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Windows Is No Longer ‘The Most Important Layer’ at Microsoft

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Microsoft has made a lot of changes to its business model since Satya Nadella took over as CEO from Steve Ballmer. The company has become far friendlier to open source and Linux, going so far as to ship a Linux kernel in Windows and to publish its exFAT specification. It’s also recently announced a range of new Surface devices, including a Surface Duo dual-screen device that runs Android instead of Microsoft’s canceled Windows 10 Mobile.

According to Satya Nadella, the changes go deeper. The writing has been on the proverbial wall on this point ever since Microsoft reorganized Windows development and put the core OS team underneath its cloud and AI organization. But it’s still striking to hear Nadella verbalize this new stance, as he did in a recent interview with Wired. When asked if Microsoft would ever consider getting back in the mobile OS business, or if it considers its lack of presence in that business to be a critical problem, Nadella emphatically dismisses the idea.

“The operating system is no longer the most important layer for us,” Nadella said. “What is most important for us is the app model and the experience. How people are going to write apps for Duo and Neo will have a lot more to do with each other than just writing a Windows app or an Android app, because it’s going to be about the Microsoft graph.”

The idea that the device is the center of the computing experience? “just nonsense,” says Nadella, who apparently feels that the future is “cloud-powered, if anything.”

There’s a tremendous contradiction in claiming the future has nothing to do with devices at an event where you are launching multiple new devices, but what Nadella seems to be driving at is the idea that apps and overall experiences, not hardware or operating systems, is the future of computing. Microsoft likes to talk about the idea of carrying work or fun from one device to another, despite differences in underlying hardware or operating system. The company has been working to break down barriers between the Xbox and PC ecosystems and has implemented a variety of features in Windows intended to improve this sort of functionality, including “Pick up where I left off” and Windows Timeline.

Windows-Timeline-Feature

Despite this, there’s something fundamentally strange about hearing Microsoft declare that the OS isn’t “the most important layer.” Windows and Office were long kings of Microsoft’s world, but Office, ultimately, is an application that runs on Windows. Microsoft may have failed to gain a foothold in the mobile market, but neither Apple nor Linux have seriously disrupted it. Even as Microsoft has expanded into new cloud spaces, Windows has provided the bulk of its income.

But to hear Nadella tell it, all of that is changing. The Surface Duo and Surface Neo aren’t just dual-screen devices, they’re attempts to create a new productivity solution that people can tap into regardless of operating system preferences. It’s not that Microsoft has any intention of walking away from Windows, so much as Microsoft wants to be known as the premier productivity company whose applications and services you use whether you’re a Windows user or not. Office, from this perspective, is probably more important to Microsoft’s long-term future than Windows itself is.

After Microsoft and Intel missed on mobile, there was a lot of derision in the tech community about the performance of the two old companies, and quite a bit of speculation about how both would be crushed under the weight of ARM and a billion or more smartphone sales every year. This has not occurred. Instead, with the smartphone market maturing, Intel and Microsoft are both moving to focus on cloud growth and the AI/machine learning markets. Having been driven out of smartphones, both firms have been determined to be first-movers in the new era of computing we find ourselves in.

While the two firms have very different market roles, there’s a definite parallel between their positions. Intel is moving into new markets a focus on GPU compute with its new Xe architecture and into AI with its purchase of Mobileye and Movidius. Intel still considers PCs to be a central and important tier of its business, but it doesn’t look to the PC to define personal computing or its own future the way it once did. Microsoft continues to manufacture the dominant OS of the desktop and notebook world, but its biggest focus and self-described opportunities are in applications and the cloud. Android and Linux are both part of the Microsoft ecosystem now. Even Microsoft’s willingness to work with AMD and Qualcomm on various Surface products could be read as a subtle message about where the company believes its future lies. Intel’s partnership will remain important to Microsoft, but the company clearly believes it needs to work with a wider range of vendors than it has tapped in the past.

Microsoft and Intel’s vision of computing may be here sooner than it seems. Ten years ago, most people didn’t own smartphones. Today, they’re ubiquitous. Maybe in another decade, the idea of caring about whether you’re using an Android or a Windows device will seem as archaic as the concept of being stuck with a turn-of-the-century Nokia — nostalgia notwithstanding.

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