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A year of healthy progress along Microsoft strategic ambitions

Microsoft Stock Price for the last 5 years — July 22, 2016:Microsoft Stock Price for the last 5 years -- 22 July, 2016 My earlier posts related specifically to this 3 years overall transition history:
– Microsoft partners empowered with ‘cloud first’, high-value and next-gen experiences for big data, enterprise social, and mobility on wide variety of Windows devices and Windows Server + Windows Azure + Visual Studio as the platform as of July 10, 2013
– Microsoft reorg for delivering/supporting high-value experiences/activities as of July 11, 2013
– An ARM-focussed Microsoft spin-off could be the only solution to save Microsoft in the crucial next 3-years period as of August 24, 2013
– Opinion Leaders and Lead Opinions: Reflections on Steven Sinofsky’s “Era of Continuous Productivity” vision as of September 1, 2013
– The question mark over Wintel’s future will hang in the air for two more years as of September 15, 2013
– Microsoft could be acquired in years to come by Amazon? The joke of the day, or a certain possibility (among other ones)? as of September 16, 2013
– Sinofsky’s ‘continuous productivity’ idea to be realised first in Box Notes as of September 21, 2013
MS FY15 NEW STRATEGIC SETUPMicrosoft is transitioning to a world with more usage and more software driven value add (rather than the old device driven world) in mobility and the cloud, the latter also helping to grow the server business well above its peers as of April 25, 2014
– Satya Nadella on “Digital Work and Life Experiences” supported by “Cloud OS” and “Device OS and Hardware” platforms–all from Microsoft as of July 23, 2014
– Steve Ballmer on leaving Microsoft, relationship with Bill Gates: “We’ve dusted-up many times”, on His Biggest Regret: “doing hardware earlier [for being] more effective in phone business” AND on Amazon: “They Make No Money.” as October 25, 2014
– The Empire Reboots — Can C.E.O. Satya Nadella Save Microsoft? | Vanity Fair, Oct 27, 2014

WPC Day 1: The Digital Transformation Opportunity from Microsoft Partner Network UK Blog as of July 11, 2016:

“Empower every person and every
organisation on the planet to achieve more”
The Microsoft Mission

At the core of today’s opening Worldwide Partner Conference keynote was ‘Digital Transformation’ aka the desire of CEO’s to use technology to change business outcomes – whether it be how they:

  • Engage their customers,
  • Empower employees to make better decisions,
  • Optimise their operations,
  • Build up the predictive power within their organisations so that every operation is intelligent,
  • Transform their products and services.

Digital Transformation = An Unprecedented Partner Opportunity

Every customer of every size business (startup to Enterprise) is not only looking to use digital technology, but to build digital technology for their own.

Digital-transformatoin-all-partner-types1-1024x530[1]

Businesses are looking to drive greater efficiency – automating processes and enhancing productivity, particularly in those areas where there are operating expenses. This poses an unprecedented opportunity for you no matter what partner type you are.

Digital Transformation Opportunity by Microsoft and Partners -- July 11, 2016Microsoft Ambitions to Drive Digital Transformation

Microsoft has three core ambitions which play a fundamental part in digitally transforming businesses:

  • Re-inventing Productivity and Business process
  • Building the Intelligent Cloud
  • Create more Personal Computing

These will be covered in more detail over the next two days keynotes, however, Satya provided some great examples of what these 3 ambitions entail.

1) Re-inventing Productivity and Business Process

This is all about removing the barriers between productivity tools and business applications. Satya focused on two key areas:

  • ‘Conversations as a Platform’: Using human language understanding personal assistants and Bots (conversational interfaces) which augment our connection with technologies. (Watch the demo 48 minutes into Day 1 Keynote)

2) Building out the intelligent Cloud

To showcase how intelligent cloud is helping transformation, Satya invited General Electric CEO, Jeff Immelt, on stage to discuss how he has digitally transformed the GE business.

Considering GE is over 140 years old, it’s a company that has embraced transformation and digital transformation. You can read more about their story and find out about Microsoft’s new partnership with GE to bring Predix to Azure, accelerating digital transformation for industrial customers.

Satya then went on to talk about ‘The next phase of building the Intelligent cloud’ with ‘Cognitive services’.  We’re seeing the beginnings of a new platform for cognitive services. Microsoft has taken decades of research from Microsoft Research encapsulating speech, computer vision, natural language text understanding, and made these available as API’s. These API’s are being used to infuse perception into apps – the ability for Apps/Bots to understand speech and see i.e. computer vision. These cognitive capabilities are capable of transforming business by bringing productivity gains. A great example of this is how Macdonalds are creating efficiency in their Drive Thru’s with speech/order recognition (Watch the demo 1 hour 10 minutes into the Day 1 keynote).

3) Create More Personal Computing

Create more personal computing was the third and final ambition covered. Satya discussed Windows 10 – an OS system spanning multiple devices from Raspberry PI to Hololens and bringing centralised infrastructure benefits and cost savings to business.

It was on the topic of Hololens, he discussed how personal computing is shaped by category creation moments. Moments where input and output change. ‘Mixed Reality’ is that moment. With Hololens its created an interface changing moment – Mixing real with virtual, enabling us to be anywhere and everywhere – fully untethered and mobile.

What followed was a great demo showcasing how Japan Airlines are using Microsoft HoloLens to change how they train flight crews and mechanics (Watch the demo 1 hour 17 minutes into the Day 1 keynote)

Mixed reality offers huge opportunities for partners with so many applications across so many sectors.

Expect more details on Digital Transformation and Microsoft’s three ambitions in WPC Day 2 and 3 keynotes.

News From WPC2016 Day 1

The three ambitions announced a year ago and the proof-points of healthy progress along them in FY16:

  1. Office 365, Dynamics 365, AppSource, and LinkedIn as all being part of one overarching strategy in Productivity and Business Process:
    – core part of an overarching strategy
    – digital transformation both for us and our partnerships with customers
  2. Significant differentiation vs. Amazon AWS in Intelligent Cloud:
    – enterprise cloud leadership
    – every customer is also an ISV
    – hyperscale-plus-hybrid approach with annuity focus enabling cloud lead conversation with customers
    – meeting cloud needs of customers where they are
  3. Windows strategy to achieve progress in More Personal Computing:
    – deliver more value and innovation, particularly for enterprise customers
    – grow new monetization through services across our unified Windows platform
    – innovate in new device categories in partnership with our OEMs

The Q1FY16 progress was presented in my Microsoft is ready to become a dominant force in cloud computing with superior cloud offerings, a Windows ecosystem under complete renewal, first signs of Surface-Lumia-Xbox successes on the market, and strong interest in technology partnerships by other industry leaders as of October 24, 2015.

Reinvent Productivity and Business Processes“, “Build the Intelligent Cloud” and “Create More Personal Computing” were the original 3 “interlocking ambitions” the Microsoft CEO talked about at Microsoft Iginite held on May 4-8, 2015 in Chicago. The proof-points of FY16 progress are shown along that list, and explained in detail by remarks from Microsoft (MSFT) Satya Nadella on Q4 2016 Results – Earnings Call Transcript as of July 18, 2016.

For more information see also:  Q4 2015 Earning Call Transcript, the 2015 Annual Report or—even better—my earlier posts indicated here under each ambition. For a deeper strategic intent underlying these ambilitions see my earlier post Julia Liuson: “Microsoft must transform from a company that throws a box with software into the market … into a company that offers pure services” published on These ambitions also became reporting segments in FY16. See Earnings Release FY16 Q1 as of October 22, 2015. The major corporate groups were also organised along these line: ASG = Application & Services Group for “Reinvent productivity and business processes” ambition, C&E = Cloud & Enterprise for “Build the intelligent cloud platform” ambition, and OSG= Operating Systems Group for “Create more personal computing” ambition.

Note that the overall strategic approach was developed 2 years ago and it was described in my post Satya Nadella on “Digital Work and Life Experiences” supported by “Cloud OS” and “Device OS and Hardware” platforms–all from Microsoft of July 23, 2014:

image.png

Here are the remarks from Microsoft (MSFT) Satya Nadella on Q4 2016 Results – Earnings Call Transcript as of July 18, 2016. for details

1. Office 365, Dynamics 365, AppSource, and LinkedIn as all being part of one overarching strategy in Productivity and Business Process:

For initial and additional details available earlier see my earlier posts:
– The first “post-Ballmer” offering launched: with Power BI for Office 365 everyone can analyze, visualize and share data in the cloud as of February 10, 2014
– OneNote is available now on every platform (+free!!) and supported by cloud services API for application and device builders as of March 18, 2014
– An upcoming new era: personalised, pro-active search and discovery experiences for Office 365 (Oslo) as of April 2, 2014
– Microsoft Azure: Marketable machine learning components capability for “a new data science economy”, and real-time analytics for Azure HDInsight service as of October 22, 2014

In fact, this last quarter, some of the most strategic announcements were all around our application platform. At our partner conference, there was a significant amount of excitement with the tools that we announced like PowerApps and Power BI, Azure functions and Flow. These are tools that our developers and system integrators and solution partners will use in order to be able to customize applications around Azure. And so to me that’s another huge advantage and a competitive differentiation for us.

1.1 Core part of an overarching strategy

The move to the cloud for our customers and for us is not just about a new way of delivering the same value just as a SaaS service. It’s really the transformation from having applications that are silos to becoming more services in the cloud where you can reason about the activity and the data underneath these services to benefit the customers who are using these services. So that’s what this notion of a graph [by Microsoft Graph] represents.

So when somebody moves to Office 365, their graph [by Microsoft Graph], their people, their relationships with other people inside the organization, their work artifacts all move to the cloud. You can connect them with all the business process data that’s in Dynamics 365, but not just in Dynamics 365 but all the applications in AppSource because business process will always be a much more fragmented market as opposed to just one market share leader by industry, by vertical, by country. And so that’s our strategy there.

And now the professional cloud or the professional network helps usage across all of that professional usage. Whether it’s in Office 365 or whether you’re a salesperson using any application related to sales, you want your professional network there. Of course, it’s relevant in recruiting, it’s relevant in training, it’s relevant in marketing. So that’s really our strategy with LinkedIn as the professional network meeting the professional cloud. And these are all part of one overarching strategy, and ultimately it’s about adding value to customers.

1.2 Digital transformation both for us and our partnerships with customers

This past year was a pivotal one in both our transformation and in our partnerships with customers who are also driving their own digital transformation. Our progress is best captured in the results of our three ambitions, starting with Productivity and Business Process. In a world of infinite information but finite attention and time, we aim to change the nature of work with digital technology. In pursuit of this ambition, we continue to add value to our products, grow usage, and increase our addressable market. Along these lines, let me start with Office 365 and then move to Dynamics 365.

In the last quarter, we advanced our collaboration tools. We launched Microsoft Planner, which helps teams manage operations, as well as Skype Meetings, which is aimed at helping small businesses collaborate. In June, we further strengthened our security value proposition with the release of Advanced Security Management.

Lastly, we continue to add intelligence in machine learning to Office to help people automate their tasks and glean insights from data. These advancements helped to drive increased usage across enterprises, small and medium businesses, and consumers. In the enterprise, Office 365 Commercial seats grew 45% year over year, and revenue grew 59% in constant currency. Also 70% of our Office Enterprise agreement renewals are in the cloud. Innovative companies like Facebook, Hershey’s, Discovery Communications, Cushman Wakefield all adopted Office 365 and now see how transformative this service can be for their own business.

We are enthusiastic about the early feedback and growth opportunity from companies using our newly released Office 365 E5, which includes powerful security controls, advanced analytics, and cloud voice. These customers tell us that they love the simplification that comes with standardizing across all of our productivity workloads.

We will continue to grow our install base and drive premium mix through offers like Office 365 E5, but they’re very, very early days of E5. And E5 value proposition across all three of the areas, whether it’s cloud voice or analytics or security are all three massive areas for us. And I would say if anything, the initial data from our customers around security is gaining a lot of traction. But at the same time, one of the things that customers are looking for is making an enterprise-wide architectural decision across all of the workloads.

We see momentum in small and medium businesses, with a growing number of partners selling Office 365, now up to nearly 90,000, a 25% increase year over year. We continue to grab share and adding over 50,000 customers each month for 28 consecutive months.

We also see momentum amongst consumers, with now more than 23 million Office 365 subscribers. Across segments, customers increasingly experience the power of Office on their iOS and Android mobile devices. In fact, we now have more than 50 million iOS and Android monthly active devices, up more than four times over last year.

Now let’s talk about progress with the other pillar of this ambition, Dynamics 365. We are removing any impedance that exists between productivity, collaboration, and business process. This month we took a major step forward with the introduction of Microsoft Dynamics 365 and Microsoft AppSource. Dynamics 365 provides business users with purpose-built SaaS applications. These applications have intelligence built in. They integrate deeply with communications and collaboration capabilities of Office 365.

Dynamics 365 along with AppSource and our rich application platform introduces a disruptive and customer-centric business model so customers can build what they want and use just the capabilities they need. The launch of Dynamics 365 builds on the momentum we’re already seeing in this business. Customers around the globe are harnessing the power of Dynamics in their own transformation, including 24 Hour Fitness and AccuWeather. Overall, Dynamics now has nearly 10 million monthly paid seats, up more than 20% year over year, and Q4 billings grew more than 20% year over year.

Overall, Business Processes represent an enormous addressable market, projected to be more than $100 billion by 2020. It’s a market we are increasingly focused on, and I believe we are poised with both Dynamics 365 and Microsoft AppSource to grow and drive opportunity for our partners.

Across Office 365 and Dynamics 365, developers increasingly see the opportunity to build innovative apps and experiences with the Microsoft Graph, and we now have over 27,000 apps connected to it. Microsoft AppSource will be a new way for developers to offer their services and reach customers worldwide.

Lastly, with Office 365 and Dynamics 365, we have the opportunity to connect the world’s professional cloud and the world’s professional network with our pending LinkedIn deal. Overall, the Microsoft Cloud is winning significant customer support. With more than $12 billion in Commercial Cloud annualized revenue run rate, we are on track to achieve our goal of $20 billion in fiscal year 2018. Also, nearly 60% of the Fortune 500 companies have at least three of our cloud offerings. And we continue to grow our annuity mix of our business. In fact, commercial annuity mix increased year over year to 83%.

2. Significant differentiation vs. Amazon AWS in Intelligent Cloud 

For initial and additional details available earlier see my earlier posts:
– Windows Azure becoming an unbeatable offering on the cloud computing market as of June 28, 2013
Microsoft partners empowered with ‘cloud first’, high-value and next-gen experiences for big data, enterprise social, and mobility on wide variety of Windows devices and Windows Server + Windows Azure + Visual Studio as the platform as of July 10, 2013

– 4. Microsoft products for the Cloud OS [‘Experiencing the Cloud’, as of Dec 18, 2013, but published only on Feb 14, 2014] (was separated from the next “half bakedness” post because of its length)
– 4.5. Microsoft talking about Cloud OS and private clouds: starting with Ray Ozzie in November, 2009[‘Experiencing the Cloud’, as of Dec 18, 2013, but published only on Feb 14, 2014] (was separated from the next “half bakedness” post because of its length)
Microsoft’s half-baked cloud computing strategy (H1’FY14) as of February 17, 2014 Note that this “half bakedness” ended by the facts published in Microsoft is ready to become a dominant force in cloud computing with superior cloud offerings, a Windows ecosystem under complete renewal, first signs of Surface-Lumia-Xbox successes on the market, and strong interest in technology partnerships by other industry leaders as of October 24, 2014
– Microsoft is transitioning to a world with more usage and more software driven value add (rather than the old device driven world) in mobility and the cloud, the latter also helping to grow the server business well above its peers as of April 25, 2014
– Microsoft BUILD 2014 Day 2: “rebranding” to Microsoft Azure and moving toward a comprehensive set of fully-integrated backend services as of April 27, 2014
– Scott Guthrie about changes under Nadella, the competition with Amazon, and what differentiates Microsoft’s cloud products as of October 2, 2014
– Sam Guckenheimer on Microsoft Developer Division’s Journey to Cloud Cadence as of October 19, 2014
– Microsoft Azure: Marketable machine learning components capability for “a new data science economy”, and real-time analytics for Azure HDInsight service as of October 22, 2014
Microsoft Cloud state-of-the-art: Hyper-scale Azure with host SDN — IaaS 2.0 — Hybrid flexibility and freedom as of July 11, 2015
– Microsoft’s first quarter proving its ability to become a dominant force in cloud computing with superior cloud offerings as of Januar 27, 2015
– DataStax: a fully distributed and highly secure transactional database platform that is “always on” as of February 3, 2016
– Microsoft chairman: The transition to a subscription-based cloud business isn’t fast enough. Revamp the sales force for cloud-based selling as of June 6, 2016

Cloud Growth Helps Microsoft Beat Street in Q4 from TheStreet as of July 19, 2016 

… [0:34] and Microsoft’s Enterprise Mobility [Suite]
customers nearly doubled YoY to 33,000. [0:40] …

Note that the Q1FY16 report was that “Enterprise Mobility [Suite] customers more than doubled year-over-year to over 20,000, and the installed base grew nearly 6x year-over-year“. Enterprise Mobility Suite (EMS) is a service available in the CSP (Cloud Solution Partner program) along with Windows Intune, Office 365, Azure and CRM Online. The reason for that very impressive growth was given by Satya Nadella in the much earlier Q2FY15 report as:

Microsoft Enterprise Mobility Suite is one key of product innovation that I would like to highlight given the growth and uniqueness of our offering. Microsoft offers a comprehensive solution that brings together mobile device management, mobile application management, hybrid identity management and data protection into a unified offering via EMS.

Office 365 now includes new app experiences on all phones and tablets for mobile productivity.  Further, we have released completely new scenarios. This includes Office Sway for visualizing and sharing ideas; Delve, to help search and discover content; Office 365 Groups to make it easier to collaborate; andOffice 365 Video for secure media streaming for businesses.

Finally, we continue to invest in enterprise value by integrating MDM and the Enterprise Mobility Suite into Office 365; new encryption technologies and compliance certifications; and new eDiscovery capabilities in Exchange.

