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How Microsoft is attempting to reshape personal computing

Amid falling global PC sales, Microsoft is trying to reinvent itself as an agent of digital transformation. But it will face stiff competition from peers and well-funded start-ups

On 8 December, for instance, Microsoft Corp. joined its partners and hardware engineers from around the world at the Windows Hardware Engineering Community event (WinHEC) in China to talk about its vision for building the next generation of personal computers (PCs) that support mixed reality and gaming, and to introduce always-connected, more power-efficient cellular PCs running Windows 10.

Microsoft first announced a new PC partnership with Intel Inc., code-named ‘Project Evo’, which envisages “new ways for devices to light up with the latest in advanced security, artificial intelligence and Cortana, mixed reality, and gaming”, according to a 7 December note by Terry Myerson, executive vice-president of Microsoft’s Windows and Devices Group. The announcement was a continuation of Wintel, an industry lingo for personal computers based on Intel microprocessors and one of the Windows operating systems from Microsoft.

That very day, the Redmond-based company also announced a partnership with Qualcomm Technologies Inc., to enable Windows 10 on mobile computing devices powered by Qualcomm Snapdragon processors, once again signalling that personal computing is increasingly becoming mobile, which will necessitate power-efficient devices with multiple form factors that run on open platforms. The first such PCs are expected to be available as early as next year.

Personal computers are passé

The reason for these announcements is evident. While Microsoft garnered almost half of its $85 billion revenue from PCs, this year, the fortunes of PCs are consistently on the decline. Worldwide PC shipments totaled 68.9 million units in the third quarter of 2016, a 5.7% decline from the third quarter of 2015, according to preliminary results by Gartner Inc. This was the eighth consecutive quarter of PC shipment decline, the longest duration of decline in the history of the PC industry.

“According to our 2016 personal technology survey, the majority of consumers own, and use, at least three different types of devices in mature markets. Among these devices, the PC is not a high-priority device for the majority of consumers, so they do not feel the need to upgrade their PCs as often as they used to. Some may never decide to upgrade to a PC again,” Mikako Kitagawa, principal analyst at Gartner, said in a 11 October note. “In emerging markets, PC penetration is low, but consumers are not keen to own PCs. Consumers in emerging markets primarily use smartphones or phablets for their computing needs, and they don’t find the need to use a PC as much as consumers in mature markets,” Kitagawa added.

The fact is that the world is becoming increasingly mobile, making it imperative for Microsoft to prove that it is no longer just an Office and Windows company for PCs but an agent of digital transformation.

The change is perceptible under the guidance of its chief executive Satya Nadella, with Microsoft executives peppering their pitches with terms like analytics, intelligent cloud, artificial intelligence, augmented reality, virtual reality, mixed reality, machine learning and deep learning, in the same breath as they talk of Windows, Microsoft Office and PCs.

“Personal computing is about the mobility of the experience, the Internet of Things (IoT); it is about augmented and virtual reality. It’s the way we access computing through touch and make it accessible in multiple languages. It is about enabling even differently-abled people to interact with computing because computing has become all pervasive. And in a sense, people will only see personal computing because everything else will become invisible. Personal computing will come in different shapes and sizes,” says Bhaskar Pramanik, chairman of Microsoft Corp. (India) Pvt. Ltd.

Form factors are already changing

With Windows 10, Microsoft’s goal is to have “the effect of the Gutenberg Press on this next generation of computing, enabling 3D creativity, mixed reality, and eSports and game broadcasting for everyone”, said Myerson in a 26 October note when introducing the ‘Surface Studio’ and a new input device called ‘Surface Dial’. Microsoft touts Surface Studio as “a new class of device that transforms from a desktop PC into a powerful digital canvas”.

Microsoft has also launched its ‘Creators Update’, which enables Windows 10 users to be able to start capturing in 3D, printing in 3D, creating in 3D, sharing in 3D, and experiencing mixed reality. Users can take an object from the real world, capture it in 3D, edit it in Paint 3D, share it on the web, bring it back as a hologram, or even take it into a virtual world. Over the next year, Microsoft also plans to bring 3D to a range of Office applications including Word, Excel and PowerPoint.

Myerson believes that with Intel’s collaboration, devices of the future will “take advantage of Microsoft and Intel innovations” including “far-field speech communications so you can ask Cortana a question or play a song from across the room”, advances in biometric authentication with Windows Hello, insights from Microsoft’s Intelligent Security Graph, analytics from Intel, mixed reality experiences with head mounted displays (HMDs), and gaming innovations like eSports and game broadcasting.

