10 resolutions Microsoft should make for 2012

It's my annual ritual. Rather than make predictions for the new year, I arrogantly tell Companies X, Y or Z what they should do. This year, I asked colleague Ed Oswald to offer Apple resolutions, and Google's will come from you. I've got Microsoft, but, sadly, my list looks too much like last year's, and that's disturbing. If the world doesn't end for the rest of us in 2012, as Mayans predicted, it could for Microsoft, if CEO Steve Ballmer and top execs don't take the post-PC era more seriously.

In mid December 2010, I warned that "2011 will be make or break" for Microsoft. Viewed from perception, the year was more "make", as Microsoft marketing, successful BUILD conference and Xbox Kinect helped lift a long sagging image. Last year I put forth: "Perception management is a good 2011 priority for Microsoft, with no new versions of its flagship products planned for the year. The company needs to give consumers, developers and IT Pros reasons to get excited again about Microsoft software and OEM products". There, Microsoft succeeded.

Otherwise, 2011 was more "break", because Microsoft couldn't keep pace with competitors, particularly Apple, Amazon and Google, which are driving forces shifting informational and computing relevance to connected portable devices from PCs. Kinect was a winner, while Apple and Android partners served Windows Phone for dinner.

For this year, several 2011 resolutions didn't make the cut:

• "Open a unified applications store", which Microsoft is kind of doing (but not completely) with the Windows Store.
• "Open 50 more stores or cafés"; Microsoft has committed to 75 stores within two or three years, which is good enough.
• "Engage enthusiasts", something the company is doing much better at.

With that introduction, I present 10 resolutions Microsoft should make for 2012, from least to most important. You may be surprised at No. 1, because it was last in 2011.

10. Hold smaller, more-intimate product events. The best news coming out of Microsoft at end of 2011 surprised many people: The company is done with Consumer Electronics Show. Hot damn, it's about fraking time. These big tradeshows are anachronisms. They are total wastes of time.

They're expensive, and value is questionable, because there is so much noise from other companies. Apple, Facebook and Google maximize buzz without investing in big events. Microsoft needs to hold even more intimate events than it does now for bloggers, customers, enthusiasts, news media or partners -- lots of them. I'm not talking about the ongoing marketing and sales roadshows Microsoft already does, but invitation-only gatherings, like Apple's. They will generate buzz, particularly if the target audience doesn't officially include bloggers or journalists (but they can get in with a little prodding).

Intimacy is hugely important to any relationship. It's easy for anyone with a keyboard to write bad things about an amorphous, distant corporation. It's something else when those same people interact with real executives and product managers. Personal contact changes everything. Walmart is a good example. Those greeters at the door aren't just there to be friendly. Walmart has learned that people who identify the store with a real person, the greeter, are less likely to steal.

9. Step up "value marketing." This one was No. 4 last year, and almost needn't be on the list. Microsoft successfully stepped up value marketing in 2011. For example, late-year Microsoft marketing campaign "It's a great time to be a family" is spot on. One of Microsoft's founding principles is value -- making computing affordable enough to put a PC on every desktop, in every home. Microsoft marketing had drifted from the value principle, but finally is company back in line. But nowhere near enough.

Value isn't about low pricing but getting the most from what you spend. For families, there is the value products bring to them. The measure is often emotional. McDonalds succeeds for many reasons, but family values is among them. Happy Meals help make McDonalds an affordable place to bring the kids to eat. Later, as teenagers, they go there and shop the "value menu".

For enterprises, isn't that what ROI (return on investment) and TCO (total cost of ownership) are all about? Perhaps one reason Apple focuses so little marketing efforts on enterprises is that it has so little value -- ROI and TCO -- to sell them.

I see good Microsoft "value marketing" to consumers but nowhere near enough for enterprises. That's why this resolution remains on the list for 2012.

