Founded in 1975, Microsoft is, alongside Apple (1976), the great survivor of big tech. Over the 45 years since it was founded by Bill Gates and Paul Allen, Microsoft has consistently been recognised as one of the biggest technology companies in the world. Even Apple hasn’t had that kind of consistency, with the company on the verge of going bust before co-founder Steve Jobs, who had left the company, retook the reigns.

Microsoft, on the other hand, smoothly moved from its first product of BASIC interpreters into personal computer operating systems, first MS-DOS in the mid-1980s and then Windows. The Microsoft Office package was added next, which still accounts for around 25% of all revenues for one of the 5 most valuable companies in the world.

Source: Investopedia

Microsoft’s key to sustained success has been achieved through a combination of developing its own products, mainly software for the home PC and business software sectors, and intelligent acquisitions such as GitHub (the world’s leading software development platform), Skype and LinkedIn.

The company’s only real failures have been in losing out to Google (Alphabet) for dominance of first the search engine market (Bing) and then the mobile operating system, to Android. But you can’t have everything and Microsoft’s successes have more than made up for the few markets it hasn’t managed to crack.

Key to the company’s success has been quickly and successfully identifying needs and trends in the home computing and business productivity software spaces. Cloud computing, now one of Microsoft’s biggest sources of revenue and still quickly growing, is a case in point.

Enterprise Software Facilitating Remote Teams And Work From Home The Next Big Market For Microsoft

Software that facilitates collaboration between professionals, especially key to remote teams where members are not based in the same location, was already a quickly growing market before the 2020 coronavirus pandemic. But several years of growth have suddenly been concentrated into several months, as a result of lockdowns forcing most office workers to do their jobs from home since March.

Even as lockdowns ease, it is far from certain when, and if, something approaching normal office life will resume. New, second wave lockdowns are already being brought into effect in some regions. Even if they, so far, don’t go to quite the same extent as earlier lockdowns and are often localised to cities and regions, they highlight the fact that it is unlikely for office life to return to pre-coronavirus norms before widespread vaccination. That isn’t expected to be practical before at least a year or two have passed.

Which means companies and organisations around the world are setting themselves up for an extended period of remote, or at least part-remote, work. Opinion is divided over just how standard remote work will be in the future. But there is a general consensus that it will be much more common than it has ever been. The only real question is exactly how much more.

But it does mean that the battle for the enterprise and remote work software market has taken on a new level of intensity. And Microsoft is targeting a larger slice of the larger pie. But it has competition. Historical rival Google is also in the mix alongside younger upstarts such as conference calling software start-up Zoom and professional collaboration tool Slack. Both are now public companies and will not be easily brushed aside.

Source: The Times

The Pandemic Effect – Accelerating Digital Transformation

Some are starting to argue that video conferencing could actually come to be considered as superior to physical meeting thanks to new features being developed such automated translation functionalities and subtitles. Investors certainly seem to agree that the market will continue to grow.

Over the course of the pandemic, the share price of Zoom has grown by more than 200% and has serviced over 300 million users, across freemium and paid versions of the software. With a value of around $70 billion, Zoom is tiny in comparison to $1.5 trillion Microsoft. But Zoom and Slack have grown quickly enough that they are being treated as serious competitors in a sector Microsoft has had few real rivals in for a long time.

Microsoft is taking the threat posed by the likes of Zoom seriously. The company understands the danger of agile younger companies gaining a strong foothold and market share in lucrative lines such as video conferencing.

That is apparent in the recent big budget advertisement Microsoft created with ad agency McCann. A minute-long promotion of Microsoft Teams showing doctors hold virtual meetings over the software was a not overly subtle dig at criticism Zoom faced a few months ago.

Early in the pandemic security issues were raised over the fact not all Zoom calls were encrypted. That has been rectified but Microsoft has been keen to focus on security and position itself on reputation and trust. Of all the big tech companies, Microsoft has arguably the best reputation on privacy and security. Only Apple has made comparable efforts to position itself as a choice for users with privacy priorities.