Overall at the highest level, our strategy here is to make sure that the Microsoft Services i.e. cloud services be it Azure, Office 365, CRM Online or Enterprise Mobility Suite are covering all the devices out there in the marketplace. So that, that way we maximize the opportunity we have for each of these subscription and capacity based services.

2.1 Enterprise cloud leadership

Now let’s get into the specifics of the Intelligent Cloud, an area of massive opportunity, as we are clearly one of the two enterprise cloud leaders. Companies looking to digitally transform need a trusted cloud partner and turn to Microsoft. As a result, Azure revenue and usage again grew by more than 100% this quarter. We see customers choose Microsoft for three reasons. They want a cloud provider that offers solutions that reflect the realities of today’s world and their enterprise-grade needs. They want higher level services to drive digital transformation, and they want a cloud open to developers of all types. Let me expand on each.

To start, a wide variety of customers turn to Azure because of their specific real-world needs. Multinationals choose us because we are the only hybrid and hyperscale cloud spanning multiple jurisdictions. We cover more countries and regions than any other cloud provider, from North America to Asia to Europe to Latin America. Our cloud respects data sovereignty and makes it possible for an enterprise application to work across these regions and jurisdictions. More than 80% of the world’s largest banks are Azure customers because of our leadership support for regulatory requirements, advanced security, and commitment to privacy. Large ISVs like SAP and Citrix as well as startups like Sprinklr also choose Azure because of our global reach and a broad set of platform services. Last week GE announced it will adopt our cloud for its IoT approach.

Next, Azure customers also value our unique higher-level services. Now at 33,000, we nearly doubled in one year the number of companies worldwide that have selected our Enterprise Mobility Solutions. The Dow Chemical Company leverages EMS along with Azure, Office 365, and Dynamics to give its thousands of employees secure real-time access to data and apps from anywhere.

Just yesterday, we announced Boeing will use Azure, our IoT suite, and Cortana Intelligence to drive digital transformation in commercial aviation, with connected airline systems optimization, predictive maintenance, and much more. This builds on great momentum in IoT, including our work with Rolls-Royce, Schneider Electric, and others.

This is great progress, but our ambitions are set even higher. Our Intelligent Cloud also enables cognitive services. Cortana Intelligence Suite offers machine learning capabilities and advanced predictive analytics. Customers like Jabil Circuit, Fruit of the Loom, Land O’Lakes, LIBER already realize the benefits of these new capabilities.

Lastly, central to our Intelligent Cloud ambition is providing developers with the tools and capabilities they need to build apps and services for the platforms and devices of their choice. We have the best support for what I would say is the most open platform for all developers. Not only is .NET first class but Linux is first class, Java is first class. The new Azure Container service cuts across both containers running on Windows, running across Linux. So again, it speaks to the enterprise reality. .NET Core 1.0 for open source and our ongoing work with companies such as Red Hat, Docker, and Mesosphere also reflects significant progress on this front. We continue to see traction from open source, with nearly a third of customer virtual machines on Azure running Linux.

So those would be the places where we are fairly differentiated, and that’s what you see us gaining both for enterprise customers and ISVs.

On the server side, premium server revenue grew double digits in constant currency year over year. New SQL Server 2016 helps us expand into new markets with built-in advanced analytics and unparalleled performance. More than 15,000 customers, including over 50% of the Fortune 500, have registered for the private preview of SQL Server for Linux. And we’re not slowing down. We will launch Windows Server 2016 and System Server 2016 later this year.

2.2 Every customer is also an ISV

One of the phenomena now is that pretty much anyone who is a customer of Azure is also in some form an ISV, and that’s no longer just limited to people who are “in the classic tech industry” or the software business. So every customer who starts off consuming Azure is also turning what is their IP in most cases into an ISV solution, which ultimately will even participate in AppSource. So at least the vision that we have is that every customer is a digital company that will have a digital IP component to it, and that we want to be able to partner with them in pretty unique ways.

That’s the same case with GE. It’s the same case with Boeing. It’s the same case with Schneider Electric or ABB or any one of the customers we are working with because they all are taking some of their assets and converting them into SaaS applications on Azure. And that’s something that we will in fact have distribution agreements with.

And AppSource is a pretty major announcement for us because we essentially created for SaaS applications and infrastructure applications a way to distribute their applications through us and our channel. And I think it makes in fact our cloud more attractive to many of them because of that. So we look – I think going forward, you’ll look to see – or you’ll see us do much more of this with many other customers of ours.

2.3 Hyperscale-plus-hybrid approach with annuity focus enabling cloud lead conversation with customers

The focus for us is in what I describe as this hyperscale-plus-hybrid approach when you think about the current approach, which is pretty unique to us. Overall, I believe this hyperscale plus hybrid architecturally helps us a lot with enterprise customers because we meet them where their realities are today and also the digital transformation needs going forward, so that’s one massive advantage we have.

And the way we track progress is to see how is our annuity growth of our server business, and how is our cloud growth. And if you look at this last quarter, our annuity grew double digits and our cloud grew triple digits. And that’s a pretty healthy growth rate, and that’s something that by design both in terms of the technical architecture as well as the traction we have in the marketplace and our sales efforts and so on are playing out well, and we are very bullish about that going forward.

The Transactional business is much more volatile because of the macro environment, IT budgets, and also the secular shift to the cloud. The question again that gets asked is about the cannibalization. But if you look at Boeing or you look at any of the other examples that I talk about when it comes to the cloud, our servers never did what these customers are now doing in our cloud. So at a fundamental long-term secular basis, we have new growth, new workloads, and that’s what we are focused on, and that’s a much bigger addressable market than anything our Transactional Server business had in the past.

[Amy E. Hood – Chief Financial Officer & Executive Vice President:]
The first thing really that I think Satya and I both focus on every quarter, every month, is how much of our business are we continuing to shift to annuity and specifically to the cloud. We structure all of our motions at this company, from how we engineer to how we do our go-to-markets to how we think about sales engagement to how we do our investments, fundamentally toward that long-term structural transition in the market.

In terms of server products and services, I tend to think of it as the all-up growth. It’s really about growing the cloud, growing the hybrid, and then whatever happens in the Transactional business happens.

And so to your question on Transactional performance, there were some deals that didn’t get done in Q3 that got done in Q4, and there were some deals done in Q4 on the Office side with large companies that I’m thrilled by. But at the same time, we still will focus on those deals moving to the cloud over time. And so this volatility that we are going to see because of macro and because of budget constraints, especially on Transactional, we will focus on because we expect excellent execution and have accountability to do that in the field. But our first priority, every time, is to make sure we are focused on annuity growth and digital transformation at our company, which is best done through that motion.

In terms of the sales motion they are absolutely incented more towards cloud versus Transactional going into this year.

I do believe that every conversation that we’re having with customers is cloud-led. That cloud-led conversation and making a plan for customers to best change and transform their own business certainly is a far more in-depth one than on occasion is required by long-time Transactional purchasers, especially in Office, as an example, because what we’re talking about now is really pivoting your business for the long term.

And so I’m sure there are examples where that has elongated the sales cycle, for good reason. But I would generally point back and say most of these are driven at the structural level, which is – structurally over time, on-premises Transactional business will move to the cloud or to a hybrid structure through an annuity revenue stream.
[END BY Amy E. Hood]

2.4 Meeting cloud needs of customers where they are

The position that we have taken is that we want to serve customers where they are and not assume very simplistically that the digital sovereignty needs of customers can be met out of a fewer data center approach. Because right now, given the secular trend to move to the cloud across all of the regulated industries across the globe, we think it’s wiser for us and our investors long term to be able to meet them where they are. And that’s what you see us. We are the only cloud that operates in China under Chinese law, the only cloud that operates in Germany under German law. And these are very critical competitive advantages to us.

And so we will track that, and we will be very demand driven. So in this case we’re not taking these positions of which regions to open and where to open them well in advance of our demand. If anything, I think our cycle times have significantly come down. So it will be demand-driven, but I don’t want to essentially put a cap because if the opportunity arises, and for us it’s a high ROI decision to open a new region, we will do so.

3. Windows strategy to achieve progress in More Personal Computing

For initial and additional details available earlier see my earlier posts:
– Windows Embedded is an enterprise business now, like the whole Windows business, with Handheld and Compact versions to lead in the overall Internet of Things market as well as of June 8, 2013
– How the device play will unfold in the new Microsoft organization? as of July 14, 2013
– With Android and forked Android smartphones as the industry standard Nokia relegated to a niche market status while Apple should radically alter its previous premium strategy for long term as of August 17, 2013
– Windows [inc. Phone] 8.x chances of becoming the alternative platform to iOS and Android: VERY SLIM as it is even more difficult for Microsoft now than any time before as of August 20, 2013
– Leading PC vendors of the past: Go enterprise or die! as of November 7, 2013
– Xamarin: C# developers of native “business” and “mobile workforce” applications now can easily work cross-platform, for Android and iOS clients as well as of November 15, 2013
Microsoft is transitioning to a world with more usage and more software driven value add (rather than the old device driven world) in mobility and the cloud, the latter also helping to grow the server business well above its peers as of April 25, 2014
Microsoft Surface Pro 3 is the ultimate tablet product from Microsoft. What the market response will be? as of May 21, 2014
Windows 10 Technical Preview: Terry Myerson and Joe Belfiore on the future of Windows as of October 1, 2014
– The Era Of Sub-$90 Windows 8.1 Phones in U.S. as of October 3, 2014
– Windows 10 is here to help regain Microsoft’s leading position in ICT as of July 31, 2015
– Microsoft and partners to capitalize on Continuum for Phones instead of the exited Microsoft phone business as of June 5, 2016

We have increased Windows 10 monthly active devices and are now at more than 350 million. This is the fastest adoption rate of any prior Windows release. While we are proud of these results, given changes to our phone plan, we changed how we will assess progress. Going forward, we will track progress by regularly reporting the growth of Windows 10 monthly active devices in addition to progress on three aspects of our Windows strategy:

3.1 Deliver more value and innovation, particularly for enterprise customers

We continue to pursue our goal of moving people from needing Windows to choosing Windows to loving Windows. In two weeks, we will launch Windows 10 Anniversary Update, which takes a significant step forward in security. We are also extending Windows Hello to support apps and websites and delivering a range of new features like Windows Ink and updates to Microsoft Edge. We expect these advances will drive increased adoption of Windows 10, particularly in the enterprise, in the coming year. We already have strong traction, with over 96% of our enterprise customers piloting Windows 10.

3.2 Grow new monetization through services across our unified Windows platform

As we grow our install base and engagement, we generate more opportunity for Microsoft and our ecosystem. Bing profitability continues to grow, with greater than 40% of the search revenue in June from Windows 10 devices. Bing PC query share in the United States approached 22% this quarter, not including volume from AOL and Yahoo!. The Cortana search box has over 100 million monthly active users, with 8 billion questions asked to date.

We continue to drive growth in gaming by connecting fans on Xbox Live across Windows 10, iOS, and Android. Just this quarter we launched our Minecraft Realm subscription on Android and iOS. Overall engagement on Xbox Live is at record levels, with more than 49 million monthly active users, up 33% year over year. At E3 we announced our biggest lineup of exclusive games ever for Xbox One and Windows 10 PCs. And we announced Xbox Play Anywhere titles, where gamers can buy a game once and play it on both their Windows 10 PC and Xbox One. We also announced two new members of the Xbox One console family, the Xbox One S and Project Scorpio.

The Windows Store continues to grow, with new universal Windows apps like Bank of America, Roku, SiriusXM, Instagram, Facebook, Wine, Hulu, and popular PC games like Quantum Break.

3.3 Innovate in new device categories in partnership with our OEMs

Our hardware partners are embracing the new personal computing vision, with over 1,500 new devices designed to take advantage of Windows 10 innovations like Touch, Pen, Hello, and better performance and power efficiency.

Microsoft’s family of Surface devices continues to drive category growth, and we are reaching more commercial customers of all sizes with the support of our channel partners. We recently announced new Surface enterprise initiatives with IBM and Booz Allen Hamilton to enable more customer segments. Also in the past year, we grew our commercial Surface partner channel from over 150 to over 10,000.

Lastly this quarter, more and more developers and enterprise customers got to experience two entirely new device categories from Microsoft Surface Hub and Microsoft HoloLens. While we are still in the early days of both of these devices, we are seeing great traction with both enterprise customers and developers, making us optimistic about future growth.

Julia Liuson: “Microsoft must transform from a company that throws a box with software into the market … into a company that offers pure services”

April 9, 2015Microsoft Changes Course by Hsiao-wen Wang
from CommonWealth Magazine, Taiwan

On Oct 21, 2015 she expanded her role as the head of the Visual Studio and .NET engineering with all the rest of the once existing DevDiv, except Brian Harry's Visual Studio Online Team (responsible for both the 3rd party developer services from Microsoft, as well as for new One Microsoft Engineering System–1ES). So product management and cross-platform developer tools belong to her as well. See the announcement below.

On Oct 21, 2015 Julia Liuson, corporate vice president of Microsoft, expanded her role as the head of the Visual Studio and .NET engineering with all the rest of the once existing DevDiv, except Brian Harry’s Visual Studio Online Team (responsible for both the 3rd party developer services from Microsoft, as well as for new One Microsoft Engineering System). So now product management and cross-platform developer tools belong to her as well. See the announcement below. Note that in August 2013 she was the manager of Brian Harry’s TFS (Team Foundation Server) DevTeam. In her …get more girls in STEM disciplines (STEM=science, technology, engineering and mathematics) article of Sept 10, 2012 she is already a corporate vice president in Microsoft’s Developer Tools business. In June 2010 she was Visual Studio Business Applications and Server & Tools Business (STB) China co-General Manager.

Microsoft remains a technology giant that is able to post net earnings of more than NT$100 billion [$3B USD] per quarter. The giant is currently transforming itself and redefining its battlefield. Industry insiders wonder how Microsoft will make money if it can no longer rely on software licensing.

It seems that commercial cloud services are Microsoft’s answer. One of the crucial parties in overcoming in-house resistance to turning Windows into open source software is Julia Liuson. Born in Shanghai, Liuson grew up in Beijing. Upon obtaining a bachelor of science in electrical engineering from the University of Washington, she joined Microsoft in 1992, holding various technical and managerial positions when the company was still in its heyday. Liuson [as a corporate vice president] works closely with Microsoft’s new CEO Satya Nadella and oversees software development for Visual Studio and the .Net framework.

Q: When taking the helm of Microsoft, Nadella said, “Our industry does not respect tradition — it only respects innovation.” How has Microsoft changed since Nadella called for the company’s transformation when taking office more than a year ago?

A: There has been a very big change in terms of acceptance for going open-source. In terms of operating procedures, we have also seen massive changes. In the past we used to release major software updates every three years, as if we were selling a precious encyclopedia set. But in a speed-hungry Internet business environment, someone needs to run and maintain [software], racing against time 24 hours a day. It is like having to update one encyclopedia page per day, updating a chapter every week.

We have also changed our organization’s operating model. In the past, the ratio of software developers to software testing personnel was one to one. When the developers had developed new software, they would throw it over the wall to the testing staff, where it was no longer the developers’ business. Now, the real work begins when the developers have written the software and release it into the market, because we need to pay attention to customer feedback before we go back to make modifications.

In order to tear down the fences between developers and other departments, we reorganized our staff in work teams of eight to twelve members so that planning, development, testing, marketing and sales as well as customer support can communicate closely with each other and shorten the time needed for product updates and new releases.

INSERT from Oct 1, 2015: Our DevOps Journey – Microsoft Engineering Stories

… In the past, we had three distinct roles on what we call “feature teams”: program managers, developers, and testers. We wanted to reduce delays in handoffs between developers and testers and focus on quality for all software created, so we combined the traditional developer and tester roles into one discipline: software engineers. Software engineers are now responsible for every aspect of making their features come to life and performing well in production. … One of our first steps was to bring the operations teams into the same organization. Before, our ops teams were organizationally distant from the engineering team. … [Now] we call our operations team “Service Engineers.” Service Engineers have to know the application architecture to be more efficient troubleshooters, suggest architectural changes to the infrastructure, be able to develop and test things like infrastructure as code and automation scripts, and make high-value contributions that impact the service design or management. …

In addition to the Our DevOps Journey – Microsoft Engineering Stories briefing from Microsoft see also the background information in the end of this post under the “DevOps Journey” title.
END OF THE INSERT


Q: As Microsoft transforms, what attitudes and skills are needed most?

A: Microsoft must learn to listen more closely to its customers; that’s a huge change.

Just the Beginning

Corresponding to these attitudinal changes, everything was different from before, like the requirements of the products, analysis of customer behavior, and the collection of big data.

Previously, we only needed to sell our products and everything was fine; we didn’t need to look at what the user wanted. However, now that I need to collect [data] on the behavior of these users, how am I going to go about my product support? How do I analyze the data I’ve gathered? These have all been huge transformations at Microsoft.

We cannot dig moats like before to protect the high market share of our products Windows and Office. Now we are a challenger, a new service that starts with a zero market share with zero users. We need to win over every single customer.

We need to adjust our own mindset: If I were a small startup, what would I do? This is completely different from our mindset in the past, when Microsoft was the industry leader with a market share above 90 percent.

Q: What keeps you awake at night?

A: Everything (laughs)! Just kidding. Come to think of it, I am in charge of Microsoft software, which has millions of users around the globe. But I don’t know who they are and how they use our software. If you told this to the people at Amazon, they would laugh at you.

Microsoft must transform from a company that throws a box with software into the market, a company that does not know who its customers are into a company that offers pure services, that knows who every single customer is and how they use its services. This is what keeps me awake at night.

There are still many things that need to be done. How much I wish it was still yesterday. Then I would have another 24 hours to get things done (laughs).

Dec 22, 2011: cached by Zoominfo page of Microsoft Chinese Employee – 微软华人协会 > Julia Liuson

Julia[1]Julia Liuson (潘正磊) is the General Manager for Visual Studio Business Applications. Her teams are responsible for enabling developers to easily build business applications on Microsoft platforms by reinvigorating development paradigms for build LOB application, deliver first class tooling for Office server and client, and bring .Net programmability to all ISV applications.

