Four years ago to the day, Microsoft hit bottom. That’s when the company posted its first-ever quarterly loss. Doubt swirled about whether longtime CEO Steve Ballmer had the vision to pull what had once been the world’s most valuable company out of a prolonged slump precipitated by Microsoft’s utter failure to anticipate or adjust to the mobile revolution.
From that low point, Microsoft tried to regain its footing on the long path back to prominence. It was sometimes rough going. Google passed Microsoft in market cap. The company bought one-time Finnish cell phone giant Nokia for billions only to take another big loss after the acquisition floundered. Finally, Ballmer stepped down. But doubts lingered.
“Microsoft has lost its ability to inspire—not only in terms of inspiring people to do great development work, but even to inspire them with confidence,” we wrote not long after Satya Nadella took the helm as CEO.
Not so much anymore.
The Nokia acquisition now safely behind it, Microsoft has delivered four quarters of profits in a row. The company revealed today that not only did it beat analyst expectations, it once again doubled the revenue from Azure, gaining the scale that CFO Amy Hood says will make the cloud service more profitable. Microsoft’s oft-mocked search engine Bing, meanwhile, has now claimed more than one-fifth of the search market. If you add AOL and Yahoo, which use Bing to power their search services, Microsoft has now captured more than one-third of Internet searches. Microsoft’s transformation from a company that sells boxed software to one that sells services in the cloud is well underway.
That’s on top of savvy moves like finally making good with the open source community it once dismissed and snapping up kid-favorite computer game Minecraft. Once it was easy to wonder whether Microsoft could stay relevant as Apple, Amazon, and Google soared in influence over the tech industry and people’s daily lives. It’s hard to question Microsoft’s relevance today.
Not everything is perfect, of course. Microsoft’s failed phone ambitions are still dragging down its hardware division. Its aggressive Windows 10 installation tactics have alienated many users. It’s still not clear how much money it’s actually making from the cloud, and it’s too early to say how well its pending acquisition of LinkedIn will pan out.
Microsoft hasn’t retaken its crown as the most highly valued company in the world. Apple and Alphabet are both worth more. But with a current market cap of $419 billion, third place isn’t so bad. The dark days of 2012 are starting to look like a mere bad dream.
In its quest to become the world’s productivity hub, Microsoft announced today that it’s buying LinkedIn, the largest professional social network in the world.
Microsoft CEO Satya Nadella announced the $26.2 billion acquisition in a Tweet, quickly driving LinkedIn stock up 48 percent.
.@Microsoft & @LinkedIn: world’s leading professional cloud + world’s leading professional network https://t.co/63V90F77Wj
— Satya Nadella (@satyanadella) June 13, 2016
For Microsoft, the deal makes some sense. As the company has weaned itself off the smartphone business, faced with fierce international competition, Nadella has redefined the company’s mission, calling Microsoft a “productivity and platform company for a mobile first and cloud-first world.”
LinkedIn, which is home to more than 7 million job listings and has substantial mobile traction already, would seem to complement that mission. The acquisition also gives Microsoft a strong foothold in the world of social networking, without having to build a social network from scratch at this late stage in the game.
Not only does it have more than 433 million members worldwide, LinkedIn is also a growing force in business publishing, as leading minds in the business world, including Nadella himself, become publishers on the platform.
For years, Microsoft had been following the likes of Apple and Android in its quest to make a more competitive smartphone. Now, it seems, it’s Facebook that Microsoft would most like to emulate.
“Believe me, I’ve been thinking about this for a long time,” Nadella said in a video announcing the acquisition, which he recorded with LinkedIn CEO Jeff Weiner.
Weiner cast the acquisition as a major opportunity not just for Microsoft, but for LinkedIn, because it gives the somewhat staid social network a chance to be more creative. “This relationship with Microsoft, and the combination of their cloud and LinkedIn’s network, now gives us a chance to also change the way the world works,” Weiner said in a statement.
In the video, Weiner also assures LinkedIn users that Microsoft has promised the company it will “help write the rules,” and have its “independence.”
LinkedIn founder Reid Hoffman was also involved in the acquisition talks. In a statement, he called this “an incredible opportunity for LinkedIn.”
“Today is a re-founding moment for LinkedIn,” Hoffman said.
When a tech giant acquires a company that makes software you like or depend on, it’s hard not be nervous. Will the new owners raise prices, ruin your favorite product, or even discontinue a tool you need?
