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Sunday
Feb122012

why iPad doesn't matter to Microsoft

A lot of people hate Microsoft ... after all they're the New York Yankees of tech companies, taking home the crown year after year after year.  Until recently.  Recently we've seen success from Apple and Google, the likes of which has not been seen in a long, long time.   And it doesn't matter, not even a little bit.

Let me explain. 

In software, the real money comes from corporations.  Business buyers are where it's at, and the "consumerization" of IT doesn't change that in the least.  In fact, in the long term the consumerization of IT helps everyone as consumers get more devices and services to choose from, and vendors get ever higher sales.

Now with these business buyers going gangbusters Apple and Google have seen success with their respect iOS and Android products.  But so what.  When it comes down to it, these devices are merely endpoints, and not all that different from a PC or a laptop.  That is, regardless of who makes them, they consume corporate IT services like any other endpoint.  And what that means is that the spend for the corporate platforms is going to be bigger and bigger as IT departments now have to deliver services to a multitude of devices and form factors.

And who provides the brunt of these corporate IT services ?  Well, Microsoft of course ! What's the REALLY killer app on the iPhone?  Email.  What type of email ?  Exchange email.  Who makes Exchange eamil ?  MICROSOFT.  Is Exchange / free / cheap ?  Nope.  It takes Windows Server products, hardware products from the likes of Dell and HP, experienced technicians and consultants, and a host of other resources to deliver it.  And at the end of the day it's Microsoft that benefits, same as it ever was.  Sure Apple and Google get a seat at the table, but as with PCs, the cost of the device is going to represent only a fraction of the "total cost", most of which is going to be eaten by Microsoft and its ecosystem. 

Still doubting, think that music and books and movies are important, and that the companies that run these will be long term winners ?  There's no doubt that Apple and Google are going to displace a lot of industries (think newspapers and record companies), but these trends have very little to do with IT spending.  Moreover, the ability to deliver someone else's song or book is mostly about driving sales of the endpoint, and is not a profit driver per se  ...  sooner of later all these vendors are going to have content ecosystems, and great screens, and fast devices, and then it'll be look below for margins.  The hardware will be commoditized and once again it'll be the business services and software that drive the actual business. 

And who will be left standing after all the smoke clear ?  Microsoft.  Damn those New York Yankees !

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