8. Bring back Bill Gates -- to sell Microsoft products, vision. This one was No. 8 last year as well. Microsoft has an identity problem. It's too good at too many things, which makes products harder to sell. The company also isn't viewed as an innovator. Chairman Bill Gates is regarded as visionary and there is lots of goodwill given to him as a prominent philanthropist. Microsoft should bring him back as pitch man -- not to run the company as was repeatedly suggested in 2011.

The technosphere is overly-obsessed with Apple cofounder Steve Jobs, even more so following his death. Jobs is now canonized as innovator extraordinaire. But the majority of people aren't like Jobs. They're more like Gates, whose stilted speaking and awkward manner is more like them. Sure Gates is smarter than most people, which makes him unlike most everyone else from another perspective. But he's also the American Dream, the self-made and shrewd billionaire whose products are used by most of the world's population. Success commands respect, as does his philanthropy.

Even better, bring in the Gates family, talking about how they use Microsoft technology in their home or when traveling the globe. Imagine, for example, an ad campaign that follows the Gates from country to country, using Microsoft products and showing their value among people in many emerging markets.

7. Make Bing a development platform. Microsoft already is heading in this direction, as seen during the BUILD conference and plans revealed for Windows 8. Bing as a platform developers plug into their software or services is smart way to drive usage and push up search share against Google.

6. Ship Windows 8 by back-to-school buying season. I feel obligated to put something about the new operating system on the list, even though it's so damn obvious. Timing isn't. Everyone is thinking Windows 8 for the holidays, I say that's way too late. If Windows 8 tablets aren't selling for back to school 2012 (and they likely won't be with public beta expected in February), Microsoft already has fraked up. iPad is sapping PC sales among consumers -- and that's starting to bleed into the business market.

Meanwhile, Apple is rapidly becoming the brand of choice among Millennials. Microsoft simply can't bring Windows 8 to market fast enough. Internet Explorer 10 comes with it, and competitively Chrome is doing too well against older IE versions (see #5). Microsoft's 2012 motto should be: Don't wait on Windows 8.

5. Set shorter marketing and product development goals. This one was No. 10 last year (out of 11). Microsoft isn't keeping pace with Internet time and hasn't for some time. Meanwhile, Google sets a rapid pace -- in little more than three years going from nowhere to somewhere with Android (US smartphone OS leader in 2010 and 2011, according to NPD) and Chrome (in December No. 3 browser and closing on Firefox). Both products launched in autumn 2008. Then there is Facebook, which iterates with a vengeance. Pace of innovation keeps nimbler companies in the news, on the blogs, generating positive perceptions. Speaking of social networks, look at Google+, which grows at breakneck pace in little more than six months. Microsoft has what?

Microsoft's long-standing strength -- executing on long-term plans, whereas many public company competitors set quarterly goals that change too often -- is now a liability. The Microsoft that released three versions of Internet Explorer in about 18 months during the late 1990s executed tactically while keeping long-term plans in place. Microsoft needs to return to this kind of approach.

Speaking of IE, look at the pace at which Google innovates Chrome, and Mozilla follows suit with Firefox -- both keep to six-week development milestones. According to Net Applications, Internet Explorer usage share fell to 52.64 percent in December 2011, from 60.35 percent in November 2009 and more than 90 percent at the end of 2004, when Firefox shipped. Usage share for Safari, the other browser on slow development track, also is down. Meanwhile Chrome usage share was 19.11 percent in December, up from 18.18 percent in November, 17.62 percent in October and 9.5 percent in November 2010.

Setting and achieving short-term goals can boost mindshare -- that Microsoft is truly innovating, if nothing else.

4. Buy Nokia -- that is if Google gets regulatory approval for the Motorola Mobility merger. A year ago, I couldn't imagine making this recommendation. In February 2011, I called Microsoft's Windows Phone OS distribution deal with Nokia a "silent takeover" and affordable one at that. But much has changed in 11 months.

