Steve Ballmer, the CEO of Microsoft, gave the opening keynote at CES this year. This isn’t particularly new for him; he gave the opening keynote last year. What is different about this year are the calls that he not be invited to speak at CES again. Steve’s talk covered a few topics:
Steve announced that 8M Kinect boxes were sold in the first 60 days of availability. That’s a huge number! Steve had debuted Kinect at CES last year, and so it made sense for him to open with the news of its success. He also announced the extension of Kinect to power both avatars and Netflix. The Xbox now streams Netflix, Hulu, Zune, and ESPN content. As I have said before, Xbox has the potential to be the ‘cable killer’ that Apple TV could never be.
Steve gave a demo of the weak selling Windows Phone platform, and basically pleaded with the audience to try to the product out. I really liked how he is using the wildly popular Xbox platform and its integration with Windows Phone as a selling point. It’s very similar to the way Apple initially used iTunes to sell the iPhone to iPod users. Windows Phone is a very decent product, my big fear is that it is entering the market a bit late to compete with iOS and Android. Providing a compelling reason to the 30M users of Xbox Live to switch phones could be the point of differentiation needed to get traction.
Microsoft had both publically and privately reiterated their commitment to the Windows Phone platform several times (they constantly refer to how they are ‘all in’). It’s a decent product, fuelled by a huge media campaign, and tight integration to successful products. It actually has a chance.
System on a Chip:
After praising the huge success of Windows 7, which honestly has exceeded every conceivable expectation, Steve took some time to discuss Windows 8 and ‘System on a Chip.’ Microsoft now envisions embedding Windows into the microprocessor itself, using the power sipping designs of ARM (the brains behind the iPad and iPhone processors) and manufactured by Nvidia, Texas Instruments, and Qualcomm. The advantages of switching to SOC include lower power consumption and faster performance (although I don’t know how the new architecture will react to the constant updates MSFT throws at their OS). This is a huge blow to Intel and AMD, the current duopoly that makes the processors used by PCs.
What was missing:
Microsoft doesn’t have a credible tablet strategy, and appears to be happy without one. Similar to their slow response to touch based phones, they’re just digging a hole for themselves in the tablet space that will be extremely expensive to dig out of. Meanwhile Apple and Android will divvy up the tablet space amongst themselves.
Microsoft didn’t mention anything about their SaaS platforms. That’s a shame because the Office franchise, which makes up a huge portion of MSFT’s revenue, is being attacked by SaaS based offerings. MSFT’s recently released ‘Live’ offerings are beginning to be credible, but don’t appear to be a focus area for the company. That’s just more good news for Google as they continue to charge ahead with their SaaS apps and complimentary Chrome OS.
Last, Ballmer didn’t waste a lot of breath on Bing. That’s a shame since Bing is clearly making a lot of headway against Google and could become the center of a very interesting advertising strategy. I was disappointed.
Should Ballmer get the slot next year?
The talk about taking away the keynote slot from MSFT is foolish. MSFT is the glue that links CES heavyweights like Intel, Nvidia, Texas Instruments, Lenovo, HP, Qualcomm, and others together. Even if you think Windows is boring, it’s crucial to the new product introductions revealed by everyone else. The fact that ARM’s share price sky rocketed upward by 13% based on Ballmer’s keynote comments tells you how relevant MSFT still is.