Julia joined Microsoft in 1992 as a software developer on Access 1.0. After the successful launch of Access 1.0, 1.1, and 2.0 she became development lead for the database and web project tools in Visual InterDev 1.0 and 2.0. In 1998, she assumed the role of development manager for Visual Basic.Net, and led the development effort for Visual Basic.Net 2002 and 2003. Julia served as Director of Development for all Visual Studio product line, and tackled division wide process and engineering excellence issues.

As the Partner Product Unit Manager of Visual Studio Team Architect, she was a core member of the leadership team that led the successful development and launch of Visual Studio Team System in 2005.

In 2006, she became the Partner Product Unit Manager for Visual Basic, and was responsible for delivering the most productive development tool on .Net for professional developers, and for moving millions of VB6 users forward to the .Net platform.

Oct 21, 2015: Microsoft Executive VP of the Cloud and Enterprise Group [C+E] Scott Guthrie:

Today we are announcing some organizational changes within C+E that will enable us to further accelerate our customer momentum and move even faster as an organization.  Our new C+E structure will be aligned around our key strategic businesses (Cloud Infrastructure, Data and Analytics, Business Applications and App Platform, Enterprise Mobility, Developer).  As part of today’s changes we are also bringing several teams even closer together to enable us to make deeper shared technology bets.

Each team in C+E will have a clear, focused charter.  Our culture will continue to be grounded in a Growth Mindset.  We’ll exercise this by being Customer-Obsessed, Diverse and Inclusive, and by working as One Microsoft to Make a Difference for our customers and partners. We’ll embrace data driven decision making and optimize for continuous learning and improvement.

Developer Tools and Services

Our Visual Studio Family of developer tools and services provides a complete solution for building modern cloud and mobile applications.

The Visual Studio Tools and .NET Team will be led by Julia Liuson.  John Montgomery who leads the Visual Studio and .NET PM team will report to Julia going forward.  The VS Code Team, led by Shanku Niyogi, which is responsible for our cross-platform developer tools, will also today join the Visual Studio Tools and .NET Team with Shanku also reporting to Julia.

The Visual Studio Online Team will continue to be led by Brian Harry.  The VSO team is responsible for both our 3rd party developer services, as well as for new One Microsoft Engineering System.

4336.image_5F00_thumb_5F00_768E6E83[1]

“… TFS on-prem[ises] is growing slowly because it’s already huge. VS Online usage is growing more rapidly but is still far smaller than TFS on-prem[ises]. … Here’s a month by month trend of VS Online adoption by major organization. The numbers look a little larger than they really are because adoption is still early and people are using only subsets of the functionality or using VS Online as a supplement to on-prem TFS.” ASG = Application & Services Group for “Reinvent productivity and business processes” ambition, C&E = Cloud & Enterprise for “Build the intelligent cloud platform” ambition, OSG = Operating Systems Group for “Create more personal computing” ambition. Forrás: Team Foundation Server and VS Online adoption at Microsoft by Brian Harry, June 3, 2015

Oct 24, 2014 excerpt from the web according to “Visual Studio Online” “One Microsoft Engineering System” search:

… Visual Studio Online’s goal is to become the single place for all developer targeted services – for both the internal One Microsoft Engineering System and for customers. It provides software development teams with capabilities of project planning, work item management, version control, build automation, test lab management, elastic load test, Application Insights and more. We ship new features every 3 weeks at http://www.visualstudio.com>   and our adoption is growing at a very rapid clip. Ultimately, our audience is Engineers like YOU! Come onboard to build one of the most mission-critical services that will set the tone for all future engineering practices – inside Microsoft and outside in the developer community!

VS Online makes use of a wide range of technologies on premise and in the cloud, so you’ll have the opportunity to learn new stuff and go deep in many domains. Our key technologies are Azure, SQL Azure, AAD, and ASP.NET MVC on the backend. On the front end we use Knockout to build out an awesome user experience on the web, WPF for VS, and SWT for Eclipse. …

Sept 1, 2015: Cached Software Engineer II career

As Microsoft transforms to a devices + services company, Visual Studio continues to evolve and adapt in significant ways to support this transformation; requiring a strong team to deliver great engineering tools and systems. The Visual Studio Engineering Tools and Systems team is driving big, bold improvements for current and future releases in the ability to operate at a faster cadence by improving daily engineer productivity, speeding up builds and other advancements in how the software is built and delivered. This team is tasked with creating the next generation engineering system that aligns with the One Microsoft Engineering System vision (1ES). An engineering system that allows hundreds of people to work together efficiently and be very productive on one of the most important products at Microsoft, Visual Studio. This team is responsible for designing, creating, implementing, and managing the tools, services, and processes to arm the Developer Division engineers to do their best work.

As of 24 Oct, 2015Principal Software Engineer Manager – C+E career

… The Tools for Software Engineers team (TSE) is set out to maximize the productivity of all Microsoft engineers and reduce the time from idea to production.

In Satya’s memo to the company he states “In order to deliver the experiences our customers need for the mobile-first and cloud-first world, we will modernize our engineering processes to be customer-obsessed, data-driven, speed-oriented and quality-focused.” Come join us to be a part of this change!

TSE develops and operates a set of engineering tools and services including build tools, build languages (MSBuild), CloudBuild service, drop and artifact services, verification services including unit test execution and code review tools, engineering reporting and analysis services; all working towards a unified, world-class engineering system offering for internal Microsoft needs and third parties.

CloudBuild is at the center of Microsoft 1ES and is helping major groups within the company build faster, more reliable and at scale. CloudBuild serves thousands of developers and builds millions of targets daily in a highly scalable and distributed service running at scale in multiple Data Centers across the world. …

July 31, 215: 2015 Annual Report>The ambitions that drive us

To carry out our strategy, our research and development efforts focus on three interconnected ambitions:

  • Reinvent productivity and business processes.

  • Build the intelligent cloud platform.

  • Create more personal computing.

Reinvent productivity and business processes

We believe we can significantly enhance the lives of our customers using our broad portfolio of communication, productivity, and information services that spans devices and platforms. Productivity will be the first and foremost objective, to enable people to meet and collaborate more easily, and to effectively express ideas in new ways. We will design applications as dual-use with the intelligence to partition data between work and life while respecting each person’s privacy choices. The foundation for these efforts will rest on advancing our leading productivity, collaboration, and business process tools including Skype, OneDrive, OneNote, Outlook, Word, Excel, PowerPoint, Bing, and Dynamics. With Office 365, we provide these familiar industry-leading productivity and business process tools as cloud services, enabling access from anywhere and any device. This creates an opportunity to reach new customers, and expand the usage of our services by our existing customers.

We see opportunity in combining our offerings in new ways that are more contextual and personal, while ensuring people, rather than their devices, remain at the center of the digital experience. We will offer our services across ecosystems and devices outside our own. As people move from device to device, so will their content and the richness of their services. We are engineering our applications so users can find, try, and buy them in friction-free ways.

Build the intelligent cloud platform

In deploying technology that advances business strategy, enterprises decide what solutions will make employees more productive, collaborative, and satisfied, and connect with customers in new and compelling ways. They work to unlock business insights from a world of data. To achieve these objectives, increasingly businesses look to leverage the benefits of the cloud. Helping businesses move to the cloud is one of our largest opportunities, and we believe we work from a position of strength.

The shift to the cloud is driven by three important economies of scale: larger datacenters can deploy computational resources at significantly lower cost per unit than smaller ones; larger datacenters can coordinate and aggregate diverse customer, geographic, and application demand patterns, improving the utilization of computing, storage, and network resources; and multi-tenancy lowers application maintenance labor costs for large public clouds. As one of the largest providers of cloud computing at scale, we are well-positioned to help businesses move to the cloud so that businesses can focus on innovation while leaving non-differentiating activities to reliable and cost-effective providers like Microsoft.

With Azure, we are one of very few cloud vendors that run at a scale that meets the needs of businesses of all sizes and complexities. We believe the combination of Azure and Windows Server makes us the only company with a public, private, and hybrid cloud platform that can power modern business. We are working to enhance the return on information technology (“IT”) investment by enabling enterprises to combine their existing datacenters and our public cloud into a single cohesive infrastructure. Businesses can deploy applications in their own datacenter, a partner’s datacenter, or in our datacenters with common security, management, and administration across all environments, with the flexibility and scale they want.

We enable organizations to securely adopt software-as-a-service applications (both our own and third-party) and integrate them with their existing security and management infrastructure. We will continue to innovate with higher-level services including identity and directory services that manage employee corporate identity and manage and secure corporate information accessed and stored across a growing number of devices, rich data storage and analytics services, machine learning services, media services, web and mobile backend services, and developer productivity services. To foster a rich developer ecosystem, our digital work and life experiences will also be extensible, enabling customers and partners to further customize and enhance our solutions, achieving even more value. This strategy requires continuing investment in datacenters and other infrastructure to support our devices and services.

Create more personal computing

Windows 10 is the cornerstone of our ambition to usher in an era of more personal computing. We see the launch of Windows 10 in July 2015 as a critical, transformative moment for the Company because we will move from an operating system that runs on a PC to a service that can power the full spectrum of devices in our customers’ lives. We developed Windows 10 not only to be familiar to our users, but more safe and secure, and always up-to-date. We believe Windows 10 is more personal and productive, working seamlessly with functionality such as Cortana, Office, Continuum, and universal applications. We designed Windows 10 to foster innovation – from us, our partners and developers – through experiences such as our new browser Microsoft Edge, across the range of existing devices, and into entirely new device categories.

Our ambition for Windows 10 is to broaden our economic opportunity through three key levers: an original equipment manufacturer (“OEM”) ecosystem that creates exciting new hardware designs for Windows 10; our own commitment to the health and profitability of our first-party premium device portfolio; and monetization opportunities such as services, subscriptions, gaming, and search. Our OEM partners are investing in an extensive portfolio of hardware designs and configurations as they ready for Windows 10. By December 2015, we anticipate the widest range of Windows hardware ever to be available.

With the launch of Windows 10, we are realizing our vision of a single, unified Windows operating system on which developers and OEMs can contribute to a thriving Windows ecosystem. We invest heavily to make Windows the most secure, manageable, and capable operating system for the needs of a modern workforce. We are working to create a broad developer opportunity by unifying the installed base to Windows 10 through upgrades and ongoing updates, and by enabling universal Windows applications to run across all device targets. As part of our strategic objectives, we are committed to designing and marketing first-party devices to help drive innovation, create new categories, and stimulate demand in the Windows ecosystem, including across PCs, phones, tablets, consoles, wearables, large multi-touch displays, and new categories such as the HoloLens holographic computing platform. We are developing new input/output methods like speech, pen, gesture, and augmented reality holograms to power more personal computing experiences with Windows 10.

Our future opportunity

There are several distinct areas of technology that we aim to drive forward. Our goal is to lead the industry in these areas over the long-term, which we expect will translate to sustained growth. We are investing significant resources in:

  • Delivering new productivity, entertainment, and business processes to improve how people communicate, collaborate, learn, work, play, and interact with one another.
  • Establishing the Windows platform across the PC, tablet, phone, server, other devices, and the cloud to drive a thriving ecosystem of developers, unify the cross-device user experience, and increase agility when bringing new advances to market.
  • Building and running cloud-based services in ways that unleash new experiences and opportunities for businesses and individuals.
  • Developing new devices that have increasingly natural ways to interact with them, including speech, pen, gesture, and augmented reality holograms.
  • Applying machine learning to make technology more intuitive and able to act on our behalf, instead of at our command.

We believe the breadth of our products and services portfolio, our large global partner and customer base, our growing ecosystem, and our ongoing investment in innovation position us to be a leader in these areas and differentiate ourselves from competitors.

Regarding the digital work and life experiences see my earlier Satya Nadella on “Digital Work and Life Experiences” supported by “Cloud OS” and “Device OS and Hardware” platforms–all from Microsoft post of July 23, 2014:

Those ambitions are also reporting segments now
Oct 22, 2015Earnings Release FY16 Q1

Revenue in Productivity and Business Processes declined 3% (up 4% in constant currency) to $6.3 billion, with the following business highlights:

  • Office commercial products and cloud services revenue grew 5% in constant currency with Office 365 revenue growth of nearly 70% in constant currency and continued user growth across our productivity offerings
  • Office 365 consumer subscribers increased to 18.2 million, with approximately 3 million subscribers added in the quarter
  • Dynamics revenue grew 12% in constant currency, with the Dynamics CRM Online enterprise installed base growing more than 3x year-over-year

Revenue in Intelligent Cloud grew 8% (up 14% in constant currency) to $5.9 billion, with the following business highlights:

  • Server products and cloud services revenue grew 13% in constant currency, with revenue from premium products and services growing double-digits
  • Azure revenue and compute usage more than doubled year-over-year
  • Enterprise Mobility customers more than doubled year-over-year to over 20,000, and the installed base grew nearly 6x year-over-year

Revenue in More Personal Computing declined 17% (down 13% in constant currency) to $9.4 billion, with the following business highlights:

  • Windows OEM revenue declined 6%, performing better than the overall PC market, as the Windows 10 launch spurred PC ecosystem innovation and helped drive hardware mix toward premium devices
  • Phone revenue declined 54% in constant currency reflecting our updated strategy
  • Search advertising revenue excluding traffic acquisition costs grew 29% in constant currency with Bing US market share benefiting from Windows 10 usage
  • Xbox Live monthly active users grew 28% to 39 million

July 9, 2014Upcoming VS Online Licensing Changes by Brian Harry

Through the fall and spring, we transitioned VS Online from Preview to General Availability.  That process included changes to branding, the SLA, the announcement of pricing, the end of the early adopter program and more.  We’ve been working closely with customers to understand where the friction is and what we can do to make adopting VS Online as easy as possible.  This is a continuing process and includes discussions about product functionality, compliance and privacy, pricing and licensing, etc.  This is a journey and we’ll keep taking feedback and adjusting.

Today I want to talk about one set of adjustments that we want to make to licensing.

As we ended the early adopter period, we got a lot of questions from customers about how to apply the licensing to their situation.  We also watched as people assigned licenses to their users: What kind of licenses did they choose?  How many people did they choose to remove from their account?  Etc.

From all of this learning, we’ve decided to roll out 2 licensing changes in the next couple of months:

Stakeholders

A common question we saw was “What do I do with all of the stakeholders in my organization?”  While the early adopter program was in effect and all users were free, customers were liberal with adding people to their account.  People who just wanted to track progress or file a bug or a suggestion occasionally, were included.  As the early adopter period ended, customers had to decide – Is this really worth $20/user/month (minus appropriate Azure discounts)?  The result was that many of these “stakeholders” were removed from the VS Online accounts in the transition, just adding more friction for the development teams.

As a result of all this feedback we proposed a new “Stakeholder” license for VS Online.  Based on the scenarios we wanted to address, we designed a set of features that matched the needs most customers have.  These include:

    • Full read/write/create on all work items
    • Create, run and save (to “My Queries”) work item queries
    • View project and team home pages
    • Access to the backlog, including add and update (but no ability to reprioritize the work)
    • Ability to receive work item alerts

Some of the explicitly excluded items are:

    • No access to Code, Build or Test hubs.
    • No access to Team Rooms
    • No access to any administrative functionality (Team membership, license administration, permissions, area/iterations configuration, sprint configuration, home page configuration, creation of shared queries, etc.)

We then surveyed our “Top Customers” and tuned the list of features (to arrive at what I listed above).  One of the conversations we had with them was about the price/value of this feature set.  We tested 3 different price points – $5/user/month, $2/user/month and free.  Many thought it was worth $5.  Every single one thought it was worth $2.  However, one of the questions we asked was “How many stakeholders would you add to your account at each of these price points?”  The result was 3X more stakeholders if it’s free than if it’s $2.  That told us that any amount of money, even if it is perceived as “worth it”, is too much friction.  Our goal is to enable everyone who has a stake to participate in the development process (and, of course, to run a business in the process).  Ultimately, in balancing the goals of enabling everyone to participate and running a business, we concluded that “free” is the right answer.

As a result, any VS Online  account will be able to have an unlimited number of “Stakeholder” users with access to the functionality listed above, at no charge.

Access to the Test Hub

Another point of friction that emerged in the transition was access to the Test hub.  During the Preview, all users had access to the Test hub but, at the end of the early adopter program, the only way to get access to the Test hub was by purchasing Visual Studio Test Professional with MSDN (or one of the other products that include it, like VS Premium or VS Ultimate).

We got ample feedback that there were a class of users who really only need access to the web based Test functionality and don’t need all that’s in VS Test Professional.

Because of this, we’ve decided to include access to all of the Test hub functionality in the Visual Studio Online Advanced plan.

Timing

I’m letting you know now so that, if you are currently planning your future, you know what is coming.  I’m always loathe to get too specific about dates in the future because, as we all know, stuff happens.  However, we are working hard to implement these licensing changes now and my expectation is that we’ve got about 2 sprints of work to do to get it all finished.  That would put the effective date somewhere in the neighborhood of mid-August.  I’ll update you with more certainty as the date gets a little closer.

What about Team Foundation Server?

In general, our goal is to keep the licensing for VS Online and Team Foundation Server as “parallel” as we can – to limit how confusing it could be.  As a result, we will be evolving the current “Work Item Web Access” TFS CAL exemption (currently known as “Limited” users in TFS) to match the “Stakeholder” capabilities.  That will result in significantly more functionality available to TFS users without CALs.  My hope is to get that change made for Team Foundation Server 2013 Update 4.  It’s too early yet to be sure that’s going to be possible but I’m hopeful.  We do not, currently, plan to provide an alternate license for the Test Hub functionality in TFS, though it’s certainly something we’re looking at and may have a solution in a future TFS version.

Conclusion

As I said, it’s a journey and we’ll keep listening.  It was interesting to me to watch the phenomenon of the transition from Preview to GA.  Despite announcing the planned pricing many months in advance, the feedback didn’t get really intense until, literally, the week before the end of the early adopter period when everyone had to finish choosing licenses.

