Yesterday's announcement from Microsoft may look like just another product announcement in the tech industry, but it is quite a bit more than that. Microsoft indicated a major shift in strategy. Old competitors are now new partners. Microsoft fanboys and haters alike, are confused about the new messaging. They are no longer sure about whom to call friend or foe. Pundits are having a hard time forming cohesive opinions. This is the time before the new talking points have been established. Everyone is hedging their bets. Whether or not you are interested in the new Office product, Yesterday's news will have an effect on your future tech life. Here are a few observations:

Microsoft officially acknowledges the iPad as a content creation device

Since the debut of the Microsoft Surface, Microsoft has been pounding home the idea that the iPad is nothing more than an entertainment consumption device incapable of performing useful tasks that would be considered real work. They punctuated this message by including a free copy of Office with every Surface they sold. Interestingly enough, they omitted this freebie on the Surface Pro: their version of the Surface tablet designed for high-end users. Office was the main feature that was to elevate Microsoft's consumer offerings to content creation devices. Well... that, and an aftermarket keyboard. 

Microsoft hammered away at this message for a very long time. Office was a real differentiator for those who wanted to get real work done. As of yesterday, Office is no longer a differentiator, at least not in favor of the Surface. Not only has Microsoft produced an iPad version, but the first touch-friendly version of their most important piece of software. The version included on the Surface is awful by comparison. For quite a while, Microsoft and their fans have been defining real work as work done with Word, Excel, and PowerPoint. By that definition, the only way to get real work done on a tablet is to own an iPad. For Microsoft, that just won't do.

Right now, the marketing message is up in the air. If Microsoft acknowledges that real work can be done in other productivity suites like iWork or Google Docs, then they are demoting their own software to the status of just one among many. It would, then, have to compete on its merits rather than its ubiquity. If the iPad's status is upgraded to a full content creation device, then wither Microsoft's own hardware ambitions?  Either way, I believe we have seen the last of those Surface ads.

Microsoft officially acknowledges that their traditional customers have chosen competitive solutions

If Windows was still king, and Windows-based PCs and tablets were resonating with Microsoft's traditional clientele, they would not have produced a version of Office for the iPad. Not only did they produce an iPad version, but they did so before completing a version compatible with their own ecosystem. They also made it clear that nothing was held back in this version for the iPad. When a Windows 8 touch version comes out, it will not be more feature rich than this one. 

Microsoft is not willingly going cross-platform. They are desperately chasing their customers across competitive platforms. In many cases, these customers have already abandoned Windows. In doing so, they have also abandoned the real cash cow: Office. Microsoft knows they can't get them back onto Windows. With this last effort, they are hoping to keep them as customers of Office. In yesterday's presentation and after, Satya Nadella openly admitted that Microsoft is giving in to the current business reality. Microsoft wants to be on the platforms that their customers prefer. It is crystal clear that the majority of their customers prefer Apple's mobile solutions to their own. 

Microsoft officially acknowledges the failure of their hardware strategy

If you think back to the introduction of the Surface, the marketing message was mixed even then. It only got worse as time wore on. Here is a question that should be simple to answer: Why did Microsoft produce the Surface in the first place? Give up? So do I. I believe that what they really wanted was an iPad killer. They were sick and tired of the world going crazy over the iPad when they had poured so much effort into sparking the tablet revolution. Their efforts failed as spectacularly as Apple's succeeded. They wanted to be cool. They wanted trendy stores. They wanted to be Apple. Fools!

Early on, it became clear that none of that was going to happen. So Microsoft changed their message to reflect reality. They started saying that the Surface was merely to act as a guide for other tablet OEMs. They wanted to showcase how great Windows 8 could be, and show the industry how to build a tablet that would take full advantage of the software. 

In the end, it doesn't matter what their strategy was. It failed. The Surface didn't save Windows 8, and Windows 8 didn't save the Surface. Nor did the Surface make a dent in iPad popularity. It led the way to nothing, showing no one how to build a better post-PC device. None of their partners are rolling in profits, covered in glory, or laughing all the way to the bank as a result of the Surface. In fact, just the opposite is true. Long-time Microsoft partners started publicly announcing their intentions to produce PCs that also ran Android. That is the absolutely worst-case nightmare scenario for Microsoft. 

Yesterday, Microsoft announced to the world that their most important hardware initiative is the iPad. The Surface has been demoted from the flagship example of excellence, to just another product they happen to sell for the moment. But that is not the only part of their hardware strategy that is in shambles.

Yesterday, Microsoft just threw all of their hardware partners under the bus, again. The first time was when they introduced the ill-conceived Surface. The only lifeline they left their partners was the exclusivity to Office. At least they had that, and the iPad didn't. Now, that lifeline is cut in a big way. Not only does the iPad have it, but it has the best and only touch-friendly version of it. The one reason someone might have bought a Windows tablet has just been taken away. Microsoft can no longer be concerned about the hurt feelings of their hardware partners. They have to concentrate on surviving the incompetence of their former leadership. Too bad Mr. Packard!

What of iWork?

I found a way to try out the new Office on a free trial. I will link to it in another post. I'm happy to report that it is not awful. If I was an Office user on the desktop, I would also use Office for iPad. If you already have an Office 365 subscription, the iPad version is free. There is no downside to using it. If you don't already have a subscription and are looking for a good word processor for your iPad, there is no reason to use Microsoft's offerings. They do not distinguish themselves from the free offerings. The most feature-rich word processor on the iPad costs $25, and is well worth it. 

But Apple and Microsoft have a history of playing Office against iWork on the desktop. It is widely believed that Apple kept from producing a truly killer word processor in return for Microsoft continuing to produce Word for the Mac. How good might Pages be if Word for the Mac did not exist? Apple has chosen not to compete with Microsoft in that area. Might the same thing happen in mobile? Apple might choose to give Microsoft a free run at the iPad in exchange for their 30% cut. That is more than they would make from a free version of Pages. It is also possible that Apple will compete vigorously with the new competitor. That is my hope, but history is against it. We shall see.

David Johnson

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