Microsoft COO: ‘We care about the phone. We are still in the phone business’

Microsoft COO Kevin Turner  made the company’s Fiscal Year 2016 plans and strategy quite clear for the 12,000 plus channel partners in attendance at its Worldwide Partner Conference: Microsoft will not abandon the phone business, they want to build the intelligent cloud, they are going aggressively after Google and others, and they want to improve customer satisfaction. And, one of the ways the software powerhouse is going to improve customer satisfaction is by “not snooping” on customer’s private data, Turner said.

But the biggest surprise was the Lumia smartphone news. Turner acknowledged that he is aware of all the tweets, news, and general market reaction towards Microsoft’s phone business, but it has not factored into the company’s plans to support it going forward.

“We care about phone. We are still in the phone business. We are restructuring that business for profitability, growth and long-term sustainability,” he said.

The plan is to stop creating several devices and stick to just a few “killer” devices that can grab share, Turner added.

Microsoft in 2016 will also embark on changing the manufacturing process for the phone business along with shifting its go-to-market strategy with multi-tiered distributors.

“We are hard at work on the next wave of innovation and make no mistake. Microsoft is not giving up on phone, but we are resetting for profitability and growth.”

Turner was also not shy at revealing the companies Microsoft wants to disrupt in the marketplace. They are (in no particular order): GoogleAmazon Web ServicesMobileIronVMwareOracleSalesforce.comBoxIBMOpenStackAppleDropBoxSAPCiscoAirWatch, and Citrix.

“It’s a world of disruption in industries and business models. They are being disrupted by AirBnBUberLyftTeslaRent the RunwayBitcoinStripe, and Spice X. The good news is we can help the disruptors disrupt and help everyone else disrupt their own business,” he said.

Turner softened his stance on these competitors by adding that Microsoft is interested in partnering with companies who they would have never associated with in the past such as Oracle.

Currently Microsoft has agreements in place to host Oracle and IBM in its cloud. Turner has mandated for 2016 more of these types of partnerships for its cloud.

“I am not disillusioned here. I know these people wake up every single day trying to take market share away. But we are a better company when we can reach across the aisle to other companies,” he said.

And, Microsoft needs more channel partners, Turner said. That might be an incredible statement to believe from Turner considering the company has approximately 640,000 worldwide partners. But Turner needs the coverage for Office 365. He said there are currently 1.2 billion Office users today being supported by 70,000 channel partners. However, 80 per cent of Office 365 customers only have two services, while half of the enterprise agreements signed are with cloud services. Turner has set an aggressive goal of increasing both areas to 100 per cent.

In 2016, Microsoft is working on the next generation of Office 365 with an approach towards teams, networks and people centric security. More promotion will be given to Office 364 E5 suite as it grew a whopping 700 plus per cent in 2015. The E5 will include Skype for Business, Cloud PBX, analytics with Power BI Pro, Meeting Broadcast, eDiscovery, Customer LockBox and Delve. Microsoft will position E5 as a premium suite and believes it can become an upselling opportunity for channel partners to address current accounts who want advanced security. Microsoft will work to build new practice guides and IP around the E5 suite. Turner estimated E5 could be a $56 billion market opportunity that has the potential to provide increased margins for the channel.

In cloud look for these enhancements to Azure: Identification management, improved levels of support for hybrid cloud, integrated PaaS, privacy/security and compliance.

Commercial cloud revenue at Microsoft grew 106 per cent year-over-year. Microsoft’s third quarter was its seventh consecutive quarter of triple digit growth.

Another thing Turner wants partners to do is “own the cloud.” At his WPC keynote address, Turner became more amplified talking about Microsoft’s offering for hyper scale clouds, private and hybrid clouds and how it’s comprehensive across data, operating systems and dual users (Linux and Windows).

“People at Microsoft says gosh Kevin do you really want to say ‘own the cloud’. Yeah, I’m going to say it. Own the cloud! Why? If not us then who? We need to own the cloud. Cloud is being made right now. If we don’t own it; someone else will. And, there are plenty of great competitors out there. This is our time and we should go for it.”

Devices will be another major aspect for Microsoft in 2016. Turner said that the company wants to be ambitious with Windows 10 and anticipate more than one billion devices to be running Windows 10 by 2018 that can be the Surface, Surface Hubs or from OEM alliance partners.

The target for Microsoft will be Apple and chromebooks. “OEMs do amazing work. Look at the HP Elite product compared to the Apple MacBook 2015 Pro. Its thinner, lighter, has great battery life, fingerprint reader, its touch and its $100 less than the MacBook Pro,” Turner said.

Against chromebooks Microsoft pinpoints areas of difference such as the ability to run desktop and Web apps along with connecting to large peripherals.

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Paolo Del Nibletto
Paolo Del Nibletto
Editor of Computer Dealer News, covering Canada's IT channel community.

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