One of the things that I’m proud of is that we were able to absorb that feedback, create a plan, review it with enough people, create an engineering plan and (assuming our timelines hold), deliver it in about 3 monthsIn years past that kind of change would take a year or two.

Hopefully you’ll find this change valuable.  We’ll keep listening to feedback and tuning our offering to create the best, most friction-free solution that we can.

Thanks,

Brian

July 7, 2014: TFS Adoption at Microsoft – July 2014 by Brian Harry

Years ago, I used to do monthly updates on TFS adoption at Microsoft.  Eventually, the numbers got so astronomical that it just seemed silly so I stopped doing them.  It’s been long enough and there’s some changes happening that I figured it was worth updating you all on where we are.

First of all, adoption has continued to grow steadily year over year.  We’ve continued to onboard more teams and to deepen the feature set teams are using.  Any major change in the ALM solution of an organization of our size and complexity is journey.

Let’s start with some stats:

As of today, we have 68 TFS “instances”.  Instance sizes vary from modest hardware up to very large scaled out hardware for the larger teams.  We have over 60K monthly active users and that number is still growing rapidly.  Growth varies month to month and the growth below seems unusually high (over 10%).  I grabbed the latest data I could get my hands on – and that happened to be from April.  The numbers are really staggeringly large.

Current 30 day growth
Unique users 62,553 7,256
TPCs 788 46
Projects 15,581 187
Work items 42,088,748 5,572,355
Source files 320,224,466 11,959,935
Builds/month 568,190 109,764
Test cases 9,483,760 1,172,495

In addition we’ve started to make progress recently with Windows and Office – two of the Microsoft teams with the oldest and most entrenched engineering systems.  They’ve both used TFS in the past for work planning but recently Windows has also adopted TFS for all work management (including bugs) and Office is planning a move.  We’re also working with them on plans to move their source code over.

In the first couple of years of adoption of TFS at Microsoft, I remember a lot of fire drills.  Bringing on so many people and so much data with such mission critical needs really pushed the system and we spent a lot of time chasing down performance (and occasionally availability) problems.  These days things run pretty smoothly.  The system is scaled out enough and the code, and our dev processes have been tuned enough, that for the most part, the system just works.  We upgrade it pretty regularly (a couple of times a year for the breadth of the service, as often as every 3 weeks for our own instances).

As we close in on completing the first leg of our journeygetting all teams at Microsoft onto TFS, we are now beginning the second.  A few months ago, The TFS team and a few engineering systems teams working closely with them moved all of their assets into VS Online – code, work items, builds, etc.  This is a big step and, I think, foreshadows the future for the entire company.  At this point it’s only a few hundred people accessing it but it’s already the largest and most active account on VS Online and it will continue to grow.

It was a big decision for us – and we went through a lot of the same anxieties I hear from anyone wanting to adopt a cloud solution for a mission critical need.  Will be intellectual property be safe?  What happens when the service goes down?  Will I lose any data?  Will performance be good?  Etc.  Etc.  At the same time, it was important to us to live the life that we are suggesting our customers live – taking the same risks and working to ensure that all of those risks are mitigated.

The benefits of moving are already visible.  I’ve had countless people remark to me how much they’ve enjoyed having access to their work – work items, build status, code reviews, etc from any device, anywhere.  No messing with remote desktop or any other connectivity technology.  As part of this, we also bound the account to the Microsoft Active Directory tenant so we can log in using the same corporate credentials as we do for everything else.  Combining this with a move to Office 365/SharePoint Online for our other collaboration workflows has created for us a fantastic mobile, cloud experience.

I’ll see about starting to post some statistics on our move to the cloud.  As, I say, at this point, it’s a few hundred people and mostly just the TFS codebase – which is pretty large at this point.  Over time that will grow but I expect it will be slow – getting larger year over year into a distant future when all of Microsoft has moved to the cloud for our engineering system tools.

I know I have to say this because people will ask.  No, we are not abandoning on-prem TFS.  The vast majority of our customers still use it, the overwhelming majority of our internal teams still use it (the few hundred people using VS Online is still rounding error on the more than 60K people using TFS on premises).  We continue to share a codebase between VS Online and TFS and the vast majority of the work we do accrues to both scenarios – and that will continue to be the case.  TFS is here to stay and we’ll keep using it ourselves for a very long time.  At the same time VS Online is here to stay too and our use of it will grow rapidly in the coming years.  It will be a big milestone when the first big product engineering team not associated with building VS Online/TFS moves over to VSO for all of their core engineering system needs – I’ll be sure to let you know when that happens.

Brian

DevOps Journey

Sept 2, 2015DevOps – Enabling DevOps on the Microsoft Stack by Michael Learned a Visual Studio ALM Ranger currently focused on DevOps and Microsoft Azure

There’s a lot of buzz around DevOps right now. An organization’s custom software is critical to providing rich experiences and useful data to its business users. Rapidly delivering quality software is no longer an option, it’s a requirement. Gone are the days of lengthy planning sessions and development iterations.  Cloud platforms such as Microsoft Azure have removed traditional bottlenecks and helped commoditize infrastructure. Software reigns in every business as the key differentiator and factor in business outcomes. No organization, developer or IT worker can or should avoid the DevOps movement.

DevOps is defined from numerous points of view, but most often refers to removing both cultural and technology barriers between development and operations teams so software can move into production as efficiently as possible. Once software is running in production you need to ensure you can capture rich usage data and feed that data back into development teams and decision makers.

There are many technologies and tools that can help with DevOps. These tools and processes support rapid release cycles and data collection on production applications. On the Microsoft stack, tools such as Release Management to drive rapid, predictable releases and Application Insights help capture rich app usage data. This article will explore and shed some light on critical tools and techniques used in DevOps, as well as the various aspects of DevOps (as shown in Figure 1).

IC826498[1]
Figure 1 The Various Aspects of DevOps

The Role of DevOps

Most organizations want to improve their DevOps story in the following areas:

  • Automated release pipelines in which you can reliably test and release on much shorter cycles.
  • Once the application is running in production, you need the ability to respond quickly to change requests and defects.
  • You must capture telemetry and usage data from running production applications and leverage that for data-driven decision making versus “crystal ball” decision making.

Are there silos in your organization blocking those aspects of DevOps? These silos exist in many forms, such as differing tools, scripting languages, politics and departmental boundaries. They intend to provide separation of duties and to keep security controls and stability in production.

Despite their intentions, these silos can sometimes impede an organization from achieving many DevOps goals, such as speedy, reliable releases and handling and responding to production defects. In many cases, this silo structure generates an alarming amount of waste. Developers and operations workers have traditionally worked on different teams with different goals. Those teams spend cycles fixing issues caused by these barriers and less time focused on driving the business.

Corporate decision makers need to take a fresh look at the various boundaries to evaluate the true ROI or benefits these silos intend to provide. It’s becoming clear the more you can remove those barriers, the easier it will be to implement DevOps solutions and reduce waste.

It’s a challenge to maintain proper security, controls, compliance and so on while balancing agility needs. Enterprise security teams must ensure data is kept secure and private. Security is arguably as important as anything else an organization does.

However, there’s an associated cost for every security boundary you build. If security boundaries are causing your teams waste and friction, those boundaries deserve a fresh look to ensure they generate ROI. You can be the most secure organization in the world, but if you can’t release software on time you’ll have a competitive disadvantage.

Balancing these priorities isn’t a new challenge, but it’s time for a fresh and honest look at the various processes and silos your organization has built. Teams should all be focused on business value over individual goals.

The Release Pipeline

The release pipeline is where your code is born with version control, then travels through various environments and is eventually released to production. Along the way, you perform automated build and testing. The pipeline should be in a state where moving changes to production is transparent, repeatable, reliable and fast. This will no doubt involve automation. The release pipeline might also include provisioning the application host environment.

Your release pipeline might not be optimized if these factors are present:

  • Tool and process mismatches, whereby you have different tools and processes in place per environment. (For example, the dev teams deploy with one tool and ops deploy with another.)
  • Manual steps can introduce error, so avoid them.
  • Re-building just to deploy to the next environment.
  • You lack traceability and have issues understanding which versions have been released.
  • Release cycles are lengthy, even for hotfixes.

Provisioning

Provisioning containers is sometimes considered an optional part of a release pipeline. A classic on-premises scenario often exists in which an environment is already running to host a Web application. The IIS Web server or other host and back-end SQL Server have been running through numerous iterations. Rapid releases into these environments deploy only the application code and subsequent SQL schema and data changes needed to move the appropriate update levels. In this case, you’re not provisioning fresh infrastructure (both IIS and SQL) to host the application. You’re using a release pipeline that disregards provisioning and focuses only on the application code itself.

There are other scenarios in which you might want to change various container configuration settings. You might need to tweak some app pool settings in IIS. You could implement that as part of the release pipeline or handle it manually. Then you may opt to track those changes in some type of versioning system with an Infrastructure-as-Code (IaC) strategy.

There are several other scenarios in which you would want to provision as part of an automated release pipeline. For example, early in development cycles, you might wish to tear down and rebuild new SQL databases for each release to fully and automatically test the environment.

Cloud computing platforms such as Azure let you pay only for what you need. Using automated setup and tear down can be cost-effective. By automating provisioning and environmental changes, you can avoid error and control the entire application environment. Scenarios like these make it compelling to include provisioning as part of a holistic release management system.

There are many options and techniques for including provisioning as part of your release pipeline. These will differ based on the types of applications you’re hosting and where you host them. One example is hosting a classic ASP.NET Web application versus an Azure Web app or some other Platform-as-a-Service (PaaS) application such as Azure Cloud Services. The containers for those applications are different and require different tooling techniques to support the provisioning steps.

Infrastructure as Code

One popular provisioning technique is IaC. An application is an executable that can be compiled code, scripts and so on combined with an operational environment. You’ll find this environment yields many benefits.

Microsoft recently had Forrester Research Inc. conduct a research study on the impact of IaC (see bit.ly/1IiGRk1). The research showed IaC is a critical DevOp component. It also showed provisioning and configuration is a major point of friction for teams delivering software. You’ll need to leverage automation and IaC techniques if you intend to completely fulfill your DevOps goals.

One of the traditional operational challenges is automating the ability to provide appropriate environments in which to execute applications and services, and keeping those environments in known good states. Virtualization and other automation techniques are beneficial, but still have problems keeping nodes in sync and managing configuration drift. Operations and development teams continue to struggle with different toolsets, expertise and processes.

IaC is based on the premise that we should be able to describe, version, execute and test our infrastructure code via an automated release pipeline. For example, you can easily create a Windows virtual machine (VM) configured with IIS using a simple Windows PowerShell script. Operations should be able to use the same ALM tools to script, version and test the infrastructure.

Other benefits include being able to spin up and tear down known versions of your environments. You can avoid troublesome issues because of environmental differences between development and production. You can express the application environment-specific dependencies in code and carry them along in version control. In short, you can eliminate manual processes and ensure you’ve tested reliable automated environment containers for your applications. Development and operations can use common scripting languages and tools and achieve those efficiencies.

The application type and intended host location will dictate the tooling involved for executing your infrastructure code. There are several tools gaining popularity to support these techniques, including Desired State Configuration (DSC), Puppet, Chef and more. Each helps you achieve similar goals based on the scenario at hand.

The code piece of IaC could be one of several things. It could simply be Windows PowerShell scripts that provision resources. Again, the application types and hosting environment will dictate your choices here.

For Azure, you can use Cloud Deployment Projects that leverage Azure Resource Management APIs to create and manage Azure Resource Groups. This lets you describe your environments with JSON. Azure Resource Goups also let you manage group-related resources together, such as Web sites and SQL databases. With cloud deployment projects, you can store your provisioning requirements in version control and perform Azure provisioning as part of an automated release pipeline. Here are the sections that make up the basic structure of a provisioning template:

Figure 3 Separate Configuration Data Within a DCS Script
Configuration InstallWebSite
{
  Node $AllNodes.NodeName
  {
    WindowsFeature InstallIIS
    {
      Ensure = "Present"
      Name = "Web-Server"
    }
  }
}
InstallWebSite –ConfigurationData .\config.ps1
Where config.ps1 contains
$ConfigData = @{
  AllNodes = @(
  @{
    NodeName = “localhost”
  })
}

For more information on templates, go to bit.ly/1RQ3gvg, and for more on cloud deployment projects, check out bit.ly/1flDH3m.

The scripting languages and tooling are only part of the changes needed to successfully adopt an IaC strategy. Development and operations teams must work together to integrate their work streams toward a common set of goals. This can be challenging because historically operations teams have focused on keeping environments stable and development teams are more focused on introducing new features into those environments. Sophisticated technologies are emerging, but the foundation of a successful IaC implementation will depend on the ability of the operations and development teams to effectively collaborate.

Release Orchestration

Release Management is a technology in the Visual Studio ALM stack. It’s really more of a concept whereby you can orchestrate the various objects and tasks that encompass a software release.  A few of these artifacts include the payload or package produced by a build system, the automated testing that happens as part of a release pipeline, approval workflows, notifications and security governance to control environments closer to production.

You can use technologies such as DSC, Windows PowerShell scripts, Azure Resource Manager, Chef, and so on to manage environment state and install software and dependencies into running environments. In terms of tooling provided by Visual Studio ALM, think of Release Management as the service that wraps around whatever technologies and tools you need to execute the deployments. Release Management might leverage simple command-line or Windows PowerShell scripts, use DSC, or even execute your own custom tools. You should aim to use the simplest solution possible to execute your releases.

It’s also a good practice to rely on Windows PowerShell because it’s ubiquitous. For example, you can use Windows PowerShell scripts as part of a release pipeline to deploy Azure Cloud Services. There are a lot of out-of-the-box tools with Release Management (see Figure 2), but you also have the flexibility to create your own.

IC826496[1]
Figure 2 Tools and Options Available for Release Management

Release Management can help you elegantly create an automated release pipeline and produce reliable automated application releases. You can also opt to include provisioning.  The Release Management tooling with Visual Studio and Team Foundation Server can help you orchestrate these artifacts into the overall release transaction. It also provides rich dashboard-style views into your current and historical states. There’s also rich integration with Team Foundation Server and Visual Studio Online.

Where Does DSC Fit In?

There has been a lot of press about DSC lately. DSC is not, however, some all-encompassing tool that can handle everything. You’ll use DSC as one of the tools in your DevOps structure, not the only tool.

You can use DSC in pull or push modes. Then you can use the “make it so” phase to control the server state. Controlling that state can be as simple as ensuring a file or directory exists, or something more complex such as modifying the registry, stopping or starting services, or running scripts to deploy an application. You can do this repeatedly without error. You can also define your own DSC resources or leverage a large number of built-in resources.

DSC is implemented as a Local Configuration Manager (LCM), running on a target node, accepting a Management Object File (MOF) configuration file and using it to apply configuration to the node itself.  So there’s no hard-coupled tool. You don’t even have to use Windows PowerShell to produce the MOF.

To start using DSC, simply produce the MOF file. That will eventually describe the various resources to execute, which end up written mostly in Windows PowerShell. One of the big advantages of DSC on Windows Server-based systems is the LCM is native to the OS, giving you the concept of a built-in agent. There are also scenarios for leveraging DSC with Linux. See Figure 3 for an example of separating the configuration data for the DSC script.

Figure 3 Separate Configuration Data Within a DCS Script
Configuration InstallWebSite
{
  Node $AllNodes.NodeName
  {
    WindowsFeature InstallIIS
    {
      Ensure = "Present"
      Name = "Web-Server"
    }
  }
}
InstallWebSite –ConfigurationData .\config.ps1
Where config.ps1 contains
$ConfigData = @{
  AllNodes = @(
  @{
    NodeName = “localhost”
  })
}

DSC can be an important piece of a release pipeline if it has the resources available to help support your deployment. With on-premises or IaaS applications, DSC is an excellent choice to help control the environment configuration and support your deployment scenarios.

Still DSC isn’t meant to be used for every scenario. To put this in context, if you’re deploying Azure PaaS resources, it’s recommended you use Azure Resource Manager to get the VMs started and the networking configured. This isn’t something DSC is designed for. Once the VMs are running, you can use DSC to get the local configuration the way you want it and ensure the configuration elements you care about don’t change.

 Monitor with Application Insights

Once an application and environment is in production, it’s critical to collect data and monitor the operational health. You also need to understand usage patterns. This data is critical to managing a healthy service. Collecting and monitoring this data is an important piece of DevOps. For example, Microsoft has used production data to improve the Visual Studio Online teams. This rich data helps the Visual Studio Online teams ensure service availability, demonstrates to them how developers are using the service and informs decisions on feature prioritization. You can read more about the Microsoft DevOps journey at bit.ly/1AzDL9V.

Visual Studio Application Insights adds an SDK to your appli­cation and sends telemetry to the Azure Portal. It supports many different platforms and languages, including iOS, Android, ASP.NET and Java. You can capture performance data, application uptime and various usage analytics. You can show this rich data to decision makers and stakeholders to help make better decisions, detect issues and continuously improve your applications. You can read more about Application Insights at bit.ly/1IbRnrF.

Figure 4 and Figure 5 show examples of the types of data collected by Application Insights.

IC826495[1]Figure 4 Application Insights Can Provide Data on Users and Page Views

IC826494[1]Figure 5 Application Insights Also Monitors Web Tests

Wrapping Up

DevOps helps teams drive toward continuous delivery and leverage data from running applications to help make better-informed decisions. This article has examined various prominent Microsoft technologies you can use to achieve these goals:

  • Release Management lets you use any technology to drive deployments. These technologies include simple Windows PowerShell scripts, DSC configurations or even third-party tools such as Puppet.
  • Infrastructure-as-Code strategies help development and operations teams efficiently work together.
  • Visual Studio Application Insights gives you a mechanism to capture rich data from running applications, to help stakeholders understand application health and examine usage patterns to drive informed decision making.

These technologies can help you greatly improve your DevOps maturity. You’ll also need to blend an appropriate set of technologies while working to overcome cultural barriers.

