I was at TechEd this week, where IT folks learn how to deploy and use Microsoft products. While Apple was focused on phones and MP3 players and Google on search and all the stuff that makes up the other 3 percent of its revenue, Microsoft was focused on a 10-year plan to build out a new ecosystem. We are now in year seven of this plan and you can finally start to see stuff work together and reflect the strength of the strategy. This is one of the things that has often differentiated Microsoft from most others; it can focus on strategic long-term projects like .Net and Dynamic IT, while others are more tactical and product focused.
However, with strategic projects, the full benefits aren't really available until after the parts are completed. For Dynamic IT, that is a 10-year project that still has two years to go.
The concept of Dynamic IT, or an IT ecosystem that could alter itself to adjust to any business need in real time, is compelling. But a strategic project to provide it is problematic. Think about it. When Dynamic IT started as an initiative, virtualization was a science experiment, two core processors were unusual, the iPod was looking like it might be successful, the iPhone and iPad didn't exist, smartphones did e-mail if you were lucky, and Internet on an airplane was impossible. Most of us weren't even thinking of the "cloud" back then and Sun was still a viable independent company.
This means that as the initiative matured, it also had to evolve. You would expect it to have slipped and, at least according to Microsoft here at TechEd, it didn't. This is one of Microsoft's unique competitive strengths against Apple and Google; it can initiate a strategy that cuts across a number of broad areas. The other two firms not only don't appear to be able to do that successfully (for example, the iPad, iPhone, and Mac don't interoperate tightly), they often don't even have similar breadth. For instance, neither firm has a robust management tool set.
I'm not yet convinced that either Apple or Google fully understands IT needs. Apple, historically and successfully, targets users, and these users tend to drive products into companies over IT objections. However, as a result, IT does not work hard to integrate them and users typically are at a disadvantage in terms of support and interoperability. Google is trying to understand IT but its business model, which captures employee information, is counter to acceptable IT practices and it has yet to reach the status of a true IT vendor. It typically takes about 10 years with IT services to become recognized as true IT vendor.
Microsoft is very IT focused. In fact, it has been argued that it was overly so, which contributed to Apple and Google gaining advantages against it. With every advantage there is generally a balancing disadvantage. In this case, companies still pay for most smartphones; this is why RIM and not Google or Apple has the highest market share in smartphones. RIM focuses on business but, when it comes to business focus, RIM is a small shadow of what Microsoft could do.
What Microsoft showcased at TechEd was the potential for a tightly integrated consumer and business smartphone that could interoperate with a variety of desktop and server applications, ranging from Office to High Performance Computing (HPC). Neither Apple nor Google can virtualize and present your business desktop on their phones, let alone adapt it to phone use. Apple just launched a video conferencing feature that only works on its latest phones and with Wi-Fi. Microsoft showcased a similar service that could work with any phone that was properly provisioned and connected to Exchange, potentially including the iPhone (supposedly there will be an app for that and Apple likely won't dare block it).
It isn't that Microsoft will just be first to market with capabilities like this; neither Google nor Apple is even capable of doing this kind of thing. Neither Apple nor Google likes to interoperate with anything that isn't theirs. Microsoft is driven to interoperate first due to the EU settlement and then because it realized it gives it a competitive advantage. This interoperability focus is hugely helpful in a communications product like a phone. Phones that can't talk to other phones are door stops, in my opinion.
Wrapping Up: How Microsoft Could Win
I'm using the word "could" and not "will" because the critical skill needed to win is marketing. Microsoft has some capabilities that most business users should prefer over Apple and Google. However, to get them to work, people have to know of and want them. In addition, firms have to have deployed the appropriate back-end offerings that are required to make them work properly. If Microsoft can get users to prefer the Microsoft ecosystem, the firm not only moves ahead of both Google and Apple, but its gains are relatively protected because neither Apple nor Google is currently equipped to create comparable capability.
If it can't get users excited about this capability or get companies to deploy the needed back-end tools that enable it, Microsoft is removed as a competitive advantage and doesn't reach its potential. Microsoft has one person who could likely create the needed demand: Kathleen Hall, who runs Windows marketing. If they can put her, or someone like her, on this problem and provide the needed funding and support, Microsoft could pass Google and Apple. We'll see if it steps up in a few months.