Those were surely some of the questions on the minds of developers last month when Microsoft announced that it would acquire Xamarin, a company that makes tools that help coders build applications that can run on multiple systems, including those made by Microsoft’s rivals, namely Android and iOS.
But developers got a dose of good news today at the company’s Build conference: Microsoft isn’t raising prices. In fact, just the opposite: It’s making Xamarin’s platform free for all users of Microsoft’s popular Visual Studio coding tool, including those who use the free “community” edition of the product. The Mac version of Xamarin will be free as well, all of which is a far cry from the $999 Xamarin previously charged for its business edition.
Xamarin is also open sourcing some core parts of its platform, meaning that anyone will be able to modify and share code used to create those pieces. You could even take that code and build a competing product. Xamarin also offers an open source project for building across platforms called Mono, which it has just relicensed under more permissive rules.
This fits with Microsoft’s increased focus on open source software and cross-platform development in recent years. It open sourced its .NET development framework in 2014 and released a free version of Visual Studio that runs on Macs and Linux. And yesterday the company revealed new tools that allow developers to run Linux tools on Windows.
That said, Microsoft isn’t giving away all of Xamarin’s source code. “We’re releasing the Xamarin runtime and all the command line tools you need to build apps,” Xamarin co-founder Nat Friedman said in a comment on the Hacker News forum. But he added that some of Xamarin’s code editing tools will remain proprietary, though they’ll be free to use.
Of course, this could still turn out to be bad news in the long run. Facebook ran the cloud platform Parse for nearly three years before announcing that it would shut Parse’s services down. But for today at least, Xamarin users can be grateful that their favorite product’s new corporate overlord doesn’t appear to be mucking things up.
Soon you’ll be able to run Linux apps on Windows thanks to a partnership between Microsoft and Canonical, the company behind the popular Ubuntu version of Linux.
This summer, Microsoft will release Ubuntu for Windows, the company announced at its annual Build conference today. This marriage of former foes will not only bring a set of key Linux tools to the Windows desktop but make it easy to install other Linux programs without the need for those programs to be rewritten to work on the Windows OS.
That might not sound particularly useful, since commercial software companies like Adobe and Intuit tend to prioritize building applications for Windows over Linux. But it could make life easier for programmers. “This is a developer-focused release that removes a major barrier for developers who want or need to use Linux tools as part of their workflow,” Microsoft employee Scott Hanselman explained in a blog post.
More specifically, Ubuntu for Windows is ideal for web developers, says Fintan Ryan of the analyst firm RedMonk. If you’re building a website or web application, chances are it’s going to end up running on Linux. About 68 percent of websites are powered by Unix-style operating systems, according to a W3techs survey; other estimates put that rate even higher. Many programmers, particularly those who work for large corporations, are still stuck using Windows to develop software that will eventually run on Linux, Ryan says. The trouble is, Linux has its own tools and its own way of doing things. Ubuntu for Windows could create a more consistent experience for web developers working on Windows and make their lives a bit easier overall.
The Big Bash
For example, Microsoft demonstrated today how developers can use the the popular open source command line interface Bash to manage a web project from a Windows desktop using the exact same commands they’d use on a Linux server.
Sure, you can already use Linux apps on Windows by running the entire operating system in what’s called a virtual machine, but that can be resource intensive. Many of the tools Linux developers use are already available through Cygwin and other efforts to port open source apps to Windows, but that effort requires each application to be at least partially rewritten.
Ubuntu for Windows will use a new piece of technology Microsoft created called Windows Subsystem for Linux, Canonical’s Dustin Kirkland said in a blog post. Instead of relying on a virtual machine or manually rewriting apps, the Windows Subsystem for Linux translates commands meant for the Linux kernel—the core part of the operating system—into commands for the Windows kernel. It’s not perfect, Hanselman and Kirkland admit, and there’s much work left to be done. But it should become possible to run many Linux tools on Windows without needing to make any changes.
Ubuntu for Windows is part of Microsoft’s larger strategy to make Windows the main place programmers develop applications for a wide variety of platforms, from Linux to Android to iOS. But Ryan doubts Microsoft will win any Linux developers over to Windows with this new piece of technology. Rather, he thinks it’s designed to keep developers from defecting away from Microsoft. Given a choice, many developers who use Windows for work today would rather just use Linux or the Unix-like Macintosh OS X operating system to do development work than mess with virtual machines or ported apps. Making life easier for them might keep them using Microsoft products once they have a say in what they use.
It looks like Microsoft is finally getting the hang of this whole open source software thing.