Additional Resources

  • To learn more about Infrastructure as Code, listen to Brian Keller’s discussion on Channel 9 at bit.ly/1IiNqmr.
  • To learn more about Azure Resource Group Deployment Projects, check out bit.ly/1flDH3m.
  • To learn more about TFS Planning, Disaster Avoidance and Recovery, and TFS on Azure IaaS, check out the guide at vsarplanningguide.codeplex.com.
  • To learn more about Config as Code for DevOps and ALM practitioners, check out vsardevops.codeplex.com.

Micheal Learned is a Visual Studio ALM Ranger currently focused on DevOps and Microsoft Azure. He has worked on numerous software projects inside and outside of Microsoft for more than 15 years. He lives in central Illinois and devotes his free time to helping the community, as well as relaxing with his daughter, two sons and wife. Reach him on Twitter at twitter.com/mlhoop.

Thanks to the following technical experts for reviewing this article: Donovan Brown (Microsoft), Wouter de Kort (Independent Developer), Marcus Fernandez (Microsoft), Richard Hundhausen (Accentient), Willy-Peter Schaub (Microsoft) and Giulio Vian (Independent Developer)

PC Market Trends

A comment from IDC brought ahead: “Competition from 2-in-1 devices and phones remains an issue“. In the notes to the IDC press release it is mentioned as well that “tablets with detachable keyboards [i.e. 2-in-1 devices] running either Windows or Android are not included in the PC category” by IDC. This approach to the PC category is one of the reasons why the decline of the PC market in Q2 2015 is 11.8% according to IDC, while it is 9.5% according to Gartner.

But most importantly: the PC market has continuously been shrinking for the last 3 years as is shown by the chart below:
Infographic: PC Market Plunge Is Picking Up Pace | Statista

You will find more statistics at Statista
July 14, 2015: After a brief respite throughout last year, the global PC market returned to its pre-2014 slump in the first half of 2015. According to Gartner’s latest estimates, worldwide PC shipments amounted to 68.4 million in the past three months – down 9.5 percent from last year’s June quarter.

The struggling PC industry had received a boost when Microsoft ended official Windows XP support in April 2014, prompting a replacement cycle that has now apparently faded. Despite the sobering results, analysts remain cautiously optimistic about the industry’s mid-term outlook. They argue that the recent decline is no sign of structural weakness but partly a consequence of last year’s unusually positive results and partly an effect of inventory control ahead of the Windows 10 launch scheduled for later this year.

[Gartner’s latest estimates:]
July 9, 2015: Gartner Says Worldwide PC Shipments Declined 9.5 Percent in Second Quarter of 2015

PC Industry Faces Slowdown as Industry Anticipates the Launch of Windows 10

STAMFORD, Conn., July 9, 2015 — Worldwide PC shipments totaled 68.4 million units in the second quarter of 2015, a 9.5 percent decline from the second quarter of 2014, according to preliminary results by Gartner, Inc. This was the steepest PC shipment decline since the third quarter of 2013. PC shipments are projected to decline 4.4 percent in 2015.

There were many contributors to the decline of PC shipments in the second quarter of 2015, and Gartner analysts highlighted three of the major reasons for the drop in shipments. Analysts emphasized that these inhibitors are temporary events, and they are not changing the PC market’s structure. Therefore, while the PC industry is going through a decline, the market is expected to go back to slow and steady growth in 2016.

The price hike of PCs became more apparent in some regions due to a sharp appreciation of the U.S. dollar against local currencies,” Mikako Kitagawa, principal analyst at Gartner. “The price hike could hinder PC demand in these regions. Secondly, the worldwide PC market experienced unusually positive desk-based growth last year due to the end of Windows XP support. After the XP impact was phased out, there have not been any major growth drivers to stimulate a PC refresh. Lastly, the Windows 10 launch scheduled for 3Q15 has created self-regulated inventory control. PC vendors and the channels tried clearing inventory as much as possible before the Windows 10 launch.”

Lenovo maintained the top position in worldwide PC shipments in the second quarter of 2015 (see Table 1), but the company suffered a year-on-year shipment decline for the first time since the second quarter of 2013. EMEA, Latin America and Japan were tough regions for Lenovo, as the company experienced double-digit shipment declines. HP also experienced a shipment decline after five consecutive quarters of PC shipment growth. HP showed a steep decline in EMEA, which was potentially due to the currency impact. The company was also impacted by tight inventory controls in the consumer market before the Windows 10 launch.

Table 1
Preliminary Worldwide PC Vendor Unit Shipment Estimates for 2Q15 (Thousands of Units)

Gartner - Preliminary Worldwide PC Vendor Unit Shipment Estimates for 2Q15 -9-July-2015Notes: Data includes desk-based PCs, notebook PCs and ultramobile premium (see “Market Definitions and Methodology: Consumer Devices”). All data is estimated based on a preliminary study. Final estimates will be subject to change. The statistics are based on shipments selling into channels.
Numbers may not add up to totals shown because of rounding.
Source: Gartner (July 2015)

For the second consecutive quarter, Dell experienced a decline in PC shipments. Dell’s decline was relatively moderate in EMEA compared with Lenovo and HP. Analysts said this could be partly attributed to Dell’s lower presence in the consumer market, which created less impact to Dell from the Windows 10 prelaunch inventory control.

In the U.S., PC shipments totaled 15.1 million units in the second quarter of 2015, a 5.8 percent decline from the second quarter of 2014 (see Table 2). The decline was led by a double-digit decline of desk-based shipments, which offset single-digit growth of mobile PCs. Based on preliminary results, the desk-based PC shipment decline was the steepest since 2009 when the market was hit by the economic crisis.

“The weakness of desk-based PC shipments in the second quarter of 2015 is partly due to relatively large shipments in the second quarter last year when the market was driven by the end of XP support,” Ms. Kitagawa said. “Despite inventory controls for the Windows 10 launch, mobile PC shipments grew in the quarter, which resulted in five consecutive quarters of mobile PC growth in the U.S. Affordable thin/light notebooks are attracting more business buyers.”

HP maintained the top position for PC shipments in the U.S. in the second quarter of 2015 despite a 10.1 percent decline (see Table 2). Dell narrowed the gap with HP compared with a year ago. Lenovo was the only vendor showing year-over-year PC shipment growth among the top five vendors in the U.S.

Table 2
Preliminary U.S. PC Vendor Unit Shipment Estimates for 2Q15 (Thousands of Units)

Gartner - Preliminary U.S. PC Vendor Unit Shipment Estimates for 2Q15 -- 9-July-2015Notes: Data includes desk-based PCs, notebook PCs and ultramobile premium (see “Market Definitions and Methodology: Consumer Devices”). All data is estimated based on a preliminary study. Final estimates will be subject to change. The statistics are based on shipments selling into channels.
Numbers may not add up to totals shown because of rounding.
Source: Gartner (July 2015)
[The Ultramobile (Premium) category includes devices such as Microsoft’s Windows 8 Intel x86 products and Apple’s MacBook Air. Source]

PC shipments in EMEA totaled 18.6 million units in the second quarter of 2015, a 15.7 percent decline from the second quarter of 2014. In Europe, vendors spent most of the quarter trying to manage already high inventory levels. They tried clearing that inventory with promotions, having to absorb this with lower margins. In the third quarter of 2015, vendors should see better “sell-in” into the channel with new Windows 10-based devices.

Asia/Pacific PC shipments reached 24.2 million units in the second quarter of 2015, a 2.9 percent decline from the same period last year. Both desk-based and mobile PC shipments declined from the second quarter of 2014. PC shipments in China are estimated to have declined 4 percent in the quarter as demand for consumer PCs remained weak.

These results are preliminary. Final statistics will be available soon to clients of Gartner’s PC Quarterly Statistics Worldwide by Region program. This program offers a comprehensive and timely picture of the worldwide PC market, allowing product planning, distribution, marketing and sales organizations to keep abreast of key issues and their future implications around the globe.

See also
July 16, 2015, Forbes: Why Are IDC And Gartner’s PC Market Stats Different, And Does It Even Matter? by Scott McCutcheon

July 9, 2015PC Market Continues to Decline Ahead of Windows 10 Release, According to IDC

FRAMINGHAM, Mass.–(BUSINESS WIRE)–Worldwide PC shipments totaled 66.1 million units in the second quarter of 2015 (2Q15), according to the International Data Corporation (IDC) Worldwide Quarterly PC Tracker. This represented a year-on-year decline of -11.8%, about one percent below projections for the quarter.

The slow PC shipments were largely anticipated as a result of stronger year-ago shipments relating to end of support for windows XP as well as channels reducing inventory ahead of the release of Windows 10. In addition, weaker or changing exchange rates for foreign currencies have effectively increased PC prices in many markets, thereby reducing purchasing power and also complicating investment planning.

“Although the second quarter decline in PC shipments was significant, and slightly more than expected, the overall trend fits with expectations,” said Loren Loverde, Vice President, Worldwide PC Trackers & Forecasting. “We continue to expect low to mid-single digit declines in volume during the second half of the year with volume stabilizing in future years. We’re expecting the Windows 10 launch to go relatively well, though many users will opt for a free OS upgrade rather than buying a new PC. Competition from 2-in-1 devices and phones remains an issue, but the economic environment has had a larger impact lately, and that should stabilize or improve going forward.”

“The U.S. market was in line with forecasts, declining -3.3% from a year ago, after avoiding the global market declines over the past five quarters. Soft retail demand, short term weakness from inventory reductions, some cannibalization from competing devices, and low demand for large commercial refreshes are among the factors that reduced PC shipments,” said Rajani Singh, Senior Research Analyst,Personal Computers. “Nevertheless, moving forward, we expect a healthy second half as inventory and purchase decisions pick up following the launch of Windows 10. Emerging product categories will remain a bright spot as attention shifts to convertibles and Chromebooks in the commercial as well as consumer segments.”

Regional Highlights

United States – With shipments totaling nearly 16.4 million PCs in 2Q15, the U.S. market shrank -3.3% from the same quarter a year ago. Although most vendors saw volume decline, gains from Apple and Lenovo helped limit the overall decline. A tough year-on-year comparison contributed to a decline in desktop shipments, while portable PCs shipments continued to grow.

Europe, Middle East, and Africa (EMEA) – In EMEA, weakening demand and high inventory levels inhibited sell-in, driving results below expectations. Vendors continued to clean stock ahead of the back-to-school season and Windows 10 launch. Moreover, unfavorable exchange rates led to increasing prices and continued to affect demand both in the business and consumer spaces. The commercial market also faced a difficult year-on-year comparison with 2Q14, when the end of support for Windows XP boosted sales.

Asia/Pacific (excluding Japan) – China was impacted by excess commercial notebook inventory from earlier quarters as the anti-corruption campaign continues to suppress commercial spending. Currency fluctuation also remained a key factor in many countries in the region, contributing to lower demand. Nevertheless, volume was close to expectations, reflecting a slight decline in growth from prior quarters.

Japan – continued to see low growth as the weak Yen contributed to a difficult market. The Japanese PC market faced a particularly difficult comparison to year ago shipments that were boosted by the end of support for Windows XP and also changes to Japan’s tax code. As the market responds to these shifts and managing inventory, Yamada Denki (one of Japan’s major electronics stores) announced the closure of unprofitable stores in both urban and rural markets.

Vendor Highlights

Lenovo held onto the top position with shipments of 13.4 million units. Volume was up 1% from the prior quarter, but down -7.5% from the prior year. The vendor continued to aggressively court expansion outside of Asia/Pacific, leading to share gains in the U.S. and EMEA.

HP remained the number 2 vendor, but saw shipments decline -10.4% from a year ago. Slowing business demand and inventory control of entry notebooks contributed to the dip. While most of the slowdown was from outside of the U.S., the vendor also saw its U.S. volume contract nearly -7%.

Dell came in at number 3, shipping more than 9.5 million units and registering a year-over-year decline of -8.7%. Strong results in 2Q14 contributed to a poor year-over-year comparison. Stronger performance in Asia/Pacific and EMEA were offset by slower growth in the U.S.

Apple continued to outperform other vendors, with growth of 16.1% globally. The vendor has largely avoided the price competition affecting other players and may be benefitting from some of the uncertainty around the launch of Windows 10, along with refreshed products like the 12-inch MacBook and a relative concentration of shipments in the U.S.

Acer continued to see growth in Chromebooks with more models introduced. However, the vendor also struggled with the larger pullback in the market, particularly in EMEA where it had seen a rebound in mid-2014. The vendor ended 2Q14 with a volume of 4.33 million, a significant decline from the prior quarter and year ago volumes.

ASUS was statistically tied* with Acer for the number 5 position. ASUS has also been affected by currency factors and inventory management, but strong growth in the U.S. boosted overall results.

IDC - Top 5 Vendors, Worldwide PC Shipments, Market Share, and Year-Over-Year Growth for the Second Quarter of 2015 -- 9-July-2015Source: IDC Worldwide Quarterly PC Tracker, July 9, 2015
* Note: IDC declares a statistical tie in the worldwide PC market when there is less than one tenth of one percent difference in the revenue share of two or more vendors.

In addition to the table above, an interactive graphic showing worldwide PC market share for the top 5 vendors over the previous five quarters is available here. The chart is intended for public use in online news articles and social media. Instructions on how to embed this graphic can be found by viewing this press release on IDC.com.

IDC - Top 5 Vendors, United States PC Shipments, Market Share, and Year-Over-Year Growth, Second Quarter of 2015 -- 9-July-2015Source: IDC Worldwide Quarterly PC Tracker, July 9, 2015

Table Notes:

  • Some IDC estimates prior to financial earnings reports.
  • Shipments include shipments to distribution channels or end users. OEM sales are counted under the vendor/brand under which they are sold.
  • PCs include Desktops, Portables, Ultraslim Notebooks, Chromebooks, and Workstations and do not include handhelds, x86 Servers and Tablets (i.e. iPad, or Tablets with detachable keyboards running either Windows or Android). Data for all vendors are reported for calendar periods.

IDC’s Worldwide Quarterly PC Tracker gathers PC market data in over 80 countries by vendor, form factor, brand, processor brand and speed, sales channel and user segment. The research includes historical and forecast trend analysis as well as price band and installed base data.

Tablet and smartphone market trends

September update: Qualcomm’s smartphone AP revenues declined 17% year-over-year in the second quarter of 2015, Strategy Analytics estimated. Qualcomm maintained its smartphone AP market share leadership with 45% revenue share, followed by Apple with 19% revenue share and MediaTek with 18% revenue share. For the rest 18%: After a difficult 2014, Samsung LSI continued to recover and more than doubled its smartphone AP shipments in the second quarter of 2015 compared to the same period last year. Samsung LSI capitalised on its Galaxy S6 design-win in Q2 2015. In addition the company featured in multiple mid-range smartphones from Samsung Mobile. Full report: Smartphone Apps Processor Market Share Q2 2015: Samsung LSI Maintains Momentum
… The global tablet AP market declined 28% year-over-year to reach US$679 million in the second quarter of 2015, according to Strategy Analytics. Apple, Intel, Qualcomm, MediaTek and Samsung LSI captured the top-five revenue share rankings in the market during the quarter. Apple led the tablet AP market with 27% revenue share, followed by Intel with 18% revenue share. Qualcomm ranked number three, narrowly behind IntelGT400150821[1]Full report: Tablet Apps Processor Market Share Q2 2015: Apple and Intel Maintain Top Two Spots

Digitimes Research saw global tablet shipments fall to 45.76 million units in second-quarter 2015, showing a 10% decrease on quarter and representing more than a 15% decrease on year. Full report: Global tablet market – 2Q 2015 End of September update 

Investors.com comments on tablet and smartphone market trends — Q2’2015:Investors.com comments on tablet and smartphone market trends -- Q2'20151. Apple, Samsung lose ground in tablet market — LG and Huawei gain
2. Apple, Huawei [and Xiaomi] buck slowing smartphone sales trend

As the commenting articles by Investors.com are based on press releases of 2 market research companies I will give the web reference here for those press releases themselves, as well as 3 other press releases not commented on by Investors.com (if there are trend indications in the press releases themselves I will copy them alongside the web reference):

  1. July 29, 2015Worldwide Tablet Market Continues to Decline; Vendor Landscape is Evolving, According to IDCIDC on the Top 5 WW Tablet Vendors between 2014Q2 and 2015Q2“Longer life cycles, increased competition from other categories such as larger smartphones, combined with the fact that end users can install the latest operating systems on their older tablets has stifled the initial enthusiasm for these devices in the consumer market,” said Jitesh Ubrani, Senior Research Analyst, Worldwide Mobile Device Trackers. “But with newer form factors like 2-in-1s, and added productivity-enabling features like those highlighted in iOS9, vendors should be able to bring new vitality to a market that has lost its momentum.”
  2. July 30, 2015Huawei Becomes World’s 3rd Largest Mobile Phone Vendor in Q2 2015 [says Strategy Analytics]
    Strategy Analytics - Huawei becomes world's 3d largest phone vendor in 2015Q2 -- 30-July-2015

    • Woody Oh, Director at Strategy Analytics, said, “… Smartphones accounted for 8 in 10 of total mobile phone shipments during the quarter. The 2 percent growth rate of the overall mobile phone market is the industry’s weakest performance for two years, due to slowing demand for handsets in China, Europe and the US.”
    • Neil Mawston, Executive Director at Strategy Analytics, added, “… Samsung has stabilized volumes in the high-end, but its lower-tier mobile phones continue to face intense competition from rivals such as Huawei in Asia. … Apple outperformed as consumers in China and elsewhere upgraded to bigger-screen iPhone 6 and 6 Plus models.”
    • Ken Hyers, Director at Strategy Analytics, added, “… Huawei is rising fast in all regions of the world, particularly China where its 4G models, such as the Mate7, are proving wildly popular. Huawei has finally overtaken Microsoft to become the world’s third largest mobile phone vendor for the first time ever.”
    • Neil Mawston, Executive Director at Strategy Analytics, added, “Microsoft shipped 27.8 million mobile phones and captured 6 percent marketshare worldwide in the second quarter of 2015. Microsoft’s 6 percent global mobile phone marketshare is sitting near an all-time low. Microsoft continues to lose ground in feature phones, while its Lumia smartphone portfolio is in a holding pattern awaiting the launch of new Windows 10 models later this year. Xiaomi shipped 19.8 million mobile phones and captured 5 percent marketshare worldwide in Q2 2015. Xiaomi remains a major player in the China mobile phone market, but its local and international growth is slowing and Xiaomi is facing intense competition from Huawei, Meizu and others. As a result, Xiaomi may struggle to hold on to its top-five global mobile phone ranking in the coming quarters.”
  3. June 17, 2015Business smartphones shipments in Q1 up 26% from last year, now 27% of total smartphone market [says Strategy Analytics]
    Strategy Analytics - 1Q15 Worlwide Business Smartphone Shipments -- 17-June-2015Android was the most dominant OS in terms of business smartphone shipments in Q1, accounting for nearly 60% of all business smartphones (corporate- and personal-liable). It was also the dominant BYOD device; 68% of personal-liable shipments in Q1 were Android. Apple iOS accounted for only 27% of BYOD shipments in Q1, but was the dominant platform in terms of corporate-liable smartphones, with 48% of Q1 CL shipments. The difference in Android/iOS shipments between the CL and IL categories reflects the continuing corporate perception that iPhones are “safer” than Android-based devices.

