Microsoft WPC 2014: Microsoft adopts 'challenger' mentality to win larger world of connected devices

Microsoft controls more than 90 per cent of the personal-computer market. Which means that, in its view, it's an underdog.

Microsoft opened its Windows Partner Conference in Washington DC. by showcasing the abilities of its Cloud services, with the spotlight on the preview release of a new machine learning capability for Microsoft Azure. But when chief operating officer, Kevin Turner, took the stage at the end, he spoke aggressively about seizing the opportunity in connected devices.

"The reality is that the world has shifted, and the world's evolved. We now measure ourself in the total device space, and in the total device space we have a 14 per cent share of devices," Turner said.

"And when you have 14 per cent you have to adopt a challenger mindset," Turner said.

On Monday, Microsoft made a few announcements, mainly showing off how its existing products worked together, forging a cohesive whole. One important tidbit of news, however, was the Hewlett-Packard Stream, a $US199 notebook which Turner held up to illustrate the fact that Microsoft was committed to attacking the low end of the market in an effort to gobble up that remaining 86 percent of devices. The Stream will be accompanied by two other HP tablets, priced at $99, which will launch this holiday season.

Turner said when Microsoft decided to eliminate Windows licensing fees on devices 8 inches and smaller, Chinese partners announced 31 new low-end tablets in that week alone. "This holiday we're just getting started with the device and where it's headed is extremely powerful," he said. "We do intend to compete at the low end."

Turner said that Microsoft had a four-step plan of attack for its new fiscal year: double-down on the cloud, win in mobile, adopt the challenger attitude, and obsess over customers. The end goal is to be the productivity and platforms company that chief executive Satya Nadella envisioned.

Cloud is the main focus

Microsoft's WPC is an opportunity for Microsoft to present its roadmaps and plans for an assembled roster of major customers. In years past, Microsoft has made products like Office 365 and Azure key areas of focus, as platforms that partners can build off and provide consulting services for, growing their own business as well as that of Microsoft.

At past WPCs, Microsoft has shown off how products like its Power BI tools provide intelligence to products like Excel, tying together public and private data stores to provide insightful looks at information. In one example on Monday, Microsoft executives demonstrated how a travel budget could be dynamically adjusted by swapping out business-class airfare with coach for travelers in various product groups, and how warning signs in sales for a particular industry segment could be put front and center on an operations dashboard.

On Monday, however, Microsoft made machine learning its focus. Scott Guthrie, executive vice president of the cloud and enterprise group at Microsoft, called the new Azure Machine Learning technology, announced in June, sort of the opposite of Power BI--Azure ML looks forward with its predictions, not back. Azure ML was released in preview form.

Likewise, Julia White, the general manager of Office, showed off how the new Delve tool--formerly code-named "Oslo"--could tap into the power of Azure to learn what documents are relevant to you.

Microsoft continued to tout Office 365's success. A year ago, Microsoft executives boasted of Office 365's $US1 billion run rate. This year, it's up to $US2.5 billion, John Case, corporate vice president of the Office Division, said. And the Office for iPad apps have been downloaded more than 27 million times, he added. Over 5 million apps running on top of Office 365 and Azure have been downloaded through Microsoft's online stores.

Platforms and productivity

But it was Turner who shouldered the bulk of the load, admitting mistakes and painting the lines on Microsoft's road ahead. (Nadella is scheduled to speak Wednesday.)

"As a company we've been embracing several hard decisions," Turner said. "One of the one we've talked about... was zero-royalty 9-inch devices. That was not an easy choice, but it was a necessary choice. Making Office cross platform, the best of productivity. Deciding as a company that we were going to win at productivity became important for us. Getting into first-party hardware was not an easy decision, but we wanted to lead the hardware innovation cycle. Not to be an exclusive, closed proprietary first party supplier, but one that leads the innovation curve and stays...out in front in where innovation will go."

Turner touted the positive reviews that accompanied the release of the Surface Pro 3 tablet, and the resurgence of Windows Phone as part of Windows Phone 8.1.

Turner also mentioned "the next release of Windows," but provided few details. The key elements, to Turner, was that it would be "a great, world-class enterprise OS when it comes out," and that it would continue Microsoft's vision of universal apps. Apps written for this next generation of Windows devices will run on smartphones, tablets, PCs, its gigantic Perceptive Pixel displays, even the Xbox, he said, using a single API.

Finally, Turner said, Microsoft plans a substantial, apparently disproprtionately large push into security, continuing to enhance basic apps like Windows Defender on up to more sophisticated services for enterprises. Turner also pledged to notify customers when their data had been subpoenaed by the government, to never build back doors into its products, and other privacy pledges.

"We're going to be a leader in data protection, privacy, and security," Turner said.