I’m bullish on Redmond again.
Don’t call me a Microsoft fanboy, though. If anything, it would be easier to accuse me of Apple fanboy-ism. I own an iPhone, an iPad, an iPod, and a second iPad for family use. I even have a company-issued iPad for mobile-related projects at work. I just want the best technology products available, and right now — at least in my opinion — those all come from Apple. Though, to be fair, Android-based smartphones — across of a variety of hardware manufacturers — have a larger share of the smartphone market.
Regardless of your preference for Apple or Android, however, it’s clear that Microsoft — along with Research in Motion (RIM) — has a lot to lose as consumer preferences influence enterprise buying decisions. A Cisco study, in fact, reported that 88% of IT leaders are seeing increased growth of Bring Your Own Device (BYOD ) policies, which allow employees to choose their own work-related computer hardware. A lot of this is driven by intense consumer demand for Apple products, and to some extent higher-end Android smartphones from Samsung and other manufacturers.
Standard-issue BlackBerrys and cheap laptops are under attack. This situation is problematic for organizations concerned with cost containment and data security, however, as IT begins to lose oversight of the devices that employees connect to company networks.
Enter the Microsoft Surface tablet.
It runs Windows, with all the familiar Office applications (at least the Pro version does). It has a keyboard. It’s secure. Essentially, the device is a touch-screen laptop in a tablet’s clothing. Some commentators have gone so far as to say that the Surface isn’t even truly competing with the iPad.
From a perception standpoint, then, the Surface tablet is poised to solve a huge issue that CIOs and other executives have with BYOD, and more specifically, with the invasion of iPads into their previously tightly-controlled environments.
The problem: CIOs are deeply concerned with controlling their device footprints.
As companies deploy mobile devices (especially tablets) to mobile workers in sales, event management, on-site tech support and other functions, the number of devices that require IT oversight begins to creep uncomfortably upward. Each incremental device on a company network increases the cost to serve an employee base, and the last time I checked, CIOs weren’t complaining about budget surpluses.
CIOs want to keep the ratio of devices per employee at 2:1, or lower, in order to control costs. Consequently, the refrain that I’ve started to hear from IT leadership, then, goes (facetiously) something like this, “Sure, I’ll grant your request for an iPad. Just let me know which device you’ll give up in return — your laptop, or your phone.”
The tablet-for-a-laptop trade-off just isn’t a legitimate option for most employees. Let’s face it: the iPad is better-suited for consuming information, rather than creating it. For browsing the web, checking email, watching videos and using apps, the iPad is a great device. It just works. However, specialized apps and hardware (e.g. keywords) are often needed for content creation, data security, enterprise email access, and integration with Office applications. Microsoft’s Surface tablet won’t come with these issues, thereby enabling IT leaders to meet the increasing mobility needs of workers while simultaneously controlling costs (by replacing laptops).
Microsoft has an enormous opportunity to disrupt tablet use within enterprises.
While many analysts are focused on comparing the Microsoft Surface to the iPad as a consumer device, Microsoft’s best opportunity to gain early traction with the Surface is likely the enterprise market, a segment in which 80% of the Fortune 100 have deployed iPads for productivity purposes.
But Microsoft has to nail this opportunity out of the gate. A good comparison is RIM, which rushed its highly-anticipated BlackBerry PlayBook tablet to market out of desperation. The PlayBook has been an unmitigated disaster, and has contributed to RIM’s stock price free fall since its release (see chart).
Here’s how Microsoft can get the Surface right, the first time:
1. Make it easy for application developers to build apps that run on one operating system, across smartphones, tablets and laptops/desktops. This is key, and Microsoft is already taking this step.
2. Continue paying app developers to build top apps for Windows devices. Microsoft has been footing the bill for companies such as foursquare to bring versions of popular apps to Windows phone. While this is a highly unusual and expensive approach, it’s strategically brilliant. If Windows devices support most of the top mobile apps, this reduces switching costs for iPhone, iPad, and Android users. Microsoft needs to continue financing app development for makers of popular apps, and sell their accessibility across devices.
3. Get the messaging right. Is the Windows RT model a toy for consumers who want to play with apps? Is the Surface for Windows 8 Pro model aimed toward making workers more productive? There is already confusion regarding the two devices. Microsoft’s Marketing Communications team will need to work hard to market the RT and Pro tablets differently, especially given that many business executives still scoff at iPhones and iPads as “toys.”
4. Leverage its best assets, such as Xbox and Skype. This is a no-brainer. The Surface must — and undoubtedly will — come with seamless Skype integration at launch. What is less clear, however, is how the Surface will connect to the Xbox ecosystem (e.g. Will the Surface eventually double as an Xbox controller?). The Xbox is a unique competitive advantage among players in the tablet space, and Microsoft should play up future connectivity between the two systems.
