Microsoft has been somewhat of a miracle in last few years. What was deemed a failing company under Steve Ballmer is revitalized and turned into an important company by their new CEO Satya Nadella. Microsoft gets lot more respect now than it did barely 5 years ago. Microsoft board has done what boards of Yahoo, HP couldn’t do in picking right CEO.
Behind this transformation is the cold reality that MSFT is still comprised of people that grew under Ballmer era. Its not a completely changed company yet.
When I look at their Cloud strategy, I see some evidence of this outdated, hold the fort mindset. A company that’s not willing to take bigger risks when it comes to Cloud and wants to play it safe. Its a company that listens to current customers who tell them not to rock the boat.
Its no secret I am a fan of Clayton Christensen and his work on Innovators Dilemma. One of his theories is called RPV Theory.
Resources = what an organization has or is investing in
Processes = how the organization does it works
Values = what an organization wants to do and how it prioritizes decisions
RPV Theory says that an organization’s resources(R), processes(P) and values(V) define its strengths and weaknesses.
Using RPV Theory, its easy to rule out IBM, Oracle in the Cloud battle. They lack necessary investment into resources such as world-wide data centers, and processes on innovation.
Microsoft has demonstrated that it has the resources and is willing to invest in them. MSFT has processes for driving innovation as they have done time and again. MSFT does not suffer from lack of innovation. They have smart people.
The issue MSFT has is with values. MSFT listens way too much to ‘existing’ customers and undervalues ‘future’ customers. They are influenced by what current ‘paying’ customers are telling them. They focus on product features and capabilities based on these customer conversations.
These customers do not want to rock the boat. They want a smooth migration to Cloud over long period of time. They do not want to take risks. They do not want to be these unconstrained, shadow IT fueled organizations that uses Cloud without top-down project planning. These organizations have a high chance of failure as well.
Lets look at some of the decisions MSFT made in last few years:
- Each product will be available as an onprem product and as a Cloud product ( Sharepoint, Exchange, Active Directory etc )
- There will be integration between these onprem and Cloud products
- Don’t like MSFT infrastructure? Run a Gerber-ized version of Azure on your existing servers
On the other hand, the undisputed market leader for Cloud currently is AWS by a wide margin. AWS has been convincing larger customers to go all-in into Cloud. Lets look at some of the decisions AWS made in last few years:
- Speed up your data migration to Cloud ( Snowflake, S3 acceleration )
- Move all your DB to Cloud ( RDS, Aurora, RedShift ) and don’t mess around with Oracle etc
- Lambda — don’t worry about your servers, actually don’t worry about our servers either. Just focus on your application logic.
AWS values align to the Cloud adoption. Their customers are innovators that are willing to jump all in to Cloud. These organizations have a higher chance of success. Going all-in on Cloud is a leading indicator of an organization’s chance of survival.
It is my opinion that in emerging and transformative markets, the vendor that gets customers faster to the destination wins it by a wide margin. MSFT is hedging and slowing down their customer’s journey to Cloud. AWS is speeding up their customer’s journey to Cloud.
In my opinion, AWS will pull away much farther from MSFT. MSFT risks slowing down enough to catch up to ORCL, IBM in reverse direction.
I am bearish on Microsoft Cloud strategy. I am bullish on Microsoft as the company — I think they would do great on XBOX and other areas.