As I write this, I'm gearing up for the 2010 Professional Developers Conference (PDC), a smaller-than-usual show that will be held this year at Microsoft's Redmond campus. So I'm hoping to have some news about Windows 8 in time for next month's column, as well as other PDC-related information. But as we careen towards the end of 2010, there's still a lot going on, between Windows 7 momentum releases like the Internet Explorer 9 Beta release (discussed last month) and Windows Live Essentials 2011, and of course the pending Small Business Server updates, in which I'm particularly interested. But forget all that for now. I've got other fish to fry.

 

Windows Phone in the Enterprise

I like Windows Phone 7 so much, I wrote a book about it. But I do have some worries about its applicability in the enterprise. It comes down to one simple issue: The consumerization of IT. You either love it or you hate it, and that attitude should guide your decision about Windows Phone 7, at least for this next year.

Windows Phone 7 is a system aimed, primarily, at consumers who want to buy their own phones and use them at work. And in record numbers, businesses aren't just allowing this, they're embracing it. After all, if their workers actually want to buy their own phones, they can save hundreds of dollars in charges per employee every single month. What's not to love? As long as the thing supports some modicum of Microsoft Exchange policies, employees can hook up with their work accounts and busily toil on work-related projects day and night.

The dark side of this approach is that these phones are also highly connected mini-computers capable of sending sensitive corporate data to others, inadvertently or not. And for some companies, that's simply not acceptable. These businesses want to tightly control which mobile devices can be used within their organizations, and they use high-end Microsoft (or RIM) servers to make it happen. In such scenarios, Windows Phone isn’t an option, not yet. Microsoft will likely add Windows Mobile-style management capabilities to Windows Phone by the end of 2011. But they're not available now.

 

Windows 7 Has Been a Huge Success. Now What?

Microsoft CEO Steve Ballmer said something interesting in the wake of the successful launch of Windows Phone 7 back in October. When asked what the company's riskiest product was, he didn't say Windows Phone or Kinect, or anything obvious. Instead, he replied that it was the next version of Windows, still known as Windows 8.

I find Ballmer's answer to be incredibly telling. Windows 7, as I'm sure you're aware, is a huge success. Microsoft sold over 240 million licenses to its latest client OS in the first year of availability, a rate of over 20 million per month. Windows 7 is running on over 93 percent of all new PCs, Microsoft says, and already owns almost 20 percent of the installed base. And there's even good news from the business sector, where IDC reports that almost 90 percent of all businesses have at least some plan to deploy Windows 7.

So what's the problem? Windows 7 was largely a huge success because its predecessor was so bad. And while Windows 7 is indeed a refined, nicely tuned sequel to the reviled Windows Vista, it didn't exactly push any boundaries. This was a safe and easy release, an incremental update, a minor refresh of a solid foundation. How will Microsoft possibly outdo itself with Windows 8? It's quite likely that the software giant will ship a very high quality new version of Windows in 2012. But it might actually be a tough sell. It's one thing to get people to upgrade from something horrible. But how do you get them to upgrade from something everyone loves?

 

HP Slate PC 500

By the time you read this, HP should have begun shipping its business-class slate PC, imaginatively titled the PC Slate PC 500. This keyboard-less iPad lookalike features a low-end, single-core Atom processor, 64GB of solid state storage, 2GB of RAM, and Windows 7 Business, which includes both multi-touch and Tablet PC-based input capabilities. HP is thus targeting the device firmly at the business market, but it's hard to escape the feeling that the company isn't behind its Slate PC in any meaningful way.

Remember that this device was first unveiled, with some fanfare, by Microsoft CEO Steve Ballmer back in January 2010. Microsoft is HP's biggest partner, and the software giant has a lot riding on tablets, given the success of Apple's consumer-oriented iPad. But since the announcement, HP purchased Palm for its webOS, and it has also announced that it will be delivering a webOS-based tablet in the months ahead. When you factor in news that Intel won't have a credible tablet chipset available until early 2011, the Slate PC has "albatross" written all over it. My advice is to skip this computer. But then I don't have to tell you that: Businesses have been ignoring tablet PCs in droves since 2002.