    • Shipments of personal-liable smartphones (i.e. “bring your own device,” or BYOD, phones) drove market growth in Q1
    • Strategy analytics defines personal-liable devices as devices purchased by the end-user and expensed back to the company or organization, or devices purchased outright by individual users but used primarily for business purposes linking to corporate applications and backend systems.
    • While personal liable devices dominate worldwide business smartphone shipments, some regions are more resistant to the BYOD trend than others. Such regions include Western Europe and Central Europe, where corporate-liable devices are the dominant types of business smartphones. In Western Europe in Q1, 61% of the 10 million business smart phones were corporate-liable. Central and Eastern Europe had a slightly higher rate of BYOD devices shipped in Q1 — 41% — but the majority of smartphones shipped in this regions was also corporate-liable. This a sharp contrast to North America, where three-quarters of business smartphone shipments are personal-liable. The trend in Western and Eastern Europe reflects the more corporate-centric approach businesses take to mobility in these regions.
  4. July 29, 2015Mobile Broadband Tablet Subscriptions to Double to 200 Million by 2021, says Strategy Analytics Strategy Analytics - Mobile Broadband Tablet Subscription forecasted till 2021 - 29-July-2015

    • Strategy Analytics forecasts global mobile data subscriptions on tablets will more than double from 2015 to 2021, reaching over 200 million
    • Around the globe, over 100 million wireless connections on cellular enabled tablets will be added through 2021. By 2021 tablets will only account for 2 percent of total mobile subscriptions, a 2.7 percent population penetration rate.
  5. July 29, 2015Intel Maintains Top Spot in Non-Apple Tablet Apps Processors in Q1 2015 says Strategy Analytics
    Strategy Analytics - 1Q15 Tablet AP Revenue Share $733M -- 29-July-2015
    ⇒The global tablet applications processor (AP) market declined -6 percent year-over-year to reach $733 million in Q1 2015

    • According to Sravan Kundojjala, Associate Director, “Intel maintained its top spot in the non-Apple tablet AP market in unit terms in Q1 2015. Strategy Analytics estimate Android-based tablets accounted for over 70 percent of Intel’s total tablet AP shipments in Q1 2015. We expect Intel’s Atom X3 cellular tablet chip product line to help Intel maintain its momentum in the tablet AP market.”
    • Stuart Robinson, Executive Director of the Strategy Analytics Handset Component Technologies (HCT) service added, “Strategy Analytics estimates that baseband-integrated tablet AP shipments accounted for over one-fourth of total tablet AP shipments in Q1 2015, helped by a strong push from Qualcomm, MediaTek and Spreadtrum. We expect continued momentum for integrated APs as IntelRockchip and others join the bandwagon.”
  6. July 30, 2015Windows Tablet Shipments Nearly Double in Q2’15, says Strategy Analytics
    ⇒Global Tablet Shipments and Market Share in Q2 2015 (preliminary)
    Strategy Analytics - Global Tablet Shipments and Market Share in Q2 2015 (preliminary) -- 30-July-2015

    • Windows-branded Tablets comprised 9 percent of shipments in Q2 2015, up 4 points from Q2 2014
    • Android-branded Tablet shipment market share was flat at 70 percent in Q2 2015
    • Apple continued its slide in market share down to an all-time low of 21 percent in Q2 2015, 4 points lower than Q2 2014
    • Vendors with strong 3G and LTE connected Tablet strategies such as Huawei, LG, and TCL-Alcatel gained market share as leaders like Apple, Samsung, and the White Box community lost ground
Tablet & Touchscreen Strategies Senior Analyst Eric Smith added, “Windows share continues to improve as more models become available from traditional PC vendors, White Label vendors, and Microsoft itself though a healthy Surface lineup and distribution expansion. The key going forward will be if the coming wave of 2-in-1 Detachable Tablets is a hit with consumers or if they go the way of the Netbook—we remain cautiously optimistic on this point.”
Tablet & Touchscreen Strategies Service Director Peter King said, “Apple’s fortunes will turn around soon as it will launch the 12.9-inch iPad Pro as well as an iPad mini 4 in Q4 2015. New features in iOS 9, which are exclusive to iPad such as multi-tasking and a more convenient soft keyboard, will also help compel upgrades by owners of older iPad models. Meanwhile, Huawei and LG have posted fantastic growth primarily due to well-executed 3G and LTE connected Tablet strategies.”

Then I will add 2 additional information pieces from  Strategy Analytics:

Oct 8, 2014: Replacement Demand to Boost PC Sales in 2015, says Strategy Analytics

Having experienced negative growth since 2012, global PC sales are expected to rise 5 percent in 2015 driven by replacement of an ageing installed base according to Strategy Analytics’ Connected Home Devices (CHD) service report, “Computers in the Post-PC Era: Growth Opportunities and Strategies.”

Click here for the report:

http://www.strategyanalytics.com/default.aspx?mod=reportabstractviewer&a0=10146

  • PC sales will fall by 4 percent in 2014 before returning to modest growth in 2015 and beyond to support replacement demand.
  • Strategy Analytics’ consumer research of computing device usage in developed markets indicates that PCs remain essential computing devices despite healthy Tablet sales.
    • Frequent Tablet usage has grown by 22 percentage points from 2011 to Q4 2013 up to 32 percent of all households while frequent Mobile PC (excluding Tablets) usage has stayed steady through this period, as 63 percent of all households indicated they frequently used Mobile PCs.
    • Frequent usage of all PCs (including Mobile and Desktop PCs and excluding Tablets) remained above the 90 percent mark of all households, falling only 3 percentage points during this period.

Strategy Analytics - Global Computing Devices Installed Base 2009-2018 -- 8-Oct-2014Quotes:

Eric Smith, Analyst of Connected Home Devices, said: “Multiple PC ownership is falling as Tablet sales supplant replacement demand for secondary PCs mainly used for casual tasks. Still, PCs will remain essential devices as households eventually replace their primary PCs used for productivity tasks such as spreadsheet and video editing or personal banking.”

David Watkins, Service Director, Connected Home Devices, added: “The modern Tablet user experience is quickly arriving on the PC thanks to more affordable 2-in-1 Convertible PCs and new operating systems which blend traditional PC and Tablet user experiences. We see development of these forces aligning perfectly with an older PC installed base ripe for replacement in 2015.”

May 1, 2015: Children Change Disney’s Digital Strategy: “App TV” Now Central To Content Planning by David Mercer

Multiscreen TV behaviour is at the centre of television’s stormy transformation – viewing of broadcast, linear TV on the TV screen is apparently in decline while consumption on smartphones and tablets is increasing. Making sense of the big picture is increasingly challenging, and legacy players like broadcasters and the major content owners are inevitably somewhat resistant to the idea that their traditional businesses are under serious threat.

Strategy Analytics - The New TV - Global TV Capable Screens Installed Base -- 1-May-2015We have monitored the early stages of this transformation for the past decade and see its results in our own research, and we continue to predict further industry disruption in our forecasts. But sometimes it is only when you hear the evidence given in person by a senior executive at a leading global player that the scale of the challenge and opportunity are finally brought home.

This happened at last week’s AppsWorld event in Berlin, where I chaired the TV and Multiscreen conference. The speaker was Andreas Peters, Head of Digital for the Walt Disney Company Germany, Austria and Switzerland. Andreas presented some of the most compelling evidence I have yet heard that television is truly a multiscreen medium for the next generation of viewers.

Disney’s challenge in Germany was to launch a television show called Violetta aimed at 8-12 year old girls. It had been introduced successfully in Argentina but had failed in the UK. As it often does, Disney had invested considerable amounts in merchandising and retailers were eagerly anticipating sales of the new product lines. The show was first broadcast on German free TV on May 1st 2014 but it achieved only very low ratings.

The question for Disney managers was whether traditional TV had stopped working. A crisis meeting was held with a view to writing off the investment. Disney had previously not made its shows available online in Germany but the Violetta situation was so serious they were persuaded to experiment. Two episodes were made available on Youtube with a link to Disney’s own website. Viewing of the content on Youtube very quickly went viral until Disney had achieved a reach of 50% of 8-12 year old girls and eight million views. Violetta went on to become a success in German-speaking markets.

The evidence was clear: for some shows at least, younger children cannot now be reached using the traditional broadcast TV/big screen model. Peters explained that the Violetta experience was transformative for the Disney organisation and led to the inclusion of online and digital media as a key element in the business case for many products. In fact it also led to the development and launch of Disney’s own Watch App, which includes live streaming and seven-day catch-up programmes from the broadcast Disney Channel.

Even after the Violetta experience Disney was sceptical that an app was needed – there was a feeling that the website would be sufficient. Nevertheless the app was launched and Disney had planned for 20,000 downloads. Instead it has passed one million downloads in its first six months. Peters noted: “This was a real shock for us. We completely underestimated the demand.” Around 500,000 viewers are now using the Disney Watch app for linear television viewing, in addition to millions of shows being downloaded for catch-up viewing. Peak app viewing hours are between 6am and 8am and then between 1pm and 9pm on school days, with a different pattern at weekends. Peters made it clear that children did not want lots of features built in to the app – just like TV, they just want to hit “play” and watch.

“Our TV colleagues of course don’t want to believe this,” said Peters. “But the world has changed and it will continue to change.” Disney has also seen a knock-on effect from its app launch with an increase in free-to-air broadcast TV viewing. But the firm is now clear that mobile is not just an add-on to TV or a promotional tool; it must be an integral part of the entire process.

There are many implications for content strategy. TV and Digital have to “understand each other”, which is a challenge when the KPIs in each world are very different. As we have often heard, the video industry is crying out for a set of common metrics which can apply and support advertisers in both TV and online worlds. Video consumption patterns vary and different content may be relevant to different platforms.

But the overall lesson is clear: “TV” is not just the big screen in the corner of the living room. It must embrace multiscreen distribution strategies in order to reach its maximum potential. TV companies are betraying their audiences and their investors if they don’t target the 6.4bn addressable screens available to them.

ASUS EeePC revival with the $199/€199 EeeBook X205 at IFA 2014: the Chromebooks alternative based on Windows 8.1 with Bing

To be available in the U.S. and Europe starting in November. Plus information about:
– InstantGo (previously known at Connected Standby) from Microsoft aimed to bring smartphone-type power management capabilities to the PC platform, as well as increasing physical security,
– InstantGo combined with ICS (Internet Connection Sharing commonly referred to as tethering) for Connected Standby Hotspot funcionality, and
– touch gestures in Windows 8.1 supported by Smart Gesture technology of the X205 touchpad that is 36% larger compared to the ones found on the 14-inch ASUS laptop models.

Also compare with The growing Chromebook challenge for Windows laptops: promises from Google I/O are getting realized with new Chromebooks introduced at IFA 2014 post of mine as of September 5, 2014.

Information still to come (by November):
– monetization by Microsoft on the back end with Bing integration as well as MS services attach (as just mentioned by Satya Nadella on MSFT July 25 Earnings Conference Call)

See also my already existing posts about Intel Bay Trail-T, especially the Intel CTE initiative: Bay Trail-Entry V0 (Z3735E and Z3735D) SoCs are shipping next week in $129 Onda (昂达) V819i Android tablets—Bay Trail-Entry V2.1 (Z3735G and Z3735F) SoCs might ship in $60+ Windows 8.1 tablets from Emdoor Digital (亿道) in the 3d quarter of April 11, 2014. See also PadNews articles on Type 3 Z3735 (Bay Trail-Entry V2.1) based tablets (i.e. the same SoCs to be used in EeeBook X205):
– Z3735G (http://www.padnews.cn/?tag=Z3735G) and
– Z3735F (http://www.padnews.cn/?tag=Z3735F)


DETAILS

ASUS EeeBook X205 199 Euro Laptop Hands on [Steve Paine YouTube channel] with Intel’s Bay Trail-T (i.e. tablet) platform

http://umpcportal.com for more. This is the ASUS EeeBook X205 a 199 Euro laptop based on Z3000-series running Windows 8 with Bing. The model shown here has 1GB and Z3735G but other models are said to have 2GB RAM.

From ASUS Sep 3, 2014 press release:

EeeBook X205, chic and compact

EeeBook X205 is an affordable, chic and compact 11.6-inch laptop that weighs less than 1kg and is designed for on-the-go students and young professionals. Powered by Windows 8.1 with Bing — for maximum application compatibility — EeeBook X205 offers users a convenient smartphone-like experience, thanks to its use of Connected Standby technology. Connected Standby enables almost-instant resume from sleep mode and gives users an enhanced internet experience, as they are always connected to all their social apps and email — even when X205 is in standby mode. Available in four distinctive colors — black, white, gold and red — EeeBook X205 is designed with smooth curves and tactile surfaces to make it the ideal take-anywhere laptop.

ASUS EeeBook X205 Hands On – $199 Netbook unveiled at IFA 2014 [Mobilegeeks.de YouTube channel, Sept 3, 2014]

ASUS EeeBook X205 http://www.mobilegeeks.com The ASUS EeeBook X205 is 11.6 inches with an Intel Atom Z3735 is based on the Bay Trail-T architecture and is backed by 2GB of RAM and either 32G or 64GB of storage. Connectivity includes 2 USB 2.0, a Micro HDMI port, audio jack, microSD card slot plus WiFi b/g/n and Bluetooth 4.0. Don’t gorget to check out our coverage of the ASUS EeeBook X205 here: http://www.mobilegeeks.com/asus-zenbook-ux305-hands-video-ifa-2014/

ASUS announces the EeeBook X205 at IFA 2014 by Brandon LeBlanc [Blogging Windows, Sept 3, 2014]

Today at IFA 2014, ASUS has announced the EeeBook X205 – an affordable 11.6-inch laptop with Windows 8.1 with Bing priced at just $199 (U.S.). The EeeBook X205 comes powered by an Intel Atom quad-core processor and features InstantGo (previously known at Connected Standby) giving it an almost-instant resume from sleep mode with up 8 hours [up to 12-hours of web browsing see below] of battery life. It’ll run Microsoft Office smoothly as well as other desktop apps and apps from the Windows Store.

The EeeBook X205 has a compact and ergonomic design for people constantly on-the-go – like students for example. It weighs less than 1kg and has a full-size, one-piece seamless chiclet keyboard with 1.6mm of key travel for comfortable typing. It also has a 36% larger touchpad compared to the ones found on the 14-inch ASUS laptop models. And the touchpad uses Smart Gesture technology that supports touch gestures in Windows 8.1.

The EeeBook X205 will come in four colors – black, white, gold, and red – and available in the U.S. and Europe starting in November.

ASUS EeeBook X205TA [product page]

Easy to Learn, Work and Play.

  • ASUS EeeBook X205-blackWindows 8.1 with Bing
  • Weighs 980g with compact, space-saving design that fits in a small suitcase and carry bag.
  • 12 hours of battery life* for an Always On Always Connected experience
  • Windows 8.1 with Bing provides 100% capability with software and peripherals compares to other OS.

*Disclamer: 12-hours of web browsing

EeeBookX205 is an affordable, chic and compact 11.6-inch laptop that weighs less than 1kg and is designed for on-the-go students and young professionals. Windows 8.1 with Bing gives EeeBook X205 maximum application compatibility; while Connected Standby technology gives users a smartphone-like computing experience.This enables almost-instant resume from sleep mode and gives users an enhanced internet experience, as Connected Standby means they are always connected to all their social apps and email, even when X205 is in standby mode. Available in four distinctive colors — black, white, gold and red — EeeBook X205 is designed with smooth curves and tactile surfaces to make it the ideal take-anywhere laptop.

ASUS EeeBook X205-colors

Specification

Processor

Quad core Intel® Atom™ Bay Trail-T Z3735 processor running at up to 1.83GHz

Display

11.6-inch LED backlit HD (1,366 x 768)
High-contrast gloss finish

Operating System

Windows 8.1 with Bing

Storage

eMMC 32/64GB
115GB Microsoft OneDrive free for 2 years (15GB for life)
500GB ASUS WebStorage free for 2 years

RAM

2GB

Connectivity

802.11a/b/g/n dual-band Wi-Fi
Bluetooth 4.0

Input

2x USB 2.0
Micro HDMI out
1x 3.5mm headphone/mic combo jack
Micro SD card slot (SDXC, up to 64GB)

Camera

Front-facing VGA

Audio

2x 2W high-quality stereo speakers
High quality microphone

Battery

38Wh, 12 hours for web browsing

Dimensions

286 x 193.3 x 17.5mm

Weight

980g

Colors

Black, White, Red and Gold

We should note here that the Bay Trail SoCs for the EeeBook X205 are the specifically developed ones according to the following Intel slide:


1 MRD7 and MRD8/10 are Android* only. Windows is for selected ODMs with committed volume.

A significant SoC and PCB cost reduction effort (with design for “China Technical Ecosystem”) is lying behind those, so called Bay Trail Entry Z3735F/G products:

The original Windows capable Bay Trail-T already used in tablets since Oct’131: The Bay Trail-Entry version of Bay Trail-T specifically designed for heavy PCB cost reduction (used in X205):
– Z3745D (1.83 GHz, 25×16 LCD)
with DDR3L, and 8L2 HDI3 (Type4 packaged SoC based) PCBs

1 Dell Venue 8 Pro ($299+, now $249+)
2 8L PCB = 8-layer Printed Circuit Board;
3 HDIHigh Density Interconnects (aka Type 4 packaging) PCBs are utilizing blind, buried or microvia technologies.

