10 Things Microsoft did right during fiscal 2010

A month following the end of Microsoft's fiscal year and two weeks after announcement of record earnings, it's time to take a long look back at the company's FY2010 accomplishments. Some of these items will partially repeat from my calendar year 2009 list and early calendar 2010 list. Numbers 1 thru 6 are new; the others derive from the previous two lists. With that introduction, during fiscal 2010, Microsoft rightly:

1. Launched Azure. Microsoft's cloud platform debuted a month late but still early enough in FY2010 to be meaningful. Timing is right, particularly given the economy. Many businesses are struggling to budget for technology upgrades, to manage IT resources and to provide employees with anytime, anywhere, on-anything informational access.

Microsoft's cloud can solve these problems for enterprises and another for the company: Customer retention. Enterprises that might not otherwise upgrade to Microsoft's newest software have incentive to do so and more by buying into Microsoft's cloud. Watch for a major shift in customer buying priorities during fiscal 2011 (See #2).

2. Revamped its cloud computing strategy. Some announcements that seem small at the time turn out to be much bigger later on. In a December reorganization, Microsoft created the Server & Cloud Division. The move marked a fundamental directional shift in Microsoft's cloud computing strategy, which CTO Kevin Turner articulated two weeks ago. No longer is Azure really an operating system in the cloud that developers write to. Microsoft seeks to extend its Office-Windows-Windows Server enterprise applications stack to the cloud.

3. Backed away from interoperability as an enterprise priority. Haven't you noticed that Microsoft beat the interoperability drum much less loudly -- often not at all -- during second half FY2010? The revamped cloud computing strategy connects to a bigger push to establish a tighter integrated applications stack; Microsoft stepped back from an earlier integration push following the 2004 adverse antitrust ruling in Europe.

There are five pillars to the new stack: Azure, Internet Explorer 9, Office 2010, SharePoint 2010, Windows 7 and Windows Server 2008 R2. The stack is more modular in that an enterprise might choose to build from the cloud data center rather than Windows Server. Integration will define fiscal 2011, as it already started to during FY2010. It's a smart approach. Microsoft shouldn't be afraid to offer customers the benefits of integration -- trustbusters and pundits be damned!

4. (Unofficially) fired J Allard and Robbie Bach. Somebody had to be held accountable for the mobile muck up and loss of HP as a major mobile customer. In May, I described the Entertainment and Devices division shakeup as "doomed." That said, somebody had to be held accountable for the mistakes, and it had to be these two leaders. I won't argue nuances about whether or not they left voluntarily; Allard and Bach were going to leave one way or another.

By way of the reorganization, Microsoft CEO Steve Ballmer sent a clear message to all employees: If E&D's so-called visionary leaders can go, so can you. That's a message senior veep Andrew Lees had best heed. He has a bigger mobile responsibility now, and there's reason enough to presume the accountability axe missed his neck by mere millimeters.

5. Launched Internet Explorer 8 advertising campaign. The TV commercials are remarkably clever. They have a reality TV quality that is shocking and memorable. In them, Microsoft sets up a fake bank to show how easily people will give away their most confidential information and then connects that to everyday activity on the Web and how Internet Explorer 8 protects users. The personal information swiping techniques mimic the kinds of scams encountered online.

6. Debuted the "Windows 7 was my idea" marketing campaign. The approach is simply brilliant and it is timely with social networking trends. Microsoft positions Windows 7 as your operating system, which you can fix any way want. The TV commercials assert that Windows 7 was crowdsourced, with people asking for what they wanted and getting it. Catch phrase: "I'm a PC, and Windows 7 was my idea."

More importantly, Microsoft is keeping the marketing volume loud. The company all but gave up the Vista marketing campaign within about four months. Nearly 10 months after Windows 7's launch, the commercials continue to frequently air during primetime network and cable TV.

7. Opened retail stores. Microsoft opened four retail stores during fiscal 2010 -- two in California and one each in Arizona and Colorado. Two weeks ago, the company confirmed new shops opening in Illinois, Minnesota and Washington State. Retail stores are vital to Microsoft selling a lifestyle around its products and for building brand equity. Apple and Sony have both proved the brand and lifestyle value of company-run stores. However, Microsoft's retail strategy will require even more commitment, which should include running stores at losses for their greater marketing benefit.

8. Promoted Steven Sinofsky. The man who methodically led the team that turned around Microsoft's flagship operating system now leads the Windows & Windows Live division. Sinfosky hugely deserved the promotion to president of the division (see #9).

9. Flawlessly launched Windows 7. It's clear that Microsoft re-engineered the engineering process for Windows. The mistakes that led to overlong development of Windows Vista, the dumping of well-publicized features and late delivery (How could Microsoft miss Holiday 2006?) didn't reappear. Microsoft successfully executed a taunt development schedule, improved performance in the right places (like startup and wakeup), made better the user interface and insured that most drivers would be available for popular devices.

Microsoft's success was as much about managing perceptions as developing and delivering a good product. The company clearly worked the blogs that Microsoft influencers, IT managers and some consumers read, as well as social networks and forums they might participate in. Early positive reviews and some kick-ass "Windows 7 was my idea" marketing helped the operating system to pull free from the negative reaction gravity well that kept Windows Vista from achieving escape velocity.

Now, Microsoft is sitting on a growing mountain of Windows revenue: The majority of enterprises run Windows XP, and they're ready and willing to upgrade. With over 175 million licenses already sold, Windows 7 looks to be everything Vista wasn't -- a resounding success.

10. Released Office 2010. The timing nicely fits with the first big wave of enterprise Windows 7 deployments. Historically, larger businesses deploy new versions of Office and Windows at the same time whenever possible. By offsetting Office 2010 and Windows 7 business launches by about 8 months, Microsoft gave enterprises time enough to test and qualify Windows 7. Meanwhile, a very public preview made Office 2010 available for testing, too. Many more businesses now have the more logistically viable option of deploying both products simultaneously or around the same time.