 

Office 365 is More About Subscription Pricing than the Cloud

One of my big complaints about Microsoft's Business Productivity Online Services (BPOS), through which the software giant has offered hosted versions of Exchange, SharePoint, and other popular servers, is that it has never been particularly affordable for small businesses. Which, when you think about it, is the type of business that could most benefit from offsite IT services rather than expensive and complicated on-premise solutions.

That's all changing with a new Microsoft product strategy that's resulted in a more cohesive online offering called Office 365. Explaining Office 365 is hard only if you are truly aware of all of the productivity-oriented online services Microsoft previously had, all of which were branded and marketed differently. For example, it consolidates BPOS, Office Live Small Business, and (soon) Live@edu, all under one branding umbrella.

But Office 365 actually is a way for Microsoft to sell its Office and Office-type server products as consolidated hosted offerings. It's about subscription pricing, which for Microsoft is of course the holy grail because its business customers tend to purchase new versions of Office, Exchange, and other related products on increasingly long schedules.

There will be two versions of the offering: Office 365 Beta for small businesses and Office 365 Beta for enterprises. Both are subscription services that include access to Office Web Apps, Exchange Online, SharePoint Online, and Lync Online (a next-generation version of Office Communications Server).

Pricing is improved over previous BPOS pricing tiers. The small business version targets businesses with 25 or fewer employees and will cost $6 per user per month. The enterprise version adds the Office 2010 Professional Plus client software, 24x7 support, and other features, and will cost $2 to $24 per user, per month and have volume-license options.

Office 365 is currently available for testing in a beta version (office365.com). And the software giant expects the final version to hit sometime in 2011.

 

An Apple in the Enterprise?

There's no doubt about it, Apple is on a roll. The company continues to make huge gains in the mobile market with its iPhone and iPod touch devices. The iPad, while slowing from a sales perspective, has still jumpstarted a new product category and even its Mac computer line is making steady gains, especially in the US, where it accounts for one in 10 of all consumer PCs. For Microsoft, however, the biggest threat from Apple is the same as it's ever been: Apple is simply the most influential company in the technology arena.

Which leads me to a semi-obvious question: At what point does Apple simply go from being an annoyance, from a Microsoft perspective, to being a real threat? After all, Apple has surpassed Microsoft from a market cap perspective, and while that's a fairly artificial measurement (Microsoft's profits are still astronomically higher than Apple's, for example), it's pretty clear that if current trends continue, we're going to have to drop the "artificial" language from that description pretty soon. It's entirely possible that Apple will be both bigger and more influential than Microsoft.

This may not be as dire as it sounds. Apple's gains haven’t come at Microsoft's expense, at least not yet, and not in Microsoft's core markets. As noted above, Windows 7 is preinstalled on over 93 percent of all PCs today, and while Apple owns about 10 percent of the US market for new PCs, it owns only 4.2 percent worldwide. Virtually all of the other computers being sold are running Windows.

Apple makes no credible server products and doesn't try to. Its hosted offerings are aimed at the tiny percentage of consumers who have both Macs and iPhones. Microsoft, meanwhile, is making huge moves to transition its client and server products from local, on-premises solutions to the cloud. All while Apple is distracted by adding iOS features (from the iPhone and iPad) to its Mac OS X product line.

Apple is growing in areas that are important, yes, but not threatening to Microsoft's core businesses. And while Microsoft does need to establish itself in the mobile market, this is the one tech market that’s growing almost exponentially. Apple and Microsoft can grow together without necessarily harming the other, at least until this market matures.

There will continue to be much gnashing of teeth in Microsoft camps over the rise of Apple and what that portends. But remember, Microsoft does its best work when it has competition, and Apple is one of its most aggressive competitors yet. This battle, such as it is, is good for Microsoft, good for the industry, and good for consumers of technology. My guess is that Apple will continue to be a huge presence in the consumer market for the foreseeable future, but then so will Microsoft. And Microsoft will continue to handily beat Apple in businesses and in the cloud. Is this really something to stress over?

Read more about Windows 7 and Windows 8:

Zac Wiggy's Windows 7 Deployment blog post

Paul Thurrott's First Windows 8 Details Leak

Read more about Office 365:

B.K. Winstead's Microsoft Office 365 Offers Promise of Productivity

Caroline Marwitz's SharePoint Online is Turning the Microsoft Tanker Around Very Fast