– Z3735F (1.83GHz, <=2GB, <=19×12 LCD)
– Z3735G (1.83GHz, 1GB, <=12×8 LCD)
both with DDR3L, and 6L4 Type 3 packaged SoC based PCBs

4 6L PCB = 6-layer Printed Circuit Board
+ New PMIC for higher integration

In broad respects see the latest Z3735E, Z3735D, Z3735F, Z3735G comparison table of Sept 6, 2014, and in the most specific form the below table (taken from Z3600 and Z3700 Series Datasheet as of April 2014 when Type 3 SoC related information was added):

image

From MSFT Earnings Conference Call [July 22, 2014]

Satya Nadella, chief executive officer:

We feel good about the progress we are making with Windows. Developed markets continue to show stability, and we’re encouraged by the initial response from OEMs to our new consumer offerings like Windows with Bing.

In April, we released an update to Windows 8.1. To start, we improved the core desktop experience with mouse and keyboard advancements. For enterprises, we released Internet Explorer Enterprise Mode and extended our mobile device management capability. With the Windows 8.1 update, we also lowered the hardware spec required so OEMs can build tablets and clamshells at lower price points.

In addition, we made the decision to evolve the Windows business model. Now, Windows licenses are zero dollars for any OEM building a device less than nine inches. We also added a low-cost Windows offering with Bing integration for OEMs. This new offering combined with lower hardware specs means OEMs will bring a fantastic line-up of value-based notebooks and tablets to market this holiday.

We will have our OEM monetization, and some of these new business models are about monetizing on the back end with Bing integration as well as our services attach, and that’s the reason fundamentally why we have these zero priced Windows SKUs today.

Windows 8.1 with Bing for OEMs [April 2, 2014]

The Windows 8.1 with Bing edition sets Bing as the default search engine within Internet Explorer. Users will be able to manually change default search settings and install additional browsers of their choice.

Windows 8.1 with Bing is based on the feature set available in Windows 8.1 Core and incudes all of the latest updates, including Windows 8.1 Update. Windows 8.1 with Bing is available for 32-bit and 64-bit platforms.

What’s new for OEMs?

Windows 8.1 with Bing is similar to other editions of Windows and should be imaged, updated, and deployed the same as any other Windows edition. However, OEMs will not be able to change the default search engine with the SearchScopes unattend setting, Registry key, or 3rd party installation tools. When a user starts Internet Explorer, Bing is automatically set to the default Search Engine and will override any OEM-configured search provider. No other Internet Explorer defaults are changed.

Helping our hardware partners build lower cost Windows devices by Brandon LeBlanc [Blogging Windows, May 23, 2014]

Over the next couple weeks leading into Computex in Taipei, you’re going to see many of our hardware partners announce new Windows devices.

Microsoft was built on the foundation of partner opportunity and our goal remains mutual success for us and our partners. This means a continued commitment to helping ensure our hardware partners are able to build innovative, differentiated and competitive devices on the Windows platform. Over the past year, we have done a lot of work to scale Windows to an even greater number of customers with more partners and new devices at a broader range of price points. In 2013, we began to ease our approach to device certification and reduced some hardware component requirements, helping to empower our partners to drive further device differentiation and price competitiveness. And most recently with the Windows 8.1 Update, we are enabling our hardware partners to build lower cost devices with only 1GB of memory and 16GB of storage that provide customers with the fast and fluid experience they expect from a Windows device. We also announced that Windows will be available for 0 dollars to our hardware partners for Windows Phones and tablets smaller than 9-inches in screen size.

As we move forward, many of these lower cost devices will come with a new edition of Windows called Windows 8.1 with Bing. Windows 8.1 with Bing provides all the same great experiences that Windows 8.1 offers with the Windows 8.1 Update, and comes with Bing as the default search engine within Internet Explorer. And of course customers will be able to change that setting through the Internet Explorer menu, providing them with control over search engine settings. This new edition will be only be available preloaded on devices from our hardware partners. Some of these devices, in particular tablets, will also come with Office or a one-year subscription to Office 365.

The end result is that more people—across consumer and commercial—will have access to an even broader selection of new devices with all the awesomeness that Windows 8.1 provides, and get Office too, all at a really affordable price. Additionally, as reach expands, the opportunity for developers and their apps also increases.

We’re excited for our partners and the new devices that will be in market soon, and we’ll continue to work closely with our partners deliver innovative and high quality devices based on the Windows experience.

Stay tuned for more as these new devices get announced by our hardware partners over the coming weeks!

InstantGo: a better way to sleep by Kevin A Chin [Blogging Windows, June 19, 2014] (see also the InstantGo article on Wikipedia)

You may have heard about InstantGo in Windows 8.1 (known as Connected Standby in Windows 8 and Windows RT), and how it has replaced the traditional sleep or standby function in many Windows 8.1 and Windows RT 8.1 systems. What you might not know is how fundamentally different—and better—it is, and why.

First, let me give you a little background. These days, a lot of modern computing is performed on System on Chip (SoC) designs. These single chips tightly integrate the components for what used to be a complete motherboard, and allow for hardware that is thinner, lighter, and more power efficient. There are SoC designs with processors from both Intel and ARM running Windows.

These innovations in hardware go beyond just extending battery life—they actually make new user experiences possible. InstantGo is a great example of what SoC makes possible: network connectivity with very low power consumption and instant resume capabilities. With the right hardware, whether it’s a Windows powered tablet, or a convertible 2-in-1, it’s always ready for interaction.

What is InstantGo?

InstantGo maintains network connectivity when your screen is off in standby mode, allowing the system to update things in the background, and keeping it ready to instantly resume. For example, it can sync your email while your screen is off so new mail is ready and waiting as soon as you come back. Or if you want to be reachable via Skype even when you step away from your PC, you can go ahead and turn the screen off, and your calls will still come through. Power consumption in this connected standby mode is very low, and yet the system is always ready to spring back to life with your next interaction.

Common misconceptions

We’ve seen some misconceptions about InstantGo out there on the Internet, so I’d like to clear up a few of these. First of all, if your PC doesn’t already have Connected Standby (in Windows 8 or Windows RT) or InstantGo (in Windows 8.x or Windows RT 8.x), you can’t just add it as a feature – as mentioned, it’s built into the hardware and the operating system, and so it’s either there from the beginning or it isn’t. Furthermore, it isn’t limited to a particular processor architecture – it might be present on ARM, x86, and x64 systems. Finally, InstantGo is not just for tablets. You can have it on a 2-in-1 system that looks very much like a traditional laptop. You might even see two systems running the same CPU or SoC architecture, and one of them has InstantGo while the other one doesn’t. It’s really up to the hardware manufacturer to decide which systems they want to design with this capability.

Here’s a summary of the common misconceptions:

Misconception

Fact

InstantGo is a Windows software feature.

InstantGo depends on tight integration between hardware, software (drivers), and operating system to deliver new user experiences.

InstantGo only runs on ARM architecture systems.

InstantGo systems exist for ARM, x86, and x64 architectures.

InstantGo is only useful if I’m connected to a network.

All InstantGo systems allow you to turn the screen on and off almost instantly.

InstantGo is only available on Surface Pro and Surface 2.

Numerous systems support InstantGo. Examples include: Dell Venue Pro 8 , Dell Venue Pro 11, Asus T100TA, ThinkPad Tablet 2, Surface, Surface 2, and more.

InstantGo runs exclusively on Windows RT.

All Windows RT systems support InstantGo. But Windows 8 and Windows 8.x systems with the proper hardware may also support InstantGo.

InstantGo only runs on tablets.

InstantGo systems include tablets, convertibles with docks, and even some laptops.

Do you already have InstantGo?

As InstantGo is not limited to a particular form factor (tablet or laptop), or a particular architecture (ARM, x64, or x86), you might not know if you have it or not. InstantGo requires Windows RT, Windows 8, or any of the updates released after Windows 8, as well as tightly integrated hardware and software. You can see if you have it or not by running the powercfg option from a command prompt. When you type powercfg /a and press Enter, you’ll see the Standby (Connected) option only if you have InstantGo:

image

After using Windows on an InstantGo system, I’ve come to expect all my computers to have long battery life and still instantly resume from sleep.

For more on InstantGo (known as Connected Standby in Windows 8), see these articles:

In my next blog post, I’ll talk about Sleep Studyan easy way to measure your battery life while in the connected standby state.

Windows 8.1 ICS and InstantGo (Connected Standby Hotspot) [Steve Paine YouTube channel, Oct 17, 2013]

http://umpcportal.com with a 3G-capable, Connected Standby capable Windows 8.1 PC. Demonstration of a hotspot under Connected Standby conditions.

See also:

In Windows 8.1, Internet Sharing, commonly referred to as tethering, has been added to enable users to share their mobile broadband network connection with one or more other devices that are not mobile broadband-capable. Traditional tethering mechanisms include Bluetooth and USB. However, Wi-Fi can provide the fast and easy mobile broadband connection sharing mechanism, such as personal hotspots, mobile hotspots, and so on, since it requires little configuration, enables high-speed data transmission, and relies on the familiar Wi-Fi connection process.
Windows 8.1 extends the Internet sharing capability further by enabling customers to turn on and connect to PCs that have Internet Sharing configured, known as a tethering access point, just as if it was a standard Wi-Fi network.

Sleep Study: Diagnose what’s draining your battery while the system sleeps by Kevin A Chin [Blogging Windows, June 26, 2014]

In my last post, I introduced you to InstantGo (previous to Windows 8.1, we called this Connected Standby), a new power model used on some Windows 8.x systems. InstantGo is a tight integration of software (firmware, drivers, OS) with System on Chip (“SoC”) hardware to provide a sleep mode with long battery life and a connected, instant-on user experience.

In this post, I’d like to introduce you to Sleep Study, a new tool available on Windows 8.x systems with InstantGo that can help you identify sources of battery drain that occurred while the PC was in sleep mode (that is, when the screen was off).

Sleep Study tells you how well the system slept and how much activity it experienced during that time. While in the sleep state, the system is still doing some work, albeit at a lower frequency. Because the resulting battery drain is not easily perceptible (you can’t see it draining), we built the Sleep Study tool in Windows 8.1 to allow you to track what is happening. We thought of simply using traditional logging to do this, but ironically, the logging itself would drain the battery. With this in mind, we designed the Sleep Study tool to minimize its own impact on battery life, while tracking the battery draining activities.

The Sleep Study report

You can use Sleep Study to see which apps and devices are most active during a sleep session. Sleep Study reviews all the sleep sessions longer than 10 minutes and provides you with a report that color codes each session according to its power consumption.  A session is defined as the period from Screen Off to Screen On. In cases when the system is plugged into AC power, the policies are less stringent than when on battery power. While the tool still tracks connected standby activity on AC power, it is more useful to identify unexpected drains on battery, or DC power.

To help you easily identify apps, devices and services with higher power consumption, these are highlighted in red or orange in the report, and represent opportunities to extend your battery life.

In this video, we walk you through a typical Sleep Study report.

[SleepStudy powercfg command for connected standby]

The ASUS EeeBook touchpad uses Smart Gesture technology that supports touch gestures in Windows 8.1: Touch: Swipe, tap, and beyond [Windows Help, Nov 12, 2013]

If you want to know what we mean when we mention swiping, tapping, or other ways of interacting withWindows 8.1 or Windows RT 8.1 when you’re using a touchscreen, take a look at this table.

What we say

How to do it

What it does

Tap

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Tap once on an item.

Opens, selects, or activates whatever you tap. Similar to clicking with a mouse.

Press and hold

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Press your finger down and hold for about a second.

Shows info to help you learn more about an item or opens a menu specific to what you’re doing. For example, press and hold a tile on the Start screen to rearrange, resize, or pin it. Only works for some items.

Similar to right-clicking with a mouse.

Pinch or stretch to zoom

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Touch the screen or an item with two or more fingers, and then move the fingers toward each other (pinch) or away from each other (stretch).

Visually zooms in or out, like with pictures or maps. A good place to explore this is the Start screen.

Slide to scroll

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Drag your finger on the screen.

Moves through what’s on the screen. Similar to scrolling with a mouse.

Slide to rearrange

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Press and briefly drag an item in the direction opposite the way the page scrolls, then move it wherever you want. (For example, if you would scroll left or right, drag the item up or down.) When you’ve moved the item to the new location, let it go.

Moves an item. Similar to dragging with a mouse.

Swipe to select

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Swipe an item with a short, quick movement in the direction opposite the way the page scrolls. For example:

• If the page scrolls left or right, swipe the item up or down to select it.

• If the page scrolls up or down, swipe the item left or right to select it.

Selects an item, and often brings up app commands. A good place to explore this is in the Mail app.

Swipe or slide from the edge

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Starting on the edge, either swipe your finger quickly or slide across the screen without lifting your finger.

• Open the charms (Search, Share, Start, Devices, Settings). Swipe in from the right edge.

• Open a recently used app. Swipe in from the left edge. Keep swiping to switch between all of your recently used apps.

• Open another app at the same time. Slide in from the left edge without lifting your finger and drag the app until a divider appears. Then move the app where you want it, and slide the divider to adjust the app size.

• See a list of recently used apps. Slide in from the left edge without lifting your finger, and then push the app back toward the left edge.

• Show commands for the current apps, like New and Refresh. Swipe in from the top or bottom edge.

• Close an app. Slide down from the top edge without lifting your finger, and then drag the app to the bottom of the screen.

Rotate

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Put two or more fingers on an item and then turn your hand.

Rotates items in the direction you turn your hand. Only some items can be rotated

Satya Nadella on “Digital Work and Life Experiences” supported by “Cloud OS” and “Device OS and Hardware” platforms–all from Microsoft

Update: Gates Says He’s Very Happy With Microsoft’s Nadella [Bloomberg TV, Oct 2, 2014] + Bill Gates is trying to make Microsoft Office ‘dramatically better’ [The Verge, Oct 3, 2014]

This is the essence of Microsoft Fiscal Year 2014 Fourth Quarter Earnings Conference Call(see also the Press Release and Download Files) for me, as the new, extremely encouraging, overall setup of Microsoft in strategic terms (the below table is mine based on what Satya Nadella told on the conference call):

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These are extremely encouraging strategic advancements vis–à–vis previously publicized ones here in the following, Microsoft related posts of mine:

I see, however, particularly challenging the continuation of the Lumia story with the above strategy, as with the previous, combined Ballmer/Elop(Nokia) strategy the results were extremely weak:

image

Worthwhile to include here the videos Bloomberg was publishing simultaneously with Microsoft Fourth Quarter Earnings Conference Call:

Inside Microsoft’s Secret Surface Labs [Bloomberg News, July 22, 2014]

July 22 (Bloomberg) — When Microsoft CEO Satya Nadella defined the future of his company in a memo to his 127,100 employees, he singled out the struggling Surface tablet as key to a future built around the cloud and productivity. Microsoft assembled an elite team of designers, engineers, and programmers to spend years holed up in Redmond, Washington to come up with a tablet to take on Apple, Samsung, and Amazon. Bloomberg’s Cory Johnson got an inside look at the Surface labs.

Will Microsoft Kinect Be a Medical Game-Changer? [Bloomberg News, July 22, 2014]

July 23 (Bloomberg) — Microsoft’s motion detecting camera was thought to be a game changer for the video gaming world when it was launched in 2010. While appetite for it has since decreased, Microsoft sees the technology as vital in its broader offering as it explores other sectors like 3d mapping and live surgery. (Source: Bloomberg

Why Microsoft Puts GPS In Meat For Alligators [Bloomberg News, July 22, 2014]

July 23 (Bloomberg) — At the Microsoft Research Lab in Cambridge, scientists track animals and map climate change all on the off chance they’ll stumble across the next big thing. (Source: Bloomberg)

To this it is important to add: How Pier 1 is using the Microsoft Cloud to build a better relationship with their customers [Microsoft Server and Cloud YouTube channel, July 21, 2014]

In this video, Pier 1 Imports discuss how they are using Microsoft Cloud technologies such as Azure Machine Learning to to predict which the product the customer might want to purchase next, helping to build a better relationship with their customers. Learn more: http://www.azure.com/ml

as well as:
Microsoft Surface Pro 3 vs. MacBook Air 13″ 2014 [CNET YouTube channel, July 21, 2014]

http://cnet.co/1nOygqh Microsoft made a direct comparison between the Surface Pro 3 and the MacBook Air 13″, so we’re throwing them into the Prizefight Ring to settle the score once and for all. Let’s get it on!

Surface Pro 3 vs. MacBook Air (2014) [CTNtechnologynews YouTube channel, July 1, 2014]

The Surface Pro 3 may not be the perfect laptop. But Apple’s MacBook Air is pretty boring. Let’s see which is the better device!

In addition here are some explanatory quotes (for the new overall setup of Microsoft) worth to include here from the Q&A part of Microsoft’s (MSFT) CEO Satya Nadella on Q4 2014 Results – Earnings Call Transcript [Seeking Alpha, Jul. 22, 2014 10:59 PM ET]

Mark Moerdler – Sanford Bernstein

Thank you. And Amy one quick question, we saw a significant acceleration this quarter in cloud revenue, or I guess Amy or Satya. You saw acceleration in cloud revenue year-over-year what’s – is this Office for the iPad, is this Azure, what’s driving the acceleration and how long do you think we can keep this going?

Amy Hood

Mark, I will take it and if Satya wants to add, obviously, he should do that. In general, I wouldn’t point to one product area. It was across Office 365, Azure and even CRM online. I think some of the important dynamics that you could point to particularly in Office 365; I really think over the course of the year, we saw an acceleration in moving the product down the market into increasing what we would call the mid-market and even small business at a pace. That’s a particular place I would tie back to some of the things Satya mentioned in the answer to your first question.