Last year the company revealed that it had created a custom bundle of networking software built on the open source operating system Linux. Now Microsoft has shared some of the code for that software with the world, so that any other company can use it or modify it for their own purposes.
The bundle, dubbed Software for Open Networking in the Cloud, or Sonic for short, isn’t an operating system. It’s a set of software that can theoretically run on any version of Linux, though so far it’s only been tested on Debian.
This isn’t Microsoft’s first foray into open source, nor the first time it’s written software for Linux. But Sonic differs from most of the company’s other open source projects in that it’s software that the company wrote to solve its own problems, as opposed to being an attempt to get more developers using the company’s projects.
Sonic is a software platform that runs on network gear such as switches and routers. Typically this software is baked right into a networking product, but a growing number of web companies—including Google and Facebook—are creating custom software for their networking gear that allows them to scale more quickly. They can make modifications on the fly without having to wait for updates from a third party vendor—or buy entirely new hardware.
Microsoft’s engineers found it difficult to manage the wide variety of software that shipped with network gear manufactured by different vendors, said Microsoft Azure networking principal architect Kamala Subramaniam in a blog post. What the team needed was a single networking platform that runs on all of its gear. So they built Sonic.
A Big Step for Microsoft
Sonic doesn’t directly compete with any existing Microsoft product. It’s designed for networking equipment—specifically switches—rather than desktops or the sorts of servers you typically find running Windows. Theoretically you could run Microsoft’s slimmed down version of Windows on network switches, but you’d need to do a lot of extra work. That’s why Microsoft decided to use Linux instead of Windows for switches in the first place.
That’s a big step forward for Microsoft. Sure the company has released a code editor and even an open source artificial intelligence framework that can run on Linux. It’s also promised to make a Linux version of its popular database software SQL Server. But the point of those endeavors is to get Microsoft technology into the hands of Linux developers, rather than to use open source to solve Microsoft’s own problems.
One of the core ideas of open source is that it’s silly for every developer at every company to solve the same problems again and again. Using and contributing to open source software allows companies to pool their resources to solve common problems. But Microsoft has historically resisted such pragmatic solutions in favor of writing its own software using its own programming languages and running on its own operating systems, a tendency referred to as “not invented here syndrome.” By building Sonic on existing open source software, Microsoft saved time and money. By releasing its own code, Microsoft may not only be saving other developers a few headaches, but potentially convince outside companies to help improve the company.
Microsoft beat analyst expectations for its most recent quarter, pulling in a profit of 78 cents a share on $25.7 billion in revenue, versus predicted 71 cents on $25.26. The company touts to strong growth in its “Intelligent Cloud” division as one of the main highlights of the quarter. Year over year, the division grew by 5 percent to $6.3 billion in revenue. That certainly bodes well for the Microsoft, which is seeking to reinvent itself as a mobile and cloud computing company, markets led by rivals like Apple, Amazon, and Google. But Microsoft’s numbers say little about how it actually compares to those rivals.
At first glance, it appears that Microsoft is making far more on its cloud services than Amazon, which made $2.41 billion last quarter from its Amazon Web Services division. The problem is that, in reporting its results, Microsoft bundles its Azure line of cloud services with Windows Server and other traditional enterprise software sales together under the label “Intelligent Cloud” without revealing what percentage of that total actually comes from Azure. That makes an apples to apples comparison with Amazon Web Services impossible.
Make no mistake, Microsoft’s cloud is growing fast. Azure revenue grew by 140 percent, nearly triple what it was at this time last year. But without knowing the actual starting numbers, it’s impossible to tell for sure if it’s actually making a dent in the cloud market.
Microsoft
Microsoft is continuing its march toward a more open future. The company said today it will open source a core piece of its Edge web browser, the successor to Internet Explorer.
Microsoft will publish the source code for Chakra, the part of Edge responsible for running JavaScript code, next month on the code sharing and collaboration site GitHub, the company said in a blog post. What’s more, the company will accept code contributions from developers outside of Microsoft—a point driven home by the fact that it made the announcement not at a company event but at the JSConf US Last Call developers conference in Florida.
This move isn’t the same thing as open sourcing the entire browser. You won’t be able to actually browse web pages using ChakraCore. But Microsoft thinks its JavaScript engine will find use in a wide range of applications, such as games, cloud services and Internet of Things devices.
That may seem counterintuitive, given that JavaScript was originally created as a programming language for web browsers. But in recent years the language has found a home in other applications, thanks to Node.js, a platform for running JavaScript on servers or other computers. (Node.js depends on Google’s V8, the JavaScript engine that powers Chrome.)
