Microsoft results point to the future, one that is all business

Microsoft posted its quarterly results yesterday, and in shows a company in a continued trajectory toward the business market, and a rapidly declining consumer side.

The strong showing of enterprise products and services — which grew 10% to $11.2 billion — managed to overcome the poor showing of devices and consumer software, which only grew 4% to $7.46 billion. Net income of $5.24 billion, up from $4.47 billion last year.

The buzz that Microsoft might announce a successor to Steve Ballmer, the CEO who has announced his near-term departure (see Microsoft’s Ballmer stepping down in next 12 months), but that turned out to be wishful thinking. The discussion of various candidates continues, with the same old names being reported: Alan Mulally of Ford, Paul Maritz, a former Microsofty now at Pivotal, Stephen Elop, now at Nokia but soon to become part of the pending merger, and Tony Bates, now at Microsoft but the former CEO Skype.

Ballmer — as I have said many times in recent months — continues with the same old story, that Microsoft will ultimately prevail in the consumer push it is making into companion devices (smartphones, tablets), gaming, and search. I predicted that the company will send tens of billions before coming to its senses, and finally focusing on being the leading enterprise software company. And they continue down that rat hole. Here’s Ballmer:

Our devices and services transformation is progressing and we are launching a wide range of compelling products and experiences this fall for both business and consumers. Our new commercial services will help us continue to outgrow the enterprise market, and we are seeing lots of consumer excitement for Xbox One, Surface 2 and Surface Pro 2, and the full spectrum of Windows 8.1 and Windows Phone devices.

Well, he’s half right.

Sooner or later, Microsoft will have a leader that will spin out or shut down the consumer side of the business, and use that company’s considerable resources toward becoming the leading enterprise software company. Instead of playing an endless game of catch up with Google and Apple, they can turn their attention to Salesforce, Oracle, IBM, and SAP. But they will have to stop tinkering with tablets and copying Google Glass, and double down on tools for a new world of work, or they may find that Apple and Google will be displacing them.

Apple announced this week that the company was making its suite of office productivity tools free for new hardware buyers, taking direct aim for Microsoft’s dominant position with Microsoft Office (see Apple moves to edge out Microsoft Office and Google Drive). Google Apps has been a thorn in Microsoft’s side for years. And Microsoft still doesn’t have Office on the iPad. Time is running out. And if they lose with Office, they may wind up losing it all.

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Stowe Boyd

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