5. Beat competing devices on price. Microsoft didn’t announce pricing for its two Surface models during its much-ballyhooed launch event. But make no mistake: pricing is critical for the Surface. The Windows RT model should be priced well below the iPad, and the Windows 8 Pro Surface should be priced somewhere between an iPad and a mid-tier laptop. These price points will position the Surface to siphon away market share from iPads and laptops. Pricing is especially important for the Surface’s Pro model, as Microsoft will seek to familiarize business users with its tablets in order to change consumer preferences.
In summary, Microsoft has a better chance at tablet success than many are predicting.
Granted, Microsoft has to get a lot of steps right in order to make a dent in Apple’s dominance of the market for tablets. And there is very little room for error. The first generation of the product has to be amazing in order to convince a skeptical public:
Here’s the how the story ends with the Microsoft Surface: “Zune.”
— Joseph Manna (Joe) (@JoeManna) June 19, 2012
Remember the Microsoft Kin? lol… Remember the Microsoft Zune? lol… Remember the Microsoft Surface? #exactly
— Skylor (@skylor) June 23, 2012
— Eric Y Lai (@ericylai) June 19, 2012
But it’s because of this skepticism that there’s reason to believe that Microsoft will be successful with the Surface. Unlike RIM’s rushed attempt to build a tablet for enterprise buyers, Microsoft has taken a slow, almost plodding, approach. And now the business case for its resulting product is clear. With a device that enables mobile workers while controlling costs, there is evident ROI for IT departments to justify investing in the Surface.
And I believe they will. So despite what you might think, it’s time to be bullish on Microsoft again. Are you bullish or bearish? Let me know with a comment below.
Last week, Starbucks unveiled Starbucks Card Mobile, the company’s proprietary mobile payment solution. Available as an app for iPhone, iPod touch and BlackBerry devices, Starbucks’ mobile payment application will now be accepted at over 7800 locations within the United States.
Most mobile application users have become accustomed to the simplicity and intuitive nature of apps, such as those from foursquare, GetGlue and Seesmic. By contrast, the Starbucks app will likely leave many people wondering, “Well, what do I do now?” upon download. There are options to add a Starbucks card number to the application, create a new Starbucks account and enter in credit card information. The latter two features alone will not produce any kind of a prompt for making a payment. Furthermore, the “Payments” section — which many new users are likely to visit hoping to pay for goods — instead provides both a video overview of Starbucks Card Mobile and an option to search for participating Starbucks locations.
The correct process for enabling Starbucks Card Mobile involves buying a plastic Starbucks card, registering it online at starbucks.com and then linking the physical card to the application through the “Cards” section. Current cardholders can link existing cards.
The Interface and Payment Process
Once a plastic card has been linked to the app, the Starbucks mobile payment application is ready to use. Other than the aforementioned ”Payments” section — which is poorly-named — the Starbucks Card Mobile application is easy to navigate and use. Within the “Cards” section, a “Touch to Pay” button appears once a link has been established to a physical card. Other sections within the application allow customers to track any rewards they’ve earned, search for nearby Starbucks stores and manage account details such as billing information, passwords, etc.
Likewise, the process of paying for coffee is intuitive, quick and easy. After placing an order, simply press the “Touch to Pay” button — which produces a bar code — and position your device in front of the cashier’s scanner. The payment process takes less than 10 seconds.
One Small Step for Mobile, One Giant Leap for Mobile Commerce
Despite the ease-of-use associated with Starbucks Card Mobile, the technology behind the application is not the future of mobile commerce. The next generation of smartphones from Apple and Google will employ Near Field Communication (NFC), which allows for wireless data transmission between two NFC-enabled devices. In the very near future, most consumers will have phones that are pre-loaded with the capability to pay for groceries, coffee and nearly all other transactions without ever reaching for their wallets (see also: NFC: 6 Ways It Could Change Our Daily Lives)
Starbucks, however, should be commended for helping to bring mobile payments into the mainstream. Undoubtedly, by exposing its millions of customers to the new world of fast, easy mobile payments, Starbucks will expedite the adoption of wallet-less commerce.
While the efforts of companies such as Square, Bling Nation and Venmo have all helped push mobile commerce forward, none of them have the brand recognition, daily foot traffic and marketing might of Starbucks. The release of Starbucks Card Mobile builds upon the small steps of these pioneering predecessors.
Thus, by the time NFC arrives as an option for the masses, a large, highly-caffeinated segment of the American public will already be prepared to take the giant leap of leaving their wallets behind. Someday, debit cards, physical signatures and checks are likely to be but mere secondary payment options. When that day arrives, we’ll have this offering from Starbucks to look back upon, as Dennis Stevenson notes, “as the beginning” of a new era of commerce.
Have you tried Starbucks Card Mobile? If so, I’d love to hear your thoughts about the application. Let me know what you think!