Microsoft – The price is right.

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Free upgrade is excellent news for the Microsoft ecosystem.

  • Microsoft’s ambition to become an ecosystem company have crystalised further as upgrades to Windows 10 from 7, 8.1 and Windows Phone will be free.
  • Microsoft gave a deeper preview of Windows 10 at its event yesterday and at the same time launched its own foray into the world of virtual reality with Microsoft HoloLens.
  • With Windows 10, the somewhat geriatric and clunky Internet Explorer will be phased out to be replaced with Project Spartan.
  • This is a new browser based on open standards that puts content front and centre and will have Cortana the digital personal assistant integrated.
  • Internet Explorer will still be available for corporate customers that have legacy systems that require it, but it is Spartan that will be offered as the recommended option.
  • Much of the commentary and demonstrations were focused around the integration of Microsoft’s Digital Life services to make them more intuitive, functional and easy to use.
  • This is precisely what I want to hear because aside from its inability to market its wares effectively, integration is the ecosystem’s biggest challenge.
  • Digital Life services need to share user data in order to make themselves more relevant and easy to use and they also need to know how the user lives his Digital Life in order to be more useful.
  • At the moment, Microsoft’s Digital Life services exist as a series of discrete offerings with a very thin veneer of single sign-on.
  • The way Microsoft discussed functionality gives me hope that it has internalised the problem and is moving to integrate all of its services together.
  • This is a messy, difficult and time consuming task but one that I hope is well underway in the back rooms at Redmond.
  • The HoloLens wowed the press but the big news of the day was without doubt the free upgrade for existing users.
  • I suspect that this, together with Spartan, is all about making the software as consistent as possible across all devices and about making life as easy as possible for developers.
  • By making the software free, Microsoft can guarantee that uptake of its new software and Digital Life services will be excellent.
  • This is especially the case as like Apple, Microsoft controls the distribution of its software.
  • Google does not and is currently looking somewhat foolish as less than 0.1% of Android devices have made the upgrade to Lollipop (5.0) despite the software being available for months.
  • Having much greater software consistency across PCs, tablets, phones, Xbox and other hardware will give developers more devices to target and also improve the performance of Microsoft’s own Digital Life services.
  • HoloLens looks interesting with its focus on augmented reality rather than virtual, but the hardware still makes the user look and feel very silly.
  • Here an unsung part of Microsoft might be able to do something interesting.
  • In my opinion, Microsoft has become one of the leading designers of hardware in the technology industry.
  • The fact that Microsoft designed (in house) the most difficult parts of the Surface Pro 3, the superb Arc mouse, the heart rate sensor on the band and many other designs lead me to believe that Microsoft is a force to be reckoned with in hardware.
  • Hence, I think it entirely possible that this competence could be used to redesign the HoloLens to be something small, light, unobtrusive or even cool.
  • The end result is that this was a good day for Microsoft.
  • It has taken further steps to disengage with its past and is making all of the right moves to ensure that its ecosystem is a contender for both the consumer and the enterprise.
  • If the marketing message can be fixed to explain to users why they should get involved rather than just telling them that it exists then things could quickly change.
  • Consequently, I remain positive on Microsoft’s ambitions which combined with Google and Apple, make up the best way to get involved in the mobile ecosystem. 

RICHARD WINDSOR

Richard is founder, owner of research company, Radio Free Mobile. He has 16 years of experience working in sell side equity research. During his 11 year tenure at Nomura Securities, he focused on the equity coverage of the Global Technology sector.