Improvements to analytics, improvements to understanding the use scenarios, improving the product in real-time, understanding trial ease of use, ease of sign-up all of these things actually can afford us the ability to go to different categories, go to different geos into different segments. And in addition, I think what you will see more as we initially moved many of our customers to Office 365, it came on one workload. And I think what we’ve increasingly seen is our ability to add more workloads and sell the entirety of the suite through that process. I also mentioned in Azure, our increased ability to sell some of these higher value services. So while, I can speak broadly but all of them, I think I would generally think about the strength of being both completion of our product suite ability to enter new segments and ability to sell new workloads.

Satya Nadella

The only thing I would add is it’s the combination of our SaaS like Dynamics in Office 365, a public cloud offering in Azure. But also our private and hybrid cloud infrastructure which also benefits, because they run on our servers, cloud runs on our servers. So it’s that combination which makes us both unique and reinforcing. And the best example is what we are doing with Azure active directory, the fact that somebody gets on-boarded to Office 365 means that tenant information is in Azure AD that fact that the tenant information is in Azure AD is what makes EMS or our Enterprise Mobility Suite more attractive to a customer manager iOS, Android or Windows devices. That network effect is really now helping us a lot across all of our cloud efforts.

Keith Weiss – Morgan Stanley

Excellent, thank you for the question and a very nice quarter. First, I think to talk a little bit about the growth strategy of Nokia, you guys look to cut expenses pretty aggressively there, but this is – particularly smartphones is a very competitive marketplace, can you tell us a little bit about sort of the strategy to how you actually start to gain share with Lumia on a going forward basis? And may be give us an idea of what levels of share or what levels of kind unit volumes are you going to need to hit to get to that breakeven in FY16?

Satya Nadella

Let me start and Amy you can even add. So overall, we are very focused on I would say thinking about mobility share across the entire Windows family. I already talked about in my remarks about how mobility for us even goes beyond devices, but for this specific question I would even say that, we want to think about mobility not just one form factor of a mobile device because I think that’s where the ultimate price is.

But that said, we are even year-over-year basis seen increased volume for Lumia, it’s coming at the low end in the entry smartphone market and we are pleased with it. It’s come in many markets we now have over 10% that’s the first market I would sort of say that we need to track country-by-country. And the key places where we are going to differentiate is looking at productivity scenarios or the digital work and life scenario that we can light up on our phone in unique ways.

When I can take my Office Lens App use the camera on the phone take a picture of anything and have it automatically OCR recognized and into OneNote in searchable fashion that’s the unique scenario. What we have done with Surface and PPI shows us the way that there is a lot more we can do with phones by broadly thinking about productivity. So this is not about just a Word or Excel on your phone, it is about thinking about Cortana and Office Lens and those kinds of scenarios in compelling ways. And that’s what at the end of the day is going to drive our differentiation and higher end Lumia phones.

Amy Hood

And Keith to answer your specific question, regarding FY16, I think we’ve made the difficult choices to get the cost base to a place where we can deliver, on the exact scenario Satya as outlined, and we do assume that we continue to grow our units through the year and into 2016 in order to get to breakeven.

Rick Sherlund – Nomura

Thanks. I’m wondering if you could talk about the Office for a moment. I’m curious whether you think we’ve seen the worst for Office here with the consumer fall off. In Office 365 growth in margins expanding their – just sort of if you can look through the dynamics and give us a sense, do you think you are actually turned the corner there and we may be seeing the worse in terms of Office growth and margins?

Satya Nadella

Rick, let me just start qualitatively in terms of how I view Office, the category and how it relates to productivity broadly and then I’ll have Amy even specifically talk about margins and what we are seeing in terms of I’m assuming Office renewals is that probably the question. First of all, I believe the category that Office is in, which is productivity broadly for people, the group as well as organization is something that we are investing significantly and seeing significant growth in.

On one end you have new things that we are doing like Cortana. This is for individuals on new form factors like the phones where it’s not about anything that application, but an intelligent agent that knows everything about my calendar, everything about my life and tries to help me with my everyday task.

On the other end, it’s something like Delve which is a completely new tool that’s taking some – what is enterprise search and making it more like the Facebook news feed where it has a graph of all my artifacts, all my people, all my group and uses that graph to give me relevant information and discover. Same thing with Power Q&A and Power BI, it’s a part of Office 365. So we have a pretty expansive view of how we look at Office and what it can do. So that’s the growth strategy and now specifically on Office renewals.

Amy Hood

And I would say in general, let me make two comments. In terms of Office on the consumer side between what we sold on prem as well as the Home and Personal we feel quite good with attach continuing to grow and increasing the value prop. So I think that’s to address the consumer portion.

On the commercial portion, we actually saw Office grow as you said this quarter; I think the broader definition that Satya spoke to the Office value prop and we continued to see Office renewed in our enterprise agreement. So in general, I think I feel like we’re in a growth phase for that franchise.

Walter Pritchard – Citigroup

Hi, thanks. Satya, I wanted to ask you about two statements that you made, one around responsibly making the market for Windows Phone, just kind of following on Keith’s question here. And that’s a – it’s a really competitive market it feels like ultimately you need to be a very, very meaningful share player in that market to have value for developer to leverage the universal apps that you’re talking about in terms of presentations you’ve given and build in and so forth.

And I’m trying to understand how you can do both of those things once and in terms of responsibly making the market for Windows Phone, it feels difficult given your nearest competitors there are doing things that you might argue or irresponsible in terms of making their market given that they monetize it in different ways?

Satya Nadella

Yes. One of beauties of universal Windows app is, it aggregates for the first time for us all of our Windows volume. The fact that even what is an app that runs with a mouse and keyboard on the desktop can be in the store and you can have the same app run in the touch-first on a mobile-first way gives developers the entire volume of Windows which is 300 plus million units as opposed to just our 4% share of mobile in the U.S. or 10% in some country.

So that’s really the reason why we are actively making sure that universal Windows apps is available and developers are taking advantage of it, we have great tooling. Because that’s the way we are going to be able to create the broadest opportunity to your very point about developers getting an ROI for building to Windows. For that’s how I think we will do it in a responsible way.

Heather Bellini – Goldman Sachs

Great. Thank you so much for your time. I wanted to ask a question about – Satya your comments about combining the next version of Windows and to one for all devices and just wondering if you look out, I mean you’ve got kind of different SKU segmentations right now, you’ve got enterprise, you’ve got consumer less than 9 inches for free, the offering that you mentioned earlier that you recently announced. How do we think about when you come out with this one version for all devices, how do you see this changing kind of the go-to-market and also kind of a traditional SKU segmentation and pricing that we’ve seen in the past?

Satya Nadella

Yes. My statement Heather was more to do with just even the engineering approach. The reality is that we actually did not have one Windows; we had multiple Windows operating systems inside of Microsoft. We had one for phone, one for tablets and PCs, one for Xbox, one for even embedded. So we had many, many of these efforts. So now we have one team with the layered architecture that enables us to in fact one for developers bring that collective opportunity with one store, one commerce system, one discoverability mechanism. It also allows us to scale the UI across all screen sizes; it allows us to create this notion of universal Windows apps and being coherent there.

So that’s what more I was referencing and our SKU strategy will remain by segment, we will have multiple SKUs for enterprises, we will have for OEM, we will have for end-users. And so we will – be disclosing and talking about our SKUs as we get further along, but this my statement was more to do with how we are bringing teams together to approach Windows as one ecosystem very differently than we ourselves have done in the past.

Ed Maguire – CLSA

Hi, good afternoon. Satya you made some comments about harmonizing some of the different products across consumer and enterprise and I was curious what your approach is to viewing your different hardware offerings both in phone and with Surface, how you’re go-to-market may change around that and also since you decided to make the operating system for sub 9-inch devices free, how you see the value proposition and your ability to monetize that user base evolving over time?

Satya Nadella

Yes. The statement I made about bringing together our productivity applications across work and life is to really reflect the notion of dual use because when I think about productivity it doesn’t separate out what I use as a tool for communication with my family and what I use to collaborate at work. So that’s why having this one team that thinks about outlook.com as well as Exchange helps us think about those dual use. Same thing with files and OneDrive and OneDrive for business because we want to have the software have the smart about separating out the state carrying about IT control and data protection while me as an end user get to have the experiences that I want. That’s how we are thinking about harmonizing those digital life and work experiences.

On the hardware side, we would continue to build hardware that fits with these experiences if I understand your question right, which is how will be differentiate our first party hardware, we will build first party hardware that’s creating category, a good example is what we have done with Surface Pro 3. And in other places where we have really changed the Windows business model to encourage a plethora of OEMs to build great hardware and we are seeing that in fact in this holiday season, I think you will see a lot of value notebooks, you will see clamshells. So we will have the full price range of our hardware offering enabled by this new windows business model.

And I think the last part was how will we monetize? Of course, we will again have a combination, we will have our OEM monetization and some of these new business models are about monetizing on the backend with Bing integration as well as our services attached and that’s the reason fundamentally why we have these zero-priced Windows SKUs today.

Microsoft Surface Pro 3 is the ultimate tablet product from Microsoft. What the market response will be?

imageWith the jury still out (as one can judge from the value of Microsoft shares – on the right) it remains to be seen whether Microsoft will be able to crack the high-end tablet market with this product.

The Microsoft product site is entitled New Surface Pro 3 Tablet – The Tablet That Can Replace Your Laptop clearly indicating the main positioning of this 3d generation product. See also the press release for additional details, as well as the remarks by Satya Nadella, Chief Executive Officer, and Panos Panay, Corporate Vice President, Microsoft Surface, at the press event held in New York City, May 20, 2014. The brief summary video of the event is below, while a full on-demand Webcast is here. There are also several “first impression” type media feedbacks given after the brief video report.

Microsoft’s Surface Pro 3 event in under six minutes [The Verge YouTube channel, May 20, 2014]

“You’ve been told to buy a laptop, but you know you need a laptop.” Though freshly-minted Microsoft CEO Satya Nadella gave the opening remarks, today’s Surface event was all about Surface creator Panos Panay — dropping tablets, playing with scales, pushing hinges, and giving more than a few shout-outs to Wall Street Journal editor (and former Verge editor) Joanna Stern. Here’s everything you need to know from the event in under five minutes.

Microsoft Introduces a Larger-Screen Surface Tablet [By SHIRA OVIDE in The Wall Street Journal , May 20, 2014]

First Look: Microsoft Surface Pro 3
[WSJDigitalNetwork YouTube channel, May 20, 2014]

Microsoft tries again to combine the laptop and tablet. WSJ Personal Tech Columnist Joanna Stern has the first look. Photo/Video: Drew Evans for The Wall Street Journal

Microsoft Corp. MSFT -0.18% introduced a larger-screen version of one of its Surface tablet computers, offering a lighter and thinner device that the company cast as a potential successor for laptop PCs.

The software company introduced the new device, called the Surface Pro 3, at an eventTuesday in New York. The device, like prior Pro models in the Surface line, is powered byIntel Corp. INTC 0.00% computer chips. Microsoft said the new version’s display measures 12 inches diagonally, compared with the 10.6-inch screens of existing Surface devices.

Microsoft said the Surface Pro 3 will start at $799 without a keyboard. A keyboard that doubles as a device cover will cost $129.99. The top end of the product line, with the most powerful Intel chip, lists for $1,949 without a keyboard.

At the event Tuesday, Microsoft officials repeatedly compared the Surface Pro 3 with laptop personal computers like AppleInc.‘s MacBook Air, rather than discuss competitors in the tablet market, where Microsoft remains a bit player. The MacBook Air costs $899 and up.

Microsoft’s positioning underscores its troubles in becoming a major competitor in tablets, where price tags of less than $200 have become commonplace for consumer-oriented models. The company’s share of the market was less than 4% last year, according to research firm IDC.

Microsoft Chief Executive Satya Nadella and other officials stressed what they said were limits of existing tablet computers for activities like writing documents or other work that isn’t Web surfing or reading digital books. They also stressed drawing and note-taking with an upgraded digital-pen accessory that comes with the Surface Pro 3.

“This is the tablet that can replace your laptop,” Panos Panay, a Microsoft executive working on Surface devices, said about the Surface Pro 3.

Microsoft said it would start taking orders Wednesday for the new device.

Steven Sinofsky, a former Microsoft executive who helped spearhead development of the Surface, said Tuesday the Surface Pro 3 “realizes the ‘no compromises’ vision of Surface.”

Dating back to the early 2000s, Microsoft officials have used the expression “no compromises” to describe their vision of a device that combines the best features of tablets and laptops.

Microsoft also has been developing for months a tablet similar to Apple’s 7.9-inch iPad Mini, and some media reports had indicated that device would be announced Tuesday. Smaller tablets accounted for more than half of all tablets sold last year.

In an interview Tuesday, Mr. Panay said Microsoft is “looking at an array of devices. It comes down to what customers need right now.”

He also addressed a different type of Windows software used on more iPad-like tablets, including one model of Surface devices. That operating software, Windows RT, isn’t compatible with many older PC applications or software. Windows RT “is a critical element as well,” Mr. Panay said. “It’s still pumping.”

Some analysts said Tuesday Microsoft was sensible for targeting businesses and workers, rather than consumer applications, with the Surface Pro.

“This is a smart move by Microsoft,” said Patrick Moorhead, president of research firm Moor Insights & Strategy. “Surface Pro 3 is more of a laptop replacement than a device that replaces your seven-to-eight-inch tablet.”

As Microsoft touts the abilities of Surface to replace laptops, it has the potential to anger companies like Dell Inc. that also make tablets and laptops powered by the Windows operating system. At the event, however, Mr. Nadella said Microsoft isn’t trying to compete with its computer-hardware partners.

Some Microsoft investors don’t want Microsoft to make its own computing devices at all. The company incurs a loss on each Surface it sells, and the company’s critics say Microsoft hasn’t made a compelling case for expanding its hardware ambitions.

Microsoft officials, including Mr. Nadella on Tuesday, say homegrown devices like the Surface are the best showcase for Microsoft software like Office, Skype and digital file-storage service OneDrive.

“We are not building hardware for hardware’s sake,” Mr. Nadella said during a brief appearance at the Surface event. “We want to build experiences that bring together all the capabilities of our company.”

Daniel Ives, a Microsoft analyst with FBR Capital Markets, said Surface Pro 3 “appears to be an impressive” device, but he said persuading consumers to buy the Surface “remains a Kilimanjaro-like challenge given intense competition.”

—Joanna Stern contributed to this article.

The most popular “Surface Pro 3” YouTube videos 19 hours after the launch:

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Surface Pro 3—The Tablet that Can Replace Your Laptop by surface 19 hours ago  440,030 views
Witness the next evolution of productivity. Introducing the Surface Pro 3, the tablet that can replace your laptop.
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Surface Pro 3 hands on at Surface NYC event 
by Windows Phone Central  16 hours ago   26,585 views
We go hands on with the Surface Pro 3 from the Surface NYC event. More details: …
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TLDR: My Surface Pro 3 Thoughts  by LockerGnome’s Geek Lifestyles 11 hours ago 3,005 views
Become a patron for bonuses ASAP: http://ChrisPirillo.com/ Patron video bonus today: …
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Microsoft Unveils 12-inch Surface Pro 3 Tablet – IGN News  by IGN  16 hours ago  19,373 views
Microsoft has just unveiled its latest Windows-powered tablet: the Surface Pro 3.
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CNET Update – Surface Pro 3 aims to replace laptops — and paper  by CNET   15 hours ago   8,526 views
With an improved kickstand, keyboard, and stylus pen, Microsoft says the new Surface solves the productivity problem of tablets.
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Microsoft Surface Pro 3 Hands On | Mashable
by Mashable   16 hours ago     9,936 views
Microsoft’s third-generation Surface Pro 3 aims to be “the tablet that can replace your laptop.” Here’s Mashable’s Pete Pachal and …
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This is the Surface Pro 3 (hands-on)
by The Verge    18 hours ago    48,815 views
Dan Seifert takes a hands-on look at Microsoft’s 12-inch Surface Pro 3, the “tablet that can replace the laptop.”
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Surface Pro 3 Hands-on    by Booredatwork.com
15 hours ago      5,288 views
Surface Pro 3 Pre-order link: http://bit.ly/1m07g9M Loot Crate:http://www.lootcrate.com/booredatwork 10% Code “booredatwork” …
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Hands-on with the Microsoft Surface Pro 3
by CNET   14 hours ago     16,412 views
The Surface Pro 3 is a new high-performance Windows 8.1 tablet designed to get rid of the “conflict” between owning a tablet and …
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Hands-on with Surface Pro 3    by expertzone
19 hours ago   19,040 views
Ben “The PC Guy” Rudolph goes hands-on with the all-new Surface Pro 3. Faster, thinner, lighter, and with a larger screen, this is …
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Surface Pro 3 Launch Reactions & Impressions
by lachlanlikesathing   8 hours ago    864 views
My thoughts on the Surface Pro 3 launch announcement! Surface Pro 2 long term review: http://youtu.be/hlsiNom5a3o Thanks …
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Surface Pro 3 — Finally a Tablet that can replace your Laptop?!?  by SourceFed   13 hours ago   61,977 views
The SurfacePro3 was announced today — larger, lighter, and able to stream 4k! Are all the bells and whistles in the SurfacePro3 …
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Surface Pro 3 Hands On    by Geek.com
16 hours ago     2,523 views
Microsoft has a made a splash today with an all new Surface Pro, which is a 12-inch device that manages to be thinner, lighter, …
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Microsoft Surface Pro 3 Hands-On   by laptopmag
13 hours ago    2,519 views
We go hands-on with Microsoft’s latest hybrid tablet and give you an overview of the design, specs, and price. For more coverage …
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Microsoft reveals thinner, faster Surface Pro 3 tablet
by CNET   17 hours ago   13,905 views
Microsoft’s Panos Panay shows off the company’s latest tablet at a press event in New York City. The new 12-inch tablet weighs …
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Surface Pro 3 Unboxing , Hands On , and First Impression Review  by Sean Ong   6 hours ago  326 views      In this video I do my very first product unboxing as I show off the shiny new Surface Pro 3! I give my first impressions of the device …