Can Microsoft Build Appliances?

In this new world of "easy to do," Apple has done very well and Microsoft has struggled. In the old world, customers wanted a Swiss Army Knife, with the most gimmicks and gadgets possible. In the new world, people want elegantly cutlery. They may want cake cutters and utility knives too, but they don't want one device that works for all three tasks. People don't want tools, they want utensils. People don't want machines. They want appliances.

Microsoft Appliances: They Do Exist
Microsoft has built a few appliance-like devices. I would say XBox 360 is an appliance. It's versatile, mind you, but it's the kind of thing you plug in, turn on and use, as opposed to set-up, tune and open up to upgrade the internals. Windows Phone 7 is an appliance too. It's a true smartphone, unlike Windows Mobile, which was a handheld computer with a radio stack. Zune is an appliance too, and a nice one. It hasn't attained much traction in the market, but that's probably because the seminal consumer computing appliance -- the iPod -- got there so much more quickly.

In the embedded world, Mediaroom, Microsoft's set-top product for the cable industry (used by AT&T U-Verse and others) is an appliance. So is Microsoft's Sync technology, used in Ford automobiles.

Even on the enterprise side, Microsoft has an appliance: SQL Server Parallel Data Warehouse Edition (PDW) combines Microsoft software with select OEMs' server, networking and storage hardware. You buy the appliance units from the OEMs, plug them in, connect them and go.

I would even say that Bing is an appliance. Not in the hardware sense, mind you. But from the software perspective, it's a single-purpose product that you visit or run, use and then move on. You don't have to install it (except the iOS and Android native apps where it's pretty straightforward), you don't have to customize it, you don't have to program it. Basically, you just use it.

Microsoft Appliances that Should Exist
But Microsoft builds a bunch of things that are not appliances. Media Center is not an appliance, and it most certainly should be. Instead, it's an app that runs on Windows 7. It runs full-screen and you can use this configuration to conceal the fact that Windows is under it, but eventually something will cause you to abandon that masquerade (like Patch Tuesday).

The next version of Windows Home Server won't, in my opinion, be an appliance either. Now that the Drive Extender technology is gone, and users can't just add and remove drives into and from a single storage pool, the product is much more like an IT server and less like an appliance-premised one. Much has been written about this decision by Microsoft. I'll just sum it up in one word: pity.

Microsoft doesn't have anything remotely appliance-like in the tablet category, either. Until it does, it likely won't have much market share in that space either. And of course, the bulk of Microsoft's product catalog on the business side is geared to enterprise machines and not personal appliances.

Appliance DNA: They Gotta Have It.
The consumerization of IT is real, because businesspeople are consumers too. They appreciate the fit and finish of appliances at home, and they increasingly feel entitled to have it at work too. Secure and reliable push email in a smartphone is necessary, but it isn't enough. People want great apps and a pleasurable user experience too.

The full Microsoft Office product is needed at work, but a PC with a keyboard and mouse, or maybe a touch screen that uses a stylus (or requires really small fingers), to run Office isn't enough either. People want a flawless touch experience available for the times they want to read and take quick notes.

Until Microsoft realizes this fully and internalizes it, it will suffer defeats in the consumer market and even setbacks in the business market. Think about how slow the Office upgrade cycle is. Now imagine if the next version of Office had a first-class alternate touch UI and consider the possible acceleration in adoption rates.

Can Microsoft make the appliance switch? Can the appliance mentality become pervasive at the company? Can Microsoft hasten its release cycles dramatically and shed the "some assembly required" paradigm upon which many of its products are based? Let's face it, the chances that Microsoft won't make this transition are significant.

But there are also encouraging signs, and they should not be ignored. The appliances we have already discussed, especially Xbox, Zune and Windows Phone 7, are the most obvious in this regard. The fact that SQL Server has an appliance SKU now is a more subtle but perhaps also more significant outcome, because that product sits so smack in the middle of Microsoft's enterprise stack. Bing is encouraging too, especially given its integrated travel, maps and augmented reality capabilities. As Bing gains market share, Microsoft has tangible proof that it can transform and win, even when everyone outside the company, and many within it, would bet otherwise.

That Great Big Appliance in the Sky
Perhaps the most promising (and evolving) proof points toward the appliance mentality, though, are Microsoft's cloud offerings -- Azure and BPOS/Office 365. While the cloud does not represent a physical appliance (quite the opposite in fact) its ability to make acquisition, deployment and use of technology simple for the user is absolutely an embodiment of the appliance mentality and spirit. Azure is primarily a platform as a service offering; it doesn't just provide infrastructure. SQL Azure does likewise for databases. And Office 365 does likewise for SharePoint, Exchange and Lync.

You don't administer, tune and manage servers; instead, you create databases or site collections or mailboxes and start using them. Upgrades come automatically, and it seems like releases will come more frequently. Fault tolerance and content distribution are just there. No muss. No fuss. You use these services; you don't have to set them up and think about them. That's how appliances work.

To me, these signs point out that Microsoft has the full capability of transforming itself. But there's a lot of work ahead. Microsoft may say they're "all in" on the cloud, but the majority of the company is still oriented around its old products and models. There needs to be a wholesale cultural transformation in Redmond.

It can happen, but product management, program management, the field and executive ranks must unify in the effort. So must partners, and even customers. New leaders must rise up and Microsoft must be able to see itself as a winner. If Microsoft does this, it could lock-in decades of new success, and be a standard business school case study for doing so. If not, the company will have missed an opportunity, and may see its undoing.

Posted by Andrew J. Brust on 02/28/2011