A company is essentially a Cybernetic Collective of people and machines……there are different levels of complexity in the way these companies are formed.

Elon Musk on Joe Rogan – https://youtu.be/Ra3fv8gl6NE?t=313

This is the second part of a two part series, the previous part is here.

Companies that have members seamlessly communicating with other members and getting replies with minimum latency, and the members connected to the world wide web and processing information to get a task done, are the most efficient ones. Think about how your communication have shifted from paper memos, to mails to whatsapp messages to your colleagues, and how it impacts the output of your company, Also think about how effectively using google search to get info, and using online sales channel to reach client makes or breaks a business in today’s world.

Microsoft is the largest workstation operating system with 1BLN plus devices running Windows OS, and 1.2BLN plus running office desktop stack, and 200MLN plus running office 365. A big portion of these usage is however not monetized, and that is where Microsoft Teams comes in.

Microsoft Teams is Zoom, Google Drive, Slack, and Salesforce combined in one interface, running across all desktop and mobile hardware platforms. Given the need for remote work and constant communication and collaboration with teammates and colleagues, the usage of Microsoft teams skyrocketed, from a 20MLN dau in November 2019 to 75MLN daily active user in May 2020. With the advent of pandemic, the count is likely to reach 200MLN+ in the next 2 years, and 400MLN+ in next 5. Teams has crazy features in its free version, and Microsoft now allows teams for personal use as well. Because it is a communication and collaboration tool, the network effect growth is very real for Teams.

Teams allows developer to integrate their apps with team desktop and mobile apps. And Microsoft already integrated all of their office 365 offerings of word, excel, power point and such in teams, giving a google drive like experience within teams. And best of all, Microsoft opened up teams platform to the world of developers to build their own apps and integrate in the platform, which is very similar to android and IOS platform letting developers build and publish app through app store. This ensures locking to the Teams platform as more and more can be done staying in the platform.

It is extremely important that Microsoft monetize all of these users, as more cash allows it to invest more on RnD to win the next platform war. In this context, we all know the problem Microsoft have had with pirated windows os and office suite. But they have moved their focus to cloud sass based product like office 365, and Teams which enables those sass based product even more. You get used to the web interface, and those web interface of word, excel, PowerPoint sometimes feels better than native desktop given the google sheet like collaboration features.

And guess what, YOU CANNOT PIRATE A SASS PRODUCT. So all of these non paying Microsoft office suite customers are going to turn into paying customers, better still, whereas native desktop office suite price is charged once, sass products subscription are monthly or yearly :D. Also, it is quite apparent that Microsoft dont need to charge for windows OS, rather they should provide the OS free to keep user in the windows platform so that they can sell apps, Microsoft management seems to understand it well now and walking towards that direction.

Another thing Microsoft has done recently is No Code/Low Code application platform for citizen developers, under the Power Platform brand, which allows an average technical guy, who is probably a medium to advance level excel user, to build apps. They charge pretty high for these platform usage. In the last keynote in May 2020 satya mentioned Power Platform has 3.5MLN developer, who will eventually end up making apps for Teams platform as well.

Cloud is another part of short and long term computing. Microsoft is smart to reel in all of their user through their Power Platform, and selling cloud indirectly through SASS product.

Now it is quite apparent Microsoft is doing well, and will keep doing well in the next 3 year horizon with their sass based strategy. So why did i blabber so much about human computer interaction. Because remember, plaform war! It is extremely important microsoft keeps control of the workstations in the coming days otherwise their office suite dominance will crumble like many other businesses who lost when android and ios became prevalent, because new hardware platform interface requires entirely different software interface. If Microsoft loses this one, revenue will crumble, thats why they are investing so much on Hololens and getting results. If there is a widespread adoption of the AR platform, microsoft already is in the forefront of it, they will likely keep a big portion of the next platform’s market share.

The primary revenue sources of all modern consumer software products are either from subscription fees, or advertisement revenues. We all know how advertisement model is bound to force its users to keep attention in their platform, it destroys productivity and causes all sort of mental health problems. On the other hand, subscription fees driven companies such as Microsoft works on making their user more productive, and gaining more monetary value out of its usage. Communication software such as messenger and whats app will lose the fight to Teams just because of this incentive structure. Remember, on an average one third of anybody’s day is work. Microsoft is focusing user’s attention to gain wealth in life during this 8 hour, rather then making them mentally sick. And because of high network effect, Microsoft will keep capturing more and more of these hours from people, for good.

Microsoft also has made their Graph API available for developers, which lets you pull all the contents of the organization and process it for intelligence. Other social networks have their graph api as well, but access is restricted due to business reason, their whole business model is hoarding and monetizing data for ads.

Handled right, this API can be the ultimate solution for People Analytics, and make a manager’s task much much easier, coming back to our empowering individuals point. People such as Ray Dalio has already been using similar management techniques since the 90s, and trying to make an AI Manager for his organization. With recorded calls, and history of messages in Teams, it becomes possible to track projects, productivity levels, and contribution of each individual employees, a dream solution for all managers running large organizations.

So, Individual Empowerment to Organization Empowerment. The proper use of Microsoft stack is going to give significant advantage over other individuals and organizations. This remote work world is here to stay, and Microsoft is ready with its product suite and distribution channel to exert much much more control. There are tech organization leaders around the world who are leaning towards 50% or more workforce being remote, because they see the potential cost savings of it. But on the flip side, to manage the remote workers efficiently, and to localize their thought process with the organization, the leaders will be dependent on people analytics. With all of it combined, the organization becomes a super intelligent being.