Microsoft: The Empire Strikes Back or The Force Awakens?

by Ian Campbell March 9, 2016
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If we learned anything from the BYOD revolution, it’s that employees will use those technologies that are the most convenient. Which fortunately, often translates into the solution that makes them the most productive. It’s all about that blend of the right features with high usability.

Take data storage and content management, for example. While enterprise CIOs evaluate hyper-converged appliances and which vendor has the fastest data deduplication (yawn!), employees are increasingly using easier services such as Box, Dropbox and Microsoft OneDrive. It’s the iPhone replacing an overly complex desk phone all over again.

That’s not to say traditional storage companies are on the verge of collapse – yet. There is a clear need for better ways to store and manage an enterprise’s overall data repository, especially for industries that need massive scale, such as biotech, research and retail/e-commerce. But by focusing on the high end, storage vendors are all but conceding this peer-to-peer need, which is being filled by smart companies pushing up from the low end – the enterprise file sync and share (EFSS) vendors.

Anyone familiar with the ‘Innovator’s Dilemma’ by Clayton Christensen knows this is a massive opportunity for those EFSS vendors to upend the storage industry. Given its recent track record and current strategy, we think Microsoft is the company savvy enough to transform storage from the bottom up.

That’s right, I just called Microsoft savvy. Not something you hear everyday, but then again the Redmond regime has been showing new signs of life across many of its business units. The Ballmer days have faded and Microsoft is now showing an assertive new initiative with a sharper focus on strategic products. Microsoft OneDrive happens to be one of them.

Normally, it’s the trailblazing startup that has the advantage and indeed Dropbox took an early lead in this category. IBM wisely partnered with cloud innovator Salesforce.com to deliver Box as a challenger. Microsoft languished for years with a product that has gone through numerous name changes (a bad habit that Microsoft needs to kick). It was called Windows Live Folder then Windows Live SkyDrive and SkyDrive before becoming OneDrive last January.

But the name is not the only significant change here. Microsoft is pursuing a cloud strategy that proved very successful for Microsoft Lync, now called Skype for Business (See what I mean about name changes? Please stop Microsoft!). Skype for Business is a collaboration service available to all of Microsoft’s cloud-based Office 365 users. Adoption has been impressive. And we are seeing signs of an equally enthusiastic adoption for OneDrive among the Office 365 base, already at 25 percent and growing. Smart move.

Even more impressive is the investment in mobile applications and the new sync client to make file sharing even easier and more tightly integrated with the Office product suite. That’s not to say that Dropbox and Box aren’t adding innovations of their own. But in a landscape where old school technology vendors routinely lose ground to the up-and-coming fresh start up, it’s interesting to see the Empire strike back with its enterprise experience advantages and popular Office 365 service. Suddenly it’s Microsoft’s game to lose again.