Microsoft’s 2017 was a year of focus, on improving from the failures it left behind in 2016. Over the last 12 months, Microsoft’s 2018 has been a year of growth. Microsoft is now a top five PC maker in the US with Surface, revenue and cloud growth is up, and the software giant even briefly overtook Apple to become the world’s most valuable company. It’s also been a year of proof that the difficult changes CEO Satya Nadella has made are starting to pay off.
Microsoft started the year off in a difficult position like many of its PC partners. Meltdown and Spectre security flaws revealed fundamental issues with processor designs over the past 20 years, and Intel, AMD, Microsoft, and many others had to scramble to issue software updates to help protect machines. While Intel and others kept quiet about the real performance impacts of the flaws, Microsoft led the way on transparency and fixes. Microsoft even issued emergency updates to fix Intel’s buggy Spectre patches. It was a turbulent start to the year, and a distraction that could have played a part in some of the Windows quality issues we saw throughout 2018.
Leading up to some of those issues, another set of Windows-related distractions emerged.
Microsoft announced another big reorganization in March, leading to former Windows chief Terry Myerson departing the company and Microsoft slicing Windows into two different teams. The core Windows platform team has now moved closer to Microsoft’s cloud and AI work, while a separate division dubbed “Experiences & Devices” will look after Windows client releases that you see on laptops and devices. It’s a big shakeup, and the effects will be felt much more in 2019 and beyond.
The Meltdown, Spectre, and Windows reorg changes all came just as Microsoft was working on two major updates for Windows 10 this year, and it’s fair to say they didn’t go particularly smoothly. Microsoft delayed its April 2018 Windows 10 update due to last minute Blue Screen of Death issues, then had to fix desktop and Chrome freezing issues after it was shipped to more than 600 million machines. Microsoft then released its October 2018 Windows 10 update before pulling it offline after some users reported missing files. These issues should have been spotted in testing with the public, and it emerged that testers had reported the problems months before.
2018 has also been a year of the Surface. Microsoft unveiled its Surface Hub 2 in May, with a stunning 84-inch display, thin bezels, and new portrait orientation. It looks like it’s designed for an office built in the future, but the hardware will start to ship next year. Microsoft also focused on smaller hardware this year in the form of Surface Go. The $399 tablet includes a 10-inch display, and is effectively a smaller version of the Surface Pro with a less powerful processor. Sales seem to be going in the right direction, with Microsoft CFO Amy Hood revealing that Surface revenue this recent quarter has been driven by Surface Book 2 and Surface Go sales.
In October, Microsoft held a hardware event for Surface. A new Surface Pro 6 and Surface Laptop 2 were announced with all-black finishes, and Microsoft also refreshed its all-in-one Surface Studio PC with some much-needed hardware improvements. The big surprise was Surface Headphones, with built-in Cortana support. Although the new Surface Pro 6 and Surface Laptop 2 are lacking USB-C, Microsoft’s Surface Headphones charge by USB-C and have up to 15 hours of battery life. They’re a good first effort from Microsoft.
While Microsoft unveiled a lot of new Surface hardware this year, we didn’t see a rumored refresh of the Xbox Elite controller or the mysterious “pocketable” Surface device. Instead, Microsoft unveiled an Xbox Adaptive Controller earlier this year that’s designed for people with disabilities, even down to how easy the packaging is to open. This new controller was the biggest hardware announcement from Xbox this year, just as the company prepares for next-generation consoles. However, Microsoft is focusing on services beyond just consoles. Microsoft’s new XCloud game streaming service will stream Xbox games to PCs, consoles, and mobile devices. Public trials will begin in 2019, and Microsoft has built custom hardware for its data centers to compete against other game streaming services like GeForce Now, PlayStation Now, Shadow, and Liquid Sky.
Microsoft also spent parts of 2018 focusing on significant partnerships, acquisitions, and fundamental platform changes. Microsoft acquired GitHub for $7.5 billion this year, in a deal that sees it control a large code repository that has become very popular with developers and companies hosting entire projects, documentation, and code. Developers are taking a wait and see approach over how Microsoft will need to carefully manage the GitHub platform and community.
Microsoft and Amazon also formed a closer partnership this year, which led to the integration of Cortana and Alexa. It’s an ideal time as Cortana has fallen behind Google Assistant and Alexa, and it’s not clear what the future of Microsoft’s digital assistant is now that the company’s Cortana boss has departed. This partnership has extended to Alexa on the Xbox, and even Microsoft preparing to sell Amazon’s Echo devices in its retail stores. Microsoft and Amazon are still very much battling it out for bigger shares of the cloud server market, though.
In what was somewhat of a surprise, Microsoft formed an unlikely alliance with Google this year. The software giant is switching its Edge browser rendering engine over to the Chromium project – a big move that will improve web compatibility for Edge, meaning Microsoft engineers will need to work with Google engineers on open source code. Microsoft is even committing to bringing improvements to Chromium that will benefit the Chrome browser running on Windows. Microsoft has also made its 60,000 patents open source to help Linux. It’s a move that sees Microsoft join the Open Invention Network (OIN), an open-source patent group designed to help protect Linux from patent lawsuits. With Microsoft embracing Android as the mobile equivalent of Windows, we could start to see even more surprise partnerships in 2019 and beyond.
Microsoft’s year ahead looks like one of refinement. The company has a renewed focus on winning back power users that care about Windows and productivity. Microsoft has been lacking Xbox exclusives throughout 2018, so it’ll need a solid offering for its next-generation console. That same power user focus extends to Xbox, where Microsoft has a multi-studio push to create more Xbox exclusive games by acquiring games studios in a bet that positions the company for the next Xbox vs. PlayStation console war. We’ll also see Android apps from your phone appear on Windows next year, and a much bigger focus on design across Windows, Office, Surface, and more.
Final Grade: B
The Verge 2018 report card: Microsoft
- Difficult bets starting to pay off
- Edge moving to Chromium
- Xbox Adaptive Controller
- Windows 10 had a buggy year
- Surface USB-C support still lacking
- Cortana has gone MIA
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