Why, then, would developers want to use Chakra instead of V8? Microsoft claims that Chakra has better support for the latest version of JavaScript. Chakra is already used by Microsoft outside of Edge to render JavaScript on the Xbox and Windows Phone, and on the server side for technologies from Cortana the Outlook.com.
Node.js can already run on Chakra instead of V8, but only on Windows systems. But Microsoft will work to make Chakra available on other platforms, according to the company. Making the software open source will open up Microsoft’s options for having it bundled with Linux distributions, as well make it possible for independent developers to port ChakraCore to other platforms.
And by sharing the code for Chakra, browser developers at Apple, Google and Mozilla can learn from Microsoft’s approach and potentially improve their own JavaScript rendering engines.
‘Tis the season to sell gadgets, and that’s what Microsoft is presumably trying to do in its latest holiday ad revealed today. Except instead of touting the benefits of its Surface Pro 3 over Apple’s MacBook to the tune of “Winter Wonderland” like last year, or attacking Google with a mock website “Scroogled” as in 2012, Microsoft this year is reminding us to “spread harmony” as it ostensibly makes peace with its long-time competitor Apple. Really.
The new ad features Microsoft employees walking from the company’s 5th Avenue store in New York City to Apple’s signature cube a few blocks away. Alongside a local New York children’s choir, Microsoft employees from around the country sing “Let There be Peace on Earth” outside the Apple store. As what appear to be Apple employees trickle out of the store, the Microsoft workers embrace them. Let there be peace on Earth indeed.
The feel-good ad may be a departure from Microsoft’s antagonistic holiday spots of years past, but it’s in line with some other hell-freezing-over type moments from earlier this year. Kathleen Hall, corporate vice president of global advertising at Microsoft, tells Ad Age that the spot was a moment of “setting differences aside and coming together.”
But especially at a time when parts of the planet are being torn apart by real strife, exploiting a sincere sentiment for commercial purposes seems a little crass. Then again, isn’t that what Christmas is all about?
Microsoft just inked a new deal with longtime rival Red Hat to support the company’s version of Linux on Microsoft’s cloud service Azure.
Customers can already run Linux on Azure, but the new partnership will expand support for running so-called “hybrid clouds,” in which applications may exist in both private data centers and on public cloud services. More significantly, Microsoft and Red Hat support teams will work together from the same facilities to support Red Hat customers using Azure. Microsoft vice president of cloud and enterprise Scott Guthrie said during a webcast today that this is the first time that he knows of that Microsoft has “co-located” support teams with another company.
The deal is the latest example of Microsoft playing nice with a former rival. “When we started [Red Hat Enterprise Linux] I never would have thought we’d do this,” Red Hat president of product and technology Paul Cormier said during the webcast.
As recently as 2007, Microsoft was threatening to sue Linux users for patent infringement, though it soon backed down. But the information technology world has changed since then, and Microsoft has had to change along with it. Linux and open source software have gone from being a fringe movement in the 1980s and `90s to being merely controversial in the early 2000s to being business as usual today.
The business reasons for the partnership are fairly simple, Cormier said. Red Hat’s customers, especially those at large companies, tend to run a mix of different technologies, including both Linux and Microsoft, and they want those technologies to communicate with each other without hassle. Red Hat and Microsoft first linked arms in 2009 to ensure compatibility between their virtual machine technologies, a deal that followed a controversial partnership between Microsoft and Novell in 2006 that shielded SUSE Linux users from Microsoft’s lawsuits.
Microsoft’s relationships with the open source community have gradually thawed since then. The company started supporting Linux on Azure in 2012, and now roughly 25 percent of all Azure instances run Linux. Last September the company revealed that it was even using a custom version of Linux behind the scenes to help run Azure. But Microsoft’s biggest turnaround was probably its release of its programming framework .NET to the open source community—the closed world of Microsoft opening up.
Microsoft is set to unveil some new Windows 10 devices on Tuesday, October 6. The company will stream its media event in New York City for all to see. Watch the livestream on Microsoft’s website starting at 10am eastern time, 7am pacific.
What to expect? New phone hardware running Windows 10, certainly. And a Surface device, probably. Microsoft’s mobile PC, a hybrid between a laptop and a tablet, is seeing new competition now from Apple (iPad Pro) and Google (Chromebook Pixel). So the Surface is running in a completely different race than it was back when it originally launched. We also expect updates to Microsoft’s wearable fitness tracker and VR/AR products. Tune in!