Microsoft’s marketing team has been focusing on the message that its software is “safe” and “secure”. But if security compared to younger, smaller rivals is an angle that can be mined by Microsoft’s PR and marketing teams, Zoom and Slack, have not been shy in targeting the negatives in the perception of big tech. Namely, anti-competitive behaviour and taking advantage of huge wealth and dominant market share to crush smaller rivals.

Slack recently filed a complaint against Microsoft with the European Commission’s anti-trust regulator. Slack’s grievance, and what the regulator will examine, is that Microsoft has bundled its Teams software together with its Office 365 packages.

This, says Slack, ‘forces’, companies to use Teams as it is automatically installed alongside Word, Excel, PowerPoint and the rest of the Office suite. Slack also says bundling Teams into Office 365 subscriptions amounts to Microsoft hiding the true cost of companies using the software.

As a final flourish, Slack has also repeated its accusation that Microsoft Teams is a “weak, copycat product”, that rips off its own solution.

Jonathan Prince, Vice President of Communications and Policy at Slack, said in a statement:

“We’re confident that we win on the merits of our product, but we can’t ignore illegal behavior that deprives customers of access to the tools and solutions they want”.

“Slack threatens Microsoft’s hold on business email, the cornerstone of Office, which means Slack threatens Microsoft’s lock on enterprise software.”

Is Google Waiting In The Wings?

While Microsoft bickers with its precocious, smaller rivals, is there a danger it takes its eye off the ball when it comes to competition from other tech giants? Google recently unveiled a major shake-up of its G Suite. The search giant is bringing together a number of its work and productivity tools together under the Gmail roof and industry analysts believe this has long term significance to the battle for the enterprise software market.

Craig Roth, research vice president and analysts at business intelligence agency Gartner, thinks Google’s move has a longer term outlook than the skirmish between Microsoft and smaller rivals. He comments:

“I think that they are more forward-focused on trying to get to the next place and how people want to work and releasing a set of tools that looks more like that. And whether Slack or Microsoft is doing that or not, it may notice that a bit, but it’s not directly an attack on them.”

Roth argues that nestling messaging, rooms, project management tools and Meet inside of Gmail is removing barriers between its products. This should cut down on task switching, which research shows is a disruptor of work flows and has a negative impact on productivity.

It also sounds like a parallel to what Microsoft is doing by combining Teams with its Office 365 suite. As Roth says:

“Teams seems to be rising to be more of an umbrella above the components that they all describe how they connect into it. So whether it’s a tab or some other form of integration, that seems to be a hub where you would go first, and then if you have to get at a document or project plan, or whatever it is, you can do it from there.”

That does sound very similar to the G Suite design that is unfolding. But there is one big difference. Google seems happy to continue to allow integration between its G Suite products and third part platforms and software. Including those of Microsoft and Slack. After unveiling its most recent updates to G Suite, Google confirmed that “none of the available integrations with [Microsoft] or Slack will be impacted by this update.”

For its part, a Slack spokesperson commented:

“Google is a great partner, and apps like Google Calendar and Google Drive are some of the most popular on the Slack platform. Organizations are using more software from more vendors than ever – we want to help companies get the most value out of all their software tools, not just the tools from any one vendor.”

It looks as though, at least for the foreseeable future, Google is prepared to sit back and watch the show as Microsoft tackles its new rivals. But it’s certain Google has a long game in mind. If the new Davids on the scene can do some damage to a rival Goliath, without Google getting directly involved, all the better.

What is certain is that the battle for an already lucrative and quickly growing market for enterprise software and digital collaboration tools, will only continue to heat up as more remote work accelerates adoption across an ever more digital economy. Microsoft is involved in the early skirmishes and Google is sitting back. But few would bet the latter doesn’t have its own plans and strategy.

Watch this space.