This Is Why Windows PCs Are Becoming More Annoying

Over the years, I’ve learned that the best way to get an accurate picture of what Microsoft is really doing is to look at the places where the company is legally required to tell the truth.

For example, I found interesting tidbits when digging through SEC-mandated quarterly financial reports. But those revelations are usually written in language that has been scrutinized by a veritable army of lawyers so that it satisfies the letter of the law and still obscures relevant facts.

Too: Is Windows 10 too popular for its own sake?

For a full, unfiltered view of what a public company is doing, there’s nothing better than a subpoena that compels the company to hand over internal communications. That’s what happened earlier this month when a document from the ongoing battle between Microsoft and the US Federal Trade Commission over its acquisition of Activision Blizzard briefly became public.

That June 2022 document includes two lengthy memos from Microsoft CEO Satya Nadella to the company’s board of directors and its senior leadership team, as well as a heavily revised 50-slide PowerPoint presentation titled “State of the Business.” (I found the document online Case Docket for the United States District Court for Northern California, however it appears to have been removed. you can read the whole thing yourself thanks InformationWho a public copy posted online,

The document contains fascinating details about every aspect of Microsoft’s business, including key takeaways about its cloud products and Xbox gaming platform. I focused on some of the revelations about how the company plans to squeeze additional revenue out of its massive installed base for Windows.

Increasingly, Microsoft is treating Windows as a giant billboard where it can promote and cross-sell other products. Don’t believe me? Here’s a summary of Nadella’s initiative in a memo titled “Microsoft’s Growth Strategy: A Plan of Record”:

Windows extends the PC and serves as a seamless integration hub for all our products and services…

There are currently over 1.3 billion active Windows devices, of which ~750 million are owned by consumers. Our priorities are maintaining the competitiveness of the Windows ecosystem and increasing the adoption, engagement and monetization of our applications that rely on the ecosystem. Windows 11 adoption will give users a better experience and more effectively monetize our apps and services. We have great opportunities to improve adoption and monetization of key high-value services on Windows PC, including gaming (Game Pass on PC), OneDrive (“backing up your PC”), consumer productivity (M365 consumer subscriptions), and advertising through the browser. important place for and feed.

Of course, this should really come as no surprise. If you are a large global software company selling a mature product in a market that is no longer growing and where there is significant downward pressure on the price of the product, you need to start looking elsewhere for the revenue that will keep that business unit relevant.

Too: best windows laptop

One obvious solution is for Microsoft to do with Windows what the company has already done with its Office product, turning the one-time purchase license into a subscription service. Some of this work has already been done on the enterprise side, where customers typically buy Windows Enterprise edition licenses with Microsoft 365 E3 and E5 subscriptions.

Microsoft is actively working to push Windows to the cloud, with Windows 365 already available for enterprise customers who want to give their employees “the full Windows PC experience through their browser.” It may be a consumer business someday, but it will be years before a cloud-based version of Windows is ready for mass adoption by the global consumer market.

So, what to do in the meantime? Meet Microsoft Plus, which some MBAs in Redmond have decided to call the collection of consumer services the company wants to cross-sell, upsell and promote via PCs running Windows. This is listed under the heading “Current Priorities” for the Modern Living Solutions sector (the MBA-speak is thick in this document).

In this new era of the PC, we envision serving more than 1.5 billion people every day with productivity tools, software and services across work, life, education and play through a unified and personalized Windows+ experience.

,

Microsoft Plus Services Attached: Increase engagement and use of Microsoft and third party services such as Microsoft 365 Personal/Family, Xbox Game Pass and Microsoft Edge/Bing through integration on Windows 11.

In fact, there are several instances in this memo that refer to greater integration between Windows 11 and these Microsoft Plus services. It is part of the plan of records for the Search, Advertising, News, Edge (SANE) group:

Our primary objective is to create differentiated and personalized content, discovery and shopping landscape to drive maximum usage intensity among our existing millions of users. We will increase the use of Bing and Edge by differentiating our products for high-value consumer needs (for example, by making Edge the best browser for shopping). In addition to better differentiation, we aim to drive greater usability and attract new consumers through enhanced integration into the Windows Shell as part of Windows 11.

We’re already seeing some of this “enhanced integration into the Windows shell” with the defunct Windows 11 Widgets feature, which includes news headlines and ads from Microsoft’s advertising network as a removable option.

Too: Windows 11 Setup: Which User Account Type Should You Choose?

What about Microsoft Teams? It’s also embedded in Windows, as part of Microsoft’s effort to fight the threat of Google’s Chromebooks:

We’ve been focusing on Windows, which somehow helps drive almost half of our company’s total revenue. Windows 11 adoption is our priority in the business sector. In consumer and education, we’re taking on Chromebooks with the integration of Teams in Windows 11.

And no, Windows 10 is not immune to this pressure to integrate. The review of results for Microsoft 365 Consumer Groups includes the following information:

With lower-than-expected PC activations, this translates into continued sales weakness. … Selling Microsoft 365 in addition to new PC sales and activations remains a focus area for the team, which includes working with Windows on product changes within Win10 given the size of the active user base. The product experience and new premium value for Microsoft 365 are in focus, as well as driving engagement of our low cost OneDrive/storage offering.

You may have already seen some people complaining about “advertisements” in Windows for OneDrive subscriptions. Expect more of this type.

Too: How to record screen in Windows 10 or Windows 11

Of course, this sort of thing isn’t unique to Microsoft. Apple has been aggressive about pushing its services to Mac and iOS devices, and it makes huge amounts of money from advertisements on its App Store. And ads are an important part of the Chromebook experience, along with Google services. But this is relatively new territory for Windows.

So far, Microsoft hasn’t succumbed to pressure to put actual third-party advertising into the Windows shell. But you have to believe that someone in Redmond is working on those options. Can’t leave money on the table with a revenue shortfall in Q4.