According to the Washington Post an influential investor is pushing for a new direction at Microsoft. His goal is to get Microsoft to ditch the consumer market and focus solely on enterprise. He wants the X-Box gone (likely sold to someone), Surface gone (either sold or killed), and their other non-enterprise solutions eliminated as well. I think that from a Financial person’s perspective these are something of an obvious option. X-box isn’t killing it in the market, they are expensive and take a while to recoup the cost of development and all that. The Surface hasn’t had great sales – although it’s hard to separate weak sales of the Surface from the abomination of Windows 8 that sold with the bulk of them initially (I’d bet they’d be solid devices with Android on them).

I think it’s important to remember why Microsoft is Microsoft. It’s not entirely because of Enterprise. It’s because Operating systems are difficult to learn and people don’t want to learn more than one if they can avoid it. Only recently have the bulk of people been fluently on two different operating system – Windows/Mac/(few on linux) & iOS/Android/Windows Mobile/Blackberry. The most common interaction would have to be Windows & iOS and/or Android and Mac & iOS.

The reason for strong enterprise Windows sales is because of the massive consumer base that Microsoft has managed to hold on to despite it’s best efforts. If most people had to learn multiple different operating systems between home and work it would increase their stress levels at work. The skills they learned at home wouldn’t transfer well. I think this is also the reason why enterprise is conservative in upgrading their Windows OS – essentially skipping every other one. XP/Seven because those are the products that seem to build a strong enough user base on the consumer side. Most techies don’t like Win 8, so that hurts sales to Mom and Dad or their friends. They’ll tell them to avoid a product or get them to go back to Win 7 over 8 if possible.

The battle for the next OS is going to be fought on tablets and phones, before it’s fought on laptops and desktops. I know there are some tech experts out there calling for the death of the tablet, however, I think it’s far more likely that there will be a convergence between laptops and tablets. Where a tablet can meet our core needs of our laptop.

The more powerful of the two Surface products (Pro) was just that type of product. It was able to do a lot of WINDOWS laptop stuff, but in the form factor of the tablet. Should have sold well, except it cost a ton for a tablet or under powered laptop. I think that this really is the consumer space people will work from. We really don’t need more space unless we’re gaming and then people will build a desk top or buy a console.

Consoles – the X-box isn’t just a console, it’s supposed to be a full multimedia PC replacing the need of a desktop. You pair the Surface Pro with an X-Box and you’ve got everything you need for your house. This is what Microsoft is envisioning. Everyone is still using Office on their Surface, Skyping on both X-Box and Surface, and everything is based on the familiar (sort of) Windows OS. Keeping it front and center.

Let’s say MS ditches the console and Surface. They’d have to license out Windows to run on tablets and wouldn’t have the ability to help shape those conversations. They are competing with 2 Rabid fan bases in mobile OSes, one that many companies are able to use for free (with some licensing fees to MS), Google is pushing to replace MS in netbooks and likely other environments – Chromebook and ChromeBox. All of these could threaten their dominance as the work station in enterprise. For the bulk of the work I do, I could probably do it on a tablet as long as I have a compatible office suite.

Furthermore, MS isn’t the only option in many of the enterprise spaces. They aren’t the only OS, Office Suite, or Enterprise service company (Dell, IBM, Accenture, SAP, etc…) it’s not a guarantee this process would work. Furthermore, people are already talking about an Android server for some activities. These are all threats to MS core business OS and Office Suits. Leaving the consumer space only opens them up to more threats as people will want to stay in a similar environment.

This is another example of the Innovator’s Dilemma and MS should look to use Lean to help solve their cash and process challenges. Both the Surface and X-Box are good products. They just need to figure out how to find the right market for the Surface.