Compatibility and Subscriptions - the New Strategy for Microsoft

It's been nearly two months since Satya Nadella became the CEO of Microsoft. Since then one of the major releases from Microsoft was OneNote for iOS and Mac, and Office 365 for the iPad. Microsoft actively building software for devices of the competition highlights a new strategy, removed far from Steve Ballmer's original roadmap. Here are the two strategies I believe are the future of Microsoft.

Strategy 1: Device Compatibility

Realizing that users choose to be active in multiple platforms, the direction has changed into one of compatibility. For Microsoft to progress, the new strategy shows that they are no longer are they thinking of Windows only.  Even though the current corporate world is predominated by Windows, the reality is that an increasing number of users are bring their own non-Windows devices in the work environment. It's unlikely that Windows on the desktop will fall in the next 5 years. However, if the last decade of mobility is any indication of where we are headed, then Microsoft needs to play catchup fast.

By bringing the Office environment to Apple's door step, Microsoft is angling itself to be a software first company.

Next Step: Embrace Android

Linux maybe supreme in the server world, but for regular users there are four prominent environments that they regularly interact with: Windows, MacOS, iOS, and Android. With Apple growing on two of these environments, Microsoft has shown that they are willing to play ball on Apple's court. Now they need to set their sights on Android. In the USA, Android might be on a decline, however, looking at the worldwide statistics, Android is a growing popular platform.

Strategy #2: Subscription to Software

There is another strategy Microsoft is pushing - subscriptions. Office 365 Personal - the yearly subscription to Microsoft's Office for one user, is a fully encompassing service. Offered for $6.99 per month, it's designed to accomodate it's current userbase for less than the cost of using Netflix. For the corporate world, they are offering a business package for $12.50  per month per user which covers all of their major desktop applications and provides email accounts, web hosting, online versions of their desktop applications, and file sharing.

The subscription model for desktop application is becoming increasingly popular. Adobe recently adopted this suite for their line of products. Software corporations are starting to realize a simple concept: the subscription model works better.

Next Step: Simplified Pricing

Currently Microsoft has multiple pricing schemes. Ranging from Student, Business and Professional editions of Office and an ala carte option per application. Then there's the Windows 8.1 edition with regular, upgrade to Windows 8.1 Pro, standalone Pro version. In fact, this seems to be the norm for Microsoft when it comes to pricing. SQL Server, Project 2013, SharePoint and many more have the complex pricing policies.

Maybe Satya Nadella needs to take a page out of Steve Job's playbook. Simplify the pricing and product mix and it will directly increase adoption across the user base. There are two distinct product mixes available to Microsoft, standalone applications and subscription based. Instead of splitting into regular and pro lines, the focus to be towards a single lineup -- preferably the Pro line. An argument can be made that students might not need the additional software on the pro line, but exposure to it is often the reason that they will use it in the future.

Take Away

The future of Microsoft depends largely on market demands. The customer base are slowly transitioning away from a big purchase model towards a subscription model. Along with this, is the increasing need to provide software on the platform of the customers choosing.
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