For starters, Google will gobble up Motorola Mobility, putting it in the hardware-software-services business, that's as long as regulators grant approval. Galaxy Nexus, which Google co-designed with Samsung, is an exceptionally good smartphone, with hardware-software-services integration being the hallmark. Imagine what Google will eventually produce from its own company and something to truly take on iPhone/iOS. Microsoft can't rely on Windows Phone OS licensing alone to compete.

Secondly, Microsoft bought Skype for $8.5 billion last year. The voice-over-IP service is primed for mobile and Microsoft needs an integrated platform to use it to transform personal communications. Skype should have been the next really big thing in mobile long ago. Microsoft could make it so and doing so put some luster into Windows Phone.

Finally, Windows Phone is a failure, sadly, as I predicted it would be in February 2010. There is much to like about Windows Phone as an operating system, but Microsoft started too late behind upstarts Android and iOS. For example, Microsoft's US mobile OS subscriber share on smartphones was 5.2 percent at the end of November, according to data comScore released last week. That's for a three month share loss of half a point. Meanwhile, Android grew three points to 46.9 percent share and iOS to 28.7 percent from 27.3 percent.

On December 12, Ballmer essentially sacked Windows Phone president Andy Lees, Japanese style, by stripping him of authority. That says much about the state of Windows Phone, which following is loyal but too small.

Nokia has global reach and distribution channels. It's practically a takeover now anyway. Microsoft should finish the job and use Nokia to create branded smartphones -- and tablets, too.

3. License Kinect to anyone and everyone -- cheaply. In November 2010, when Microsoft shipped the first Kinect game controller, it looked like nothing more than that. Today, Kinect is an emerging development platform and one that looks to transform how people interact with all kinds of products. Kinect is a transformative user interface that businesses already use for medical research and diagnosis and for education, among others. What's exciting about Kinect is the sheer potential. I've repeatedly asserted that the most natural user interface is you.

Microsoft released the Kinect for Windows SDK beta in June and plans commercial release this year -- there could even be an announcement next week during CES. But Kinect won't connect without aggressive Microsoft support. Kinect could be a huge platform used in many different products, if Microsoft puts the kind of resources into Kinect it detects to, say, developers and partners supporting Windows.

Technology like Kinect is the stuff of science fiction. If Microsoft and its partners do what's right with connect, you'll start reading and viewing more of the "i" associated with Microsoft. Not "i" as in iPad or iPhone but innovation.

2. Empower internal "cloud" startups. This one was No. 1 last year. Many of Microsoft's best, mid- to-late-Noughties products or services came from incubation projects. Some are mainstream today, like Windows Live SkyDrive. But Microsoft killed off most internal startups following the September 2008 stock market crash.

Microsoft must bring them back and focused on mobile and the cloud. Incubation groups should operate like mini-startups, free to develop unfettered by any requirement to connect any of their work to any other Microsoft product, particularly Office or Windows. Let them run free, run wild, wildly innovate. Reward innovation, with pay incentives and other goodies. Appoint a chief startup officer (see #1), to whom employees can submit their projects, getting them outside stifling bureaucracy and mid-managers' self-preserving priorities. Empowered employees will produce. Microsoft just needs to let them.

1. Appoint a Chief Startup Officer. Post-September 2008 Microsoft is one of larger development silos, leveraged off the main product groups. There are now eight: Interactive Entertainment; Microsoft Business Solutions; Microsoft Office; Online Services; Server and Tools; Skype; Windows & Windows Live; and Windows Phone. The silo approach stifles real innovation. It's a great strategy for extending the Office-Windows-Windows Server app stack to the cloud -- essentially keeping the status quo relevant longer -- but not for innovating or inspiring employees to make exciting new stuff.

Microsoft needs someone internally responsible for encouraging internal incubation projects and bringing them to market -- outside the normal management structure.

There needs to be a fairly free-flowing process allowing employees to bring ideas to the CSO and get funding for proof of concepts, at the least. The CSO, answering to Ballmer, should have authority to spin-off new product groups as well. But more immediately he or she needs authority to create small product groups within Microsoft, focused on getting new innovations to market faster and without obligatory ties to core products like Office or Windows.