To be sure, Microsoft, which is taking to the cloud in a big way with its Office on iPad, already has Kinect—an input device that senses motion and allows users to play games with gestures and spoken commands. It is also betting big on its mixed reality holographic computer which it christened HoloLens. Microsoft believes that “holograms are the next evolution in computing”.

Photo: Bloomberg

Photo: Bloomberg

The idea, as the company puts it on its website, is: “Mixed reality blends 3D holographic content into your physical world, giving your holograms real-world context and scale, allowing you to interact with both digital content and the world around you.”

HoloLens has sensors that allow you to use your gaze to move the cursor when you want to select holograms. You can use gestures to open apps, select and size items, and drag and drop holograms, and use voice commands to navigate, select, open, command and control the apps. You can also speak directly to the personal digital assistant Cortana.

Microsoft first announced HoloLens in January 2015 and shipped to developers and commercial partners in Canada and the US this March. Microsoft HoloLens is now available to pre-order exclusively from the Microsoft Store in Australia, France, Germany, Ireland, New Zealand and the UK.

Many organisations and institutions have begun using HoloLens for business. This July, for instance, during the Worldwide Developer Conference in Toronto, Japan Airlines demonstrated a HoloLens app that lets engineers get up-close with a full-scale, computerized model of a jet engine. The app can highlight engine parts and show how different components work together in a way not possible with a real engine. Skype for HoloLens lets your contacts see what you see and draw on their screens to place holograms over physical objects in your view.

Last June, the National Aeronautics and Space Administration (Nasa) and Microsoft teamed up to develop Sidekick, a project using commercial technology to empower astronauts aboard the International Space Station (ISS). Sidekick used Microsoft HoloLens to provide virtual aid to astronauts working off the Earth. Nasa’s OnSight project also enables scientists to use HoloLens to “work on Mars” together, directly from their offices, allowing them a means to plan and, along with the Curiosity Mars Rover, conduct science operations on the Red Planet. By extending the OnSight project, in September, Microsoft opened “Destination: Mars” at the Kennedy Space Center to the public, which allows visitors the only opportunity possible today to walk around the Red Planet.

Lowe’s Innovation Labs (LIL) is another case in point. It has partnered with Microsoft to launch the Lowe’s Hologram Experience in two of Lowe’s stores in the US. At these pilot stores, customers collaborate with a HoloLens specialist to plan their kitchen renovation in an interactive, mixed reality environment. Customers view physical objects and digital holograms merged through the Microsoft HoloLens headset, while standing in a showroom kitchen.

With Skype on HoloLens, technicians at Thyssenkrupp Elevator AG can be hands-free while on the job, even when making remote calls to experts and sharing holographic instructions between users. This enables more flexibility while also complying with safety regulations.

Additionally, the elevator company has partnered with Microsoft and systems integrator CGI to develop a solution christened MAX, which integrates machine learning IoT technology to analyse realtime data from elevators around the world. The solution provides technicians with instant diagnostic capabilities and rich, real-time data visualization of two primary types of data: alarms that indicate an immediate issue, and events, which are stored and used for management.

In India, Bajaj Allianz General Insurance Co. Ltd launched an optional telematics-based service for its customers. Christened ‘Drive Smart’, the device can track vehicle information such as driving summary, vehicle diagnostics and provide safety alerts. The device uses Pune-based telematics startup, CarIQ’s app that provides real-time feedback on driver behaviour, including overspeeding, faulty gear changes and rash driving. The statistics include the time spent driving, distance travelled and likely fuel consumption. However, handling this humongous data can be very challenging in real time. Hence, CarIQ uses Microsoft’s Azure Cloud to receive data from multiple sources. Big Data analysis is then done on the stored data and the platform also integrates with external services.

This month, Microsoft also showcased three IoT solutions by three start-ups—Precimetrix, Teramatrix and Covacsis—aimed at digitally transforming the Indian manufacturing industry. According to Narendra Bhandari, general manager of Developer Experience and Evangelism at Microsoft, “these solutions are helping the manufacturing sector create digital factories”. These solutions offer IoT and analytics to improve productivity, efficiency and compliance.

Microsoft, for instance, claims that its Teramatrix IoT software platform, which enables companies to connect with their fixed or mobile infrastructure and analyze the massive data streams emanating from them, “resulted in a 20% expected increase in direct and indirect manpower productivity by enabling 24×7 continuity of testing operations and remote management of testing equipments” at Hero MotoCorp Ltd.

