Software giant Microsoft is undertaking a reorganization which will see less emphasis being placed on the Windows operating system in the face of declining PC sales. In the corporate hierarchy of Microsoft, Windows will now occupy a lower rung compared to what was previously the case. What used to be known as ‘Windows and Devices Group’ for instance will now be referred to as ‘Experiences and Devices’. The current top priorities of the largest software company in the world now are cloud computing, artificial intelligence and corporate software.
The corporate reorganization of the Redmond, Washington-based company is driven by the financial realities. Eight years ago revenues from the Windows operating system comprised about 28% of the company’s total sales. In the most recent annual fiscal report Windows ranked third with regards to the largest sources of revenues. The ubiquitous operating system was behind Office productivity software as well as the Microsoft unit that’s made up of Azure cloud services, databases and server software. Its share of total revenues was 16%.
The current chief executive officer of Microsoft, Satya Nadella, has taken a different path from that set by his predecessors – Steve Ballmer and Bill Gates. Nadella’s vision for Microsoft is markedly different from his predecessors and nothing says it more emphatically than his decision to de-emphasize Windows operating system. This was apparent from the first few weeks on the job. In a memo sent to staff four years ago he mentioned the word cloud twice as much as the Windows OS.
As the chief executive officer of Microsoft the first significant product that Nadella unveiled was Office software for the Apple iPad. While the development of the software had taken place when Steve Ballmer was still the CEO it had failed to be launched because of fears that launching it for a rival platform would hurt the sales of Windows.
Prior to Nadella’s tenure Microsoft had made a habit of releasing a new Windows edition every couple of years. However that has changed and the updates are continuous. The regular updates are now part of the price consumers pay after purchasing a new computer.
Nadella’s hand has been forced though by a shift in the market. Since 2012 sales of personal computers have been declining. When personal computers, tablets and smartphones are all taken into account the market share of Windows is under 15%. Windows is also nonexistent in areas of emerging technology such as Internet of Things and autonomous cars.