How can Microsoft reverse and save itself after suffering the biggest net loss in history?

The hero falls to the bottom of the valley when his luck runs out, then works hard and finally regains his glory. This is the story told in most American movies, and it is also the story that Microsoft hopes Wall Street will see it telling.

In the early hours of Wednesday morning Beijing time, Microsoft released its fourth quarter and full-year financial reports for the previous fiscal year. Affected by the acquisition of Nokia , Microsoft recorded its largest quarterly net loss in history. However, just a few days ago, at the WPC held in Orlando, Microsoft CEO Nadella and a group of senior executives all appeared to talk about their new business strategy. The write-down of up to $7.5 billion was seen as a drastic move by the company internally.

However, it is still unknown whether the market will accept Microsoft's transformation strategy. IBM , another established IT company, has called for transformation and proposed some practical measures, but its financial report shows that its performance has declined for 13 consecutive quarters. For Microsoft, the crisis does not only come from the acquired Nokia business, but also includes the overall decline of the PC industry and the decline of several traditional businesses such as traditional licensing.

Corresponding to this is Microsoft's cloud business, whose revenue has been rising in recent quarters. But it is worth noting that, on the one hand, the revenue of the commercial cloud business in the fourth quarter increased by 88% year-on-year, which has slowed down compared with the growth rate of more than 100% in the previous quarters; on the other hand, the commercial monetization ability of Office 365 as part of the cloud solution has been reflected, but this has also impacted the enterprise-level Office products and services, the latter of which saw a 4% decline in revenue in the quarter.

After Nadella took office, he proposed the "mobile first, cloud first" strategy, which has indeed solved some of the difficulties Microsoft encountered in moving from the PC era to the multi-terminal networking era. However, it is still difficult to answer how much Microsoft needs to pay for this "tuition fee".

Reinvention

Microsoft's traditional model of selling copies is being broken. Nadella said, "We no longer view everything as independent from each other, but integrate all projects related to core innovation, communication, collaboration and business processes together."

A week ago, Microsoft announced that it would expand its Cloud Solution Provider Program to 131 markets around the world and add Azure and CRM Online to the list of optional services. In addition, Microsoft's integration approach will make it easier for developers of other business applications and productivity tools to join.

The importance of doing so is that it can help Microsoft break the problem of a large number of mismatches within its customers caused by different product system classification definitions, which hinders the latter's success and differentiated competition.

In the past year, Microsoft has used its Cortana, Delve, and PowerBI to change the way people interact with Office 365. When building applications and tools, Microsoft has put the need for collaboration at the most basic design level in order to achieve dynamic network-based work.

Microsoft once explored how to use Skype Translate to change the way people of different languages ​​communicate with each other. One year later, Microsoft hopes to break more boundaries that restrict users, that is, to connect people, software and devices more freely. COO Kevin Turner said that more than 1.2 billion Office users will become its solid foundation.

In fact, Office downloads for iOS and Android have reached 100 million, and Microsoft estimates that the potential market size of the new Office 365 E5 can reach $56 billion.

Not only that, Nadella demonstrated the GigJam plan a week ago, which breaks down the barriers between devices, applications and people and makes them interconnected. Nadella said that this is Microsoft's plan for future productivity business processes and communication methods.

Build

Microsoft, which accounts for more than 90% of the PC operating system market share, must find new space in products other than PCs to cope with the decline of the PC industry. The upcoming Windows 10 will become a new opportunity for Microsoft because of its coverage of multiple types of terminals. Nadella said that for the ecosystem, Windows 10 will not only be a technology.

In fact, as early as January, Terry Myerson, director of Windows development, called out the slogan "Windows as a service". For Microsoft, it has changed its habit of launching new products every two or three years. From the details of the products that have been made public, it has enabled Windows 10 to flexibly switch between different hardware devices, especially mobile devices, in terms of voice recognition and interaction, dialog box form design, and the use logic of product functions.

However, the layoffs in the mobile phone department do not mean that Microsoft will give up its own product line. Nadella said in a conference call with analysts after the release of the financial report, "We should not treat mobile phones as an isolated business." Microsoft's integrity in building Windows 10 and the Windows ecosystem may be a major change for it.

In fact, sales of Microsoft's own Surface product outperformed the overall PC and tablet market. Surface overall revenue increased 117% to $888 million.

"We can apply this experience on a much broader scale to achieve growth, innovation, higher economic returns, demand, and create new product categories," Nadella said. "Windows phones and Lumia phones help us participate in the mobile market, which is very important in itself."

Microsoft CFO Amy Hood said that the sharp decline in revenue from the previous quarter indicated that Microsoft would take a more focused approach to its mobile phone business. "We have used this approach on other hardware, and it is a proven model for us."

Microsoft has decided to launch a flagship Windows 10 phone and has kept the presentation of the operating system at the mobile level a mystery. Microsoft has admitted that it has not launched high-end products after acquiring Nokia Lumia, and it hopes to make changes through Windows 10. At the same time, with the experience of Surface, Microsoft hopes that it can boost mobile phone sales in the enterprise market to avoid the weakness of the overall smartphone industry.

Although he did not announce how many models would be released or the specific price range, Nadella said this would be the biggest change in its business operations.

future

The market structure continues to send alarm bells to Microsoft. The perfection of Apple and Google 's mobile ecosystem has had a certain impact on Microsoft's entry, and the lack of support from application developers has always been the biggest question from the outside world about Microsoft.

Microsoft is becoming more open. At the Build conference, Nadella proposed "building a good bridge for developers". Microsoft provides developers with a variety of ways to migrate applications to the WIn10 system. In short, Google's Android and Apple's iOS applications can run on the Windows system after certain processing.

In the eyes of the outside world, as long as Microsoft can attract developers to return to its platform, it will be beneficial to Microsoft's subsequent market competition. However, Microsoft did not give a specific explanation for the cost of this conversion process.

However, it can be seen that Microsoft is adjusting the entire organizational structure with a positive attitude to adapt to new needs. In June, former Nova 30 CEO and Microsoft Executive Vice President Elop will leave, and some executive reorganization lists show that Nadella is establishing a new power core and deploying business priorities. Among them, Terry Myerson, Executive Vice President of the Operating System Division, and Alex Kipman, head of HoloLens, have all been reused.

It is worth noting that Nadella has always been very concerned about the impact of holographic computing and HoloLens on the Windows ecosystem. For him, the development of personalized computing has always been hindered by changes in input/output methods, and HoloLens is expected to solve this dilemma.

"For the first time, we've made it possible for a computer to combine the digital and physical worlds to create a world of mixed reality," Nadella said.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.