“The predictive analytics as a service market is entirely led by consulting firms. In contrast, what Microsoft is seeking to achieve is to empower enterprise users to access analytics platform directly by integration of R and Azure technologies into their mainstream technologies, such as SQL Database. Microsoft has made it easier to run models and brought down the learning curve. Given the extensive reach that Microsoft has in the Enterprise markets, Microsoft’s analytics platform is likely to dominate the advanced analytics market,” concurs Alok Shende, founder and director of Ascentius Consulting.

Steep curve ahead

The business potential is undoubtedly huge but so is the competition, which is getting tougher. The global augmented -reality (AR) market in 2014 was valued at $1.72 billion and is expected to touch $56.8 billion by 2020, according to market research firm MarketsandMarkets. According to the new Worldwide Semiannual Augmented and Virtual Reality Spending Guide from the International Data Corp. (IDC), worldwide revenues for the augmented-reality and virtual-reality (AR/VR) market will grow from $5.2 billion in 2016 to more than $162 billion in 2020.

MarketsandMarkets pegs the total mixed-reality market at $453.4 million by 2020. Besides the increasing adoption of mixed-reality products for multiple applications and growing popularity of reality technologies such as augmented reality, the report attributes the growth of the mixed-reality market also to rising investments and new product development activities “from some of the major companies such as the Microsoft Corp., Atheer Labs, and Meta Co. among others”.

The global mixed reality market will be worth $1.2 billion by 2024 as opposed to $35.30 million in 2015, says a 15-November report by Transparency Market Research. Some of the key companies in this market include Daqri LLC, Seiko Epson Corp., Facebook Inc., HTC Corp., Samsung Electronics Co. Ltd, Recon Instruments Inc., Microsoft , Magic Leap Inc., Canon Inc., Meta Co., Infinity Augmented Reality Inc., and Osterhout Design Group, according to the report.

Mixed reality combines the best of augmented reality and virtual reality with hardware such as associated devices, head-mounted displays (HMDs), cameras, consoles and software that comprises cloud, gestures, mixed reality tracking software, and software development kits (SDKs) to offer real-world experience through virtual images.

In terms of applications, the report divides the global mixed-reality market into segments such as healthcare, automotive and aerospace, e-commerce and retail and entertainment. Transparency Market Research analysts expect the North American market to lead the global market in the coming years with Asia Pacific projected to follow its lead “as the region is exhibiting a high uptake of smart devices”.

Research and consulting firm, IndustryARC, pegged the global mixed-reality market at $294.8 million in 2015. In its 20 July report, it pointed out that eye glass devices currently dominate mixed-reality hardware but added that the HMD devices segment is “set to become the largest one in the coming years owing to its penetration in virtual reality”.

The report noted that with increasing investments in innovation centers located in emerging countries like India and China, the mixed reality market is set to witness considerable growth especially in creative industries such as education, mobile-based applications, mixed reality-based movies, advertising and fashion. It listed the key companies in this market as Facebook, Samsung, HTC, Seiko and Recon.

“This mixed-reality market is highly consolidated with top five companies occupying close to 90% of the market share in 2015. The growing number of start-ups coupled with technological advancements is estimated to however shift the market share slightly from key players to smaller companies. Furthermore, rising investments in emerging companies boost their innovation,” said the IndustryARC report.

Moreover, while Microsoft has its Cortana, Google Assistant’s Allo chatbot and Apple’s Siri give it very tough competition. All of them use artificial intelligence and deep learning algorithms.

Moreover, while there are newer entrants like the Bridge Explorer Edition from Occipital, there are existing products like Amazon Echo and Google Home that compete with Project Evo.

Echo connects to the Alexa Voice Service to play music, provide information, news, sports scores, weather and more. Google Home, on its part, is a voice-activated speaker powered by the Google Assistant.

Pramanik is unfazed about the competition. He admits that “if you think about the Microsoft even two years back, our obsession was about competition, about our products, technology and licensing” but adds that “today, our focus is really around customers—our obsession is around customers, and our focus is on innovation.”

He concludes, “Transformation is about business model changing. So if you have a connected product or service, your whole business model changes because you don’t charge for the product—you charge for the service. Second is about differentiated customer experiences. We have transformed the way people buy. Analytics is now built into everything we do because that gives you the power of data—the ability to actually take better informed decisions. Finally, it is IoT which you can look at manufacturing, services—how using IoT you can actually make processes, products intelligent. So we are not the Office and Windows company of the past. We are a company that can help you empower, engage, optimize and transform.”

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