller devices.
Android device manufacturers pay a patent fee to Microsoft for some of its technologies, so it will now actually be cheaper to manufacture a Windows phone or tablet than an Android one.
2. Microsoft’s developer tools like its C# and .Net platforms (which programmes use to make software and apps) are now in open-source to facilitate development of Apps between all Microsoft devices (PC, tablet, phone, Xbox).
Increased support from the developer community
3. Gives away Windows licenses for free on small devices
Looking at the market conditions where more iOS devices were sold worldwide than PCs, Microsoft desperately required that it catches up with both Apple and Android. So it shifted focus towards manufacturing of Windows devices with small screens.
Significant leverage from increased number of devices in the market
(especially in developing markets like China, India, Africa and South America where price is a crucial factor)
4. Started development of wearable devices with even smaller screen sizes.
Benefit to Microsoft
It came through the use of additional services on their platform, like Cloud storage (based on their Azure platform), App and media sales (much like iTunes), Office and Xbox Live.
5. Release of Office for iPad
Microsoft’s own tablet platform, the Surface was not much successful. Now they have adopted a strategy and are enabling their customers to access their products in the way they prefer.
Through Office 365 Subscriptions
To edit documents, you need to have a subscription to Office 365 which costs a monthly fee instead of paying hundreds of dollars up-front to own the software. This means that every iPad owner who uses Office on their device could be worth more than $100 a year to Microsoft. This is predicted to bring in billions of dollars annually as both individual users and big corporates accelerate using the service.
Innovative productas Nadella is Eyeing
Delve, code-named Oslo, is Microsoft’s version of Google search.
It doesn’t search the Web, it searches your emails, social networks, and corporate documents stored in Office 365.
Delve uses “machine learning” and artificial intelligence to show you the documents, messages, and people you don’t know you need to see.
Microsoft’s answer to Siri and is part of the latest version of Windows Phone.
A real-time translation tool for Skype users
It’s a data analysis tool and also an add-on cloud service for Office 365 customers.
You type in a question and it searches through corporate documents stored in SharePoint and Excel and gives you an answer, maybe complete with chart (useful in next-generation “business intelligence” software, the kind of software used to predict things like quarterly sales, etc.)
Balmer’s strategy aimed at reaping profit from patents worked. Device makers are still signing licensing agreements and as Android sales are expected to boom and android devices sale is soon going to reach a landmark of 1.5 billion in 2017, predictions are that Microsoft will make $750 million at $1 per device and $6.3 billion at $5 per device.
If the strategy of Nadella works and these innovative products prove a hit with businesses users and organize people’s work lives, it will validate not just Nadella’s vision but will turn Microsoft towards innovation yet again.