Redmond just turned ecosystem lemons into lemonade
Microsoft has been uniquely positioned in the IT space for decades meaning it’s a massive target for the whole industry. In fact, the company is now in a similar position to Novell in the 1990s when it owned the corporate network server space. Redmond used its dominant position in supplying endpoint software to also sell server operating systems and wiped out Novell.
The hottest endpoints right now run iOS, macOS, Android and Chrome OS. Windows isn’t totally evaporating but it has seen a significant contraction – in 2016, there is the same level of purchasing as 2007.
This has to be doubly scary for Microsoft because not only is their end-device marketshare under siege but cloud has effectively become the server OS. That’s the whole idea behind Chrome OS in fact. Going further, Google recently announced at I/O that Android Instant Apps will allow users to download apps or pieces of apps on demand. In theory, you could use hundreds or thousands of apps per day and not ever worry about memory utilization because the apps only last as long as needed. This is the ultimate blurring of device and server.
Approached another way, Microsoft took their dominance in the endpoint ecosystem and extended it to servers. Google is doing the same thing and Apple likely won’t be far behind.
You could argue that Microsoft has for now, lost the endpoint OS battle. We think the company’s Surface Book is an amazing product but a $2,000-$3,000 (we can’t recommend anything less than the Core i5 with 256 GB of storage) laptop hybrid isn’t going to hit the mass adoption levels needed to reverse this trend.
With this LinkedIn acquisition, CEO Satya Nadella has just evolved the Microsoft view on ecosystems. Enterprise users are loaded with cash and are truly lucrative customers for Redmond. Office and Intelligent Cloud brought in $12.6B in the latest quarter or over half its total revenue. Microsoft’s strategy continues to be growing this business user ecosystem to protect it from the non-Windows device company onslaught. This is also the next step after buying Skype and launching Skype for Business.
LinkedIn is the world’s largest business network – used by recruiters and millions of people to interact, do background checks, query people in common, get recommendations and much more.
For a company which makes a great deal of money from applications named “Office,” being able to hold onto this market in the freemium world of Apple and Google competitors is crucial.
This is where the ecosystem merging comes in.
APIs allow thousands of companies to add value to one-another’s ecosystems. Marketo integration with Salesforce (they also bid on LinkedIn) is a great example of how CRM and marketing automation both become better when they work together seamlessly.
Microsoft is taking this to a whole new level.
About five years ago, Xobni came onto the scene and used an API to allow Microsoft Outlook users to see a LinkedIn picture of the person emailing them. Today, this isn’t such a big deal but the idea was very novel at the time and this small bit of integration gives you an idea where this new Microsoft relationship may be headed.
I conducted a Xobni interview shortly after the company launched and was purchased by Yahoo!
My colleague Doug Mohney explains:
Leveraging its investments in the cloud, Skype, and WebRTC, Microsoft will be able to facilitate communications between companies and businesses using LinkedIn on a scale that we can only start to imagine. If you need to contact someone at another company, LinkedIn will be able to offer one-click networking in an omnichannel fashion, with your choice of everything from email (the new Snailmail) to real time direct video conferencing using Skype’s new WebRTC tricks.
Need to build a project team across the company or between companies? Start by using LinkedIn to create a virtual team list, then use Microsoft cloud services for collaboration with everything shared in Azure and everything stored in the cloud. Add Microsoft’s burgeoning AI smart machine services to add security authentication for real time communications, recommendations to add new skills and team members when tasks grow, and analytics to provide project managers with metrics on progress. Other Microsoft smart machine tools will be able to enhance LinkedIn services to aid human resources in recruiting the best employees.
Bottom line: You’ll see LinkedIn interwoven into everything Microsoft, including Outlook, Calendar, Active Directory, Office, Windows, Skype, and even services like Cortana and Bing.
The way Doug explains it, by merging the Microsoft ecosystem with the LinkedIn ecosystem, you literally add orders of magnitude more value to both. He is absolutely right.
What we can take away from this deal is a company like Microsoft can turn around its entire ecosystem from a net loss of users to a gain and add tremendous value with one single agreement. In this case it’s an acquisition but it could have just as easily been an integration of APIs.
If Microsoft can do something like this, why can’t your company? The answer is, for many of us, we have more value in our organizations than can be fully appreciated. It only emerges when we take our core competency and combine it with others.
Short of an acquisition, APIs are the best way to accomplish such a goal. We should all take a moment and think this through. Digital transformation is an overused buzzword but it didn’t stop hotels and taxis from losing billions of dollars in business because of companies like AirBnB and Uber.
Similarly, your competitors are inking deals with companies in numerous spaces to gain access to their ecosystems – hoping they can come up with a magic formula for increased sales with less effort. It’s imperative that in today’s day and age, we keep up with all the changes in the market and also look to this new Microsoft with its rapidly growing business ecosystem and try to become part of their new and exciting model where 1+1 could equal 10 or 20.
Come see the world of APIs at All About The API. The event will feature a variety of intensive hack-a-thons, in-depth company-focused workshops helping attendees understand the value propositions from key vendors, powerful keynotes, daily and nightly networking opportunities plus an exhibit hall full of companies demonstrating the latest innovations in today’s market place. Every business has to pay attention to the new opportunities they are presenting or potentially be displaced. We hope to see you July 18-21 2016 in Las Vegas!
This is the only event where you can network and see keynotes from these thought leaders:
- Darko Vokovic Manager, Product Management, API Platform at Oracle
- Gareth Jones, API Architect, Microsoft Graph
- Jose de Castro, CTO, Cisco
- Vice President, Hybrid Cloud Integration and API Economy, IBM
- Tony Jamous, CEO, Nexmo
- Alexis Bonillo, COO, Zenly
- Rob Zazueta, Director, Digital Strategy, TIBCO Software
- Neil Trevett, Vice President Developer Ecosystem, NVIDIA