11 things Microsoft did right in fiscal 2011

If there was an award for most unpopular CEO, Steve Ballmer just might win it. There have been increasing calls to off his head -- to remove him and bring in anybody else. "Psst, Ms. Cleaning Lady, how would you like to run a software company?" But Microsoft's chief executive deserves more credit than he gets. The company closes its fiscal year in 17 days, with brighter future than any year since Apple announced iPhone in January 2007. Ballmer and his executive team delivered one of Microsoft's best years ever -- from a strategic perspective.

Sure, Microsoft is still running behind in mobile, and its cloud strategy is too tied to legacy products Office and Windows. But in many other respects, Microsoft delivered lots of promise, and the credit largely belongs to Ballmer and his larger executive team. One year ago, as fiscal 2010's close approached, I posted: "I have lost in faith in Steve Ballmer's leadership." In April came my turnabout post: "Steve Ballmer has restored my confidence in his leadership."

As I expressed in January, Ballmer is taking more control over Microsoft's leadership, showing more decisively that he's in charge. The buck stops with Ballmer, which is a refreshing change. Too bad it took calls for his removal to make it happen. He is executing lots better, although nowhere near perfectly.

With that brief introduction, I present 11 things Microsoft did right in fiscal 2011, in order of importance from least to most. By the way, Microsoft cloud computing efforts were purposely left off the list. I'll explain why in a future post.

11. Opened more Microsoft Stores. There are now 11 in eight states, four here in California. The stores are hugely important to selling the Microsoft lifestyle and rebuilding brand awareness. In the future, they may be the most important showcase for Microsoft development efforts around natural user interfaces like Kinect.

10. Filed antitrust complaint against Google. Microsoft whacked its rival aside the head in the late-March legal filing that alleges Google search favors its own services. They say it takes one to know one, and Microsoft was mightily accused of favoring its own products over third parties in antitrust cases on two continents. Microsoft's filing with the European Union Competition Commission supports an investigation already underway. For years, Google filed complaints with European and U.S. trustbusters about Windows. Payback is a bitch.

9. Reimaged Professional Developer Conference as BUILD. PDC is now BUILD. What a name! The connotations are loaded, and Microsoft is doing a good job endearing them. From Microsoft: "BUILD what you DREAM." "BUILD with Windows 8." PDC was tired. BUILD is a verb. Microsoft is communicating a new approach to Windows development -- beyond the PC (see #2). Microsoft needs to reenergize its developer base before they all flee to competing mobile operating systems. BUILD is a good start.

8. Undertook the first meaningful reorg in years. The changes may not be obvious to everyone, but there are more technical people now in charge of key management positions. Most of the marketing riffraff is gone, although the CEO and COO positions belong to men with sales and not technical backgrounds. The change is a process that started in fiscal 2010 but accelerated during the last 12 months. Ballmer's next task is the reduce middle management hierarchy.

7. Released Internet Explorer 9. IE 9 is by far Microsoft's most ambitious browser since v3 launched to great fanfare in summer 1996. It's not just for desktops. The browser will have a place in Windows Phone codename "Mango" planned for autumn release. Google Chrome and Mozilla Firefox are now moving at rapid-fire development pace. IE9 is table stakes Microsoft desperately needs to stay relevant. More significantly, IE will play an even more important role in Windows 8 than any other version of the operating system (see #2).

6. Bought Skype. The price, $8.5 billion, sure seemed like way too much when announced in early May. Twenty-one days later, ComScore revealed that 24 percent of U.S. adult Internet users had placed Internet phone calls -- or 19 percent Americans 18 or older -- and suddenly Skype looked like a bargain. The steep growth curve in online calling foreshadows opportunity for Microsoft and Skype. Already Skype claims a total of "170 million connected users and over 207 billion minutes of voice and video conversations in 2010."

Skype helps keep the PC relevant. Video calling/conferencing is one of those applications that benefits from the kind of processing and graphics power PC's possess. Additionally, Skype mobile fits into the smartphone as the most important computer most people will own (see #3).

5. Unveiled Windows Phone Mango. According to IDC, 1 billion smartphones will ship in 2015 -- that's larger than the current install base of PCs. Microsoft's future depends much on its ability to execute in mobile devices. Mango isn't an earth-shattering release, and it now looks to be much less following Apple's iO5 announcement. But Microsoft's "glance-and-go" philosophy is refreshing, and it's more than marketing mantra. The company really wants to liberate people from their cell phones.

4. Twisted Windows ARM. During Consumer Electronics Show in January, Microsoft revealed that Windows 8 would support ARM processors, not just x86. The timing couldn't have been more important, and it was too long coming. For Windows to compete effectively in the post-PC era, Microsoft needed to make this architecture adjustment. The only perplexing issue: How soon?

3. Cut a distribution deal with Nokia. In early February, Microsoft dropped a bombshell: Windows Phone would become Nokia's primary mobile operating system, pushing out Symbian (which later was outsourced). I've sharply criticized analysts' overblown 2015 projections for Windows Phone smartphone OS market share, but see the deal as being simply huge for Microsoft -- but not so good for Nokia. Microsoft won't own Nokia, technically, but it's a takeover in principle.

Windows Phone would be DOA without the deal. There is simply too much adopter, carrier, developer and manufacturer momentum around Android and iOS (well, not OEMs for that one). Nokia gives Windows Phone a fighting chance.

2. Debuted Windows 8. OK, Microsoft may only have previewed the new operating system, but what a sneak peak -- and given this month as fiscal 2011's close approached. The revamped task-oriented user interface is modern, taking elements from Windows Phone 7. Timing was impeccable, just four days before Apple presented Mac OS X 10.7 "Lion" to developers. Lion looks antiquated before its release some time next month.

Microsoft has taken one of the freshest approaches to operating system user interfaces since, well, the Macintosh in 1984. The new UI is fluid and modern, using HTML5 for rendering. Windows 8 needed such dramatic UI makeover for any hope of keeping it relevant for the post-PC era.

1. Connected Kinect. The device is more than a game controller. It represents a whole new design philosophy for Microsoft around natural user interfaces -- of which the Office ribbon and Windows 8 UI are part. Kinect has enormous potential as a transforming platform that could change how people interact with all kinds of devices. With Kinect, you are the controller -- the user interface. Microsoft put Kinect on sale in November, but didn't stop there, releasing new software to support the controller and prepping developers for a big SDK. Kinect and the NUI concepts behind it could transform Microsoft. Execution is key.