Microsoft is hosting a VR hackathon in Russia in a few weeks, and while this itself isn’t noteworthy (unless you’re a hacker in Russia, in that case we’re super excited for you!), what’s worth mentioning is that the company will be handing out Microsoft-branded VR headsets to developers at the event. A picture of the alleged VR headset has surfaced showing a cardboard casing that uses a Lumia as a display. The apparent name of the Google Cardboard competitor is the “Microsoft VR kit.”
There’s no word about whether the Microsoft VR kit will be on sale for the general public. As more and more content is made for a VR platform, we can expect to see more companies trying to make headsets. However, Google Cardboard definitely has a leg up on this DIY-friendly VR viewer—and that leg up is called Android. Microsoft has all but killed Windows Phone, so a long-term plan for a product that utilizes a Lumia doesn’t bode terribly well. That said, Microsoft’s Hololens has earned ample praise, and it’s incredibly possible that the company is using the cardboard kit as a means to lower the barrier and encourage VR developer interest.
And hey, if it’s all just for fun… it’s not like the materials were terribly expensive.
Windows 10 is barely two days old and it’s already huge. How huge? According to a blog post from Microsoft, 14 million computers are running Windows 10 merely 24 hours after its release. That’s a big number, but let’s give it some context.
Back in 2012, Microsoft CEO Steve Ballmer stated that Windows 8 sold four million copies in four days, which he assured outsold Windows 7 in its first few days. But copies sold does not equal how many computers are running the OS, this number should be less. Even if we take into account that there were 1.25 billion computers using Windows leading up to the Windows 8 release (compared to 1.5 billion Windows users before Window 10’s release), the growth from 8 to 10 is exponential.
And this number will keep growing. Even with 14 million computers running, Microsoft has yet to meet the demand for Windows 10, and will keep rolling out upgrades in waves. So if you’ve reserved your copy of Windows 10, be patient and you’ll get your turn. But if you haven’t, you should.
Microsoft CEO Satya Nadella speaks during the Lenovo Tech World in Beijing, China, May 28, 2015. ChinaFotoPress/Getty Images
It’s been a rough quarter for Microsoft. The company took a $7.5 billion write-down in its latest quarterly earning report today after conceding earlier this month that its acquisition of Nokia’s handset business wasn’t going to turn it into a viable competitor in the smartphone market. Microsoft CEO Satya Nadella’s decision to refocus his company’s priorities led to massive layoffs. But it also appears to be leading to growth in the areas where Microsoft sees its future.
The Nokia boondoggle—former CEO Steve Ballmer’s parting gift to Nadella—led to what Bloomberg called the company’s biggest quarterly loss ever. Understandably, then, Nadella chose to focus on the future instead of that dismal moment now officially in its past during his earnings call with analysts today. He promised a more focused approach not just to mobile but to the rest of Microsoft as well. “Business process, collaboration, communications, these category boundaries are things I believe are going to change,” he said.
Nadella talked up the acquisition of field service software company FieldOne; the launch of the Cortana Analytics Suite; and the company’s plans to reach $20 billion in cloud computing revenue in 2018. And of course Windows 10 is just days away from launch.
“While the PC ecosystem has been under pressure recently, I do believe that Windows 10 will broaden our economic opportunities and return Windows to growth,” Nadella said.
Other opportunities Microsoft has sought to seize are starting to yield results. Not counting the Nokia write-down, Microsoft actually beat analyst projections for the previous quarter. The company saw solid growth in cloud services, search (21 percent revenue growth), and Xbox (27 percent revenue growth). Azure, Office 365, and the Microsoft Dynamics cloud enterprise software line also all saw at least double-digit revenue increases.
Microsoft’s historic cash cow Office is meanwhile making a smooth transition to to the cross-platform mobile and cloud world with 150 million downloads of Office Mobile for iOS and Android. Nadella said that 50,000 new small and medium businesses adopt Office 365 per month and that the service is already in use at four out of five of the Fortune 500.
Ultimately, it seems that if Microsoft can keep convincing the world that it’s a new company with new priorities and new products worth buying, the worst could be over for a company with a starkly uncertain future when Nadella took the helm. Yet not everything from the Ballmer era resulted in bad news. The Surface tablet, Microsoft’s would-be iPad competitor, saw 117 percent revenue growth.
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Microsoft Has Zoomed Back to Relevance after Hitting Bottom