Foley on Microsoft

Feeding Microsoft's Cash Calves: What Will Replace Windows and Office

Windows and Office have been Microsoft's cash cows for years, but what will the next generation bring?

• By Mary Jo Foley
• 06/01/2011

Microsoft watchers, especially those on Wall Street, are thoroughly obsessed with Windows and Office, the two Microsoft cash cows that have powered the company for most of its 35-plus years.

Given that the Microsoft fiscal 2012 kicks off next month on July 1, it's prime time to think about the potential cash calves that could help the 'Softies wean themselves from Windows and Office dependence.

Brent Thill, a UBS analyst who covers Microsoft, recently asked me to come up with a top 10 list of Microsoft products and technologies to which investors should be paying attention. I offered my list of 10 things Microsoft has done lately to start fattening some of its potential cash calves -- here it is, in no particular order:

1. Offering management tools that go beyond managing Windows PCs, tablets and phones. Microsoft will have software in place to manage iPads (iPhones and Android devices, too) later this year, when it ships System Center Configuration Manager 2012.
2. Building more applications for non-Windows-based platforms. Microsoft delivered a killer Bing app for the iPhone, along with OneNote for the iPhone and, just recently, PhotoSynth for the iPhone (a photo-stitching program).
3. Fielding an update to Windows Phone 7 that developers -- and maybe even some business customers -- might find compelling. Microsoft appears to be on track to deliver a major update ("Mango," aka Windows Phone 7.5) this fall, which will enable more interactive and customizable phone applications.
4. Buying a place at the mobile phone table. Microsoft got a lot more from its deal with Nokia than just a new phone partner. It sounds like Microsoft is going to get cross-licensing rights on a lot of new intellectual property, courtesy of Nokia, including camera and mapping technologies and industrial-design functionality.
5. Making good on the millions it has invested in the potentially lucrative electronic medical records field.
6. Obtaining Federal Information Security Management Act (FISMA) certification for the hosted business apps of the Microsoft Business Productivity Online Suite (BPOS).
7. Continuing to find ways to sell SharePoint, the all-in-one search, collaboration and social-networking product. It's close to a $2 billion per year business for Microsoft -- with Microsoft adding 7.3 million new SharePoint users every year for the last five years. With the Office 365 release, SharePoint Online finally gets some of the on-premises SharePoint 2010 capabilities and better multi-tenancy support.
8. Getting real returns from its more than 10 years of hefty investments in Internet protocol television (IPTV). Supposedly, Microsoft is combining its Xbox and IPTV assets to use TV as leverage to sell Xbox to a wider audience via an Xbox service, code-named "Orapa," that could hit later this year.
9. Not just keeping up, but actually staying at the cutting edge (in terms of standards compliance and performance) in the browser space. The big question is whether its built-in reliance on Windows will impact its standards conformance going forward.
10. Making good on the promise of unified communications. Microsoft is spending lots of money to get users to understand all the Voice over IP and conferencing capabilities of its Lync product, going so far as to make the iPhone and iPad -- and maybe even Android phone and tablet devices -- first-class clients, right alongside Windows Phone 7 devices. All this isn't to say that Windows 8 and Office 15 (and their successors) aren't worth watching. But there's more to Microsoft than Windows and Office, and those interested in Microsoft and the tech industry in general can't forget it.