Microsoft faces competition in many different markets, from Amazon with its cloud services, to IoT platforms trying to win over the next generation of smart manufacturing. But when it comes to software, the company has owned the desktop market for several decades and has been able to hold its own in the productivity space as well.
In the hardware space, the company builds personal computers, gaming consoles, peripherals, and a few other items but the only hardware battle that matters for Microsoft is the one in the classroom.
While the personal computing space is crowded with many different companies, the Surface brand is now churning out billion dollar quarters on a frequent basis. The Xbox brand, while highly important to Microsoft, is a two-horse race with Sony and Xbox competing for console dollars; Nintendo has carved out its own island and is typically a complement to an Xbox or Sony console.
This isn’t to say that Xbox, Surface, or anything else Microsoft is building isn’t important but there is one race where the company is struggling to compete; the education segment.
Last week, Microsoft made several announcements around new hardware for educators, new features with Teams to help make teaching easier, and a new pen that works with the Surface Go. But on the other side of the coin is Google, who also announced that G-Suite for Education has 80 million users.
Further, Google also shared that there are 30 million Chromebooks being used in education, up from 5 million from the same time in 2018. There is, with little doubt, that a Chromebook generation is being born which creates a huge obstacle for Microsoft, not today, or tomorrow, but in ten years from now.
The Chromebook generation, while obviously not using Windows, is also not using Office 365 as well. You could argue that corporations today still use Office and that these students will eventually learn Microsoft’s suite of productivity tools later in life, but at some point, the Chromebook generation will run companies.
And it’s not only Chromebooks, but Microsoft also has to compete with Apple’s iPad and other MacOS devices. Each company is working to help educators find the most value in their products not only from a price perspective but also a use-case scenario as well.
Chromebooks provide affordable computing with an easy to manage operating system which is why it has quickly become the go-to solution for many educators in the US. And when schools choose Chromebooks, they are not choosing Windows or Office; Microsoft needs to find a solution to compete in this segment.
But it’s not like the company isn’t trying. The company has released Windows RT, and ARM-based Windows devices that run on Qualcomm chips, but neither caught on with educators. And while the Surface Go is a quality machine, it’s also too expensive for most schools and still uses Windows, which comes with its own challenges.
Handing a teacher or student Windows 10 is like giving them a Swiss army knife. It’s full of features and tools that enable creativity and productivity but in most schools, what is needed is a butter knife. Google is selling the butter knife while Microsoft sells an OS that tries to scale from the Enterprise down to the 8-year-old trying to access a website for a school activity.
Even with the challenges of Windows in education, the company is exploring other areas like its purchase of Flipgrid and a few others. But the only way the company can truly win in this area will be with hardware.
The company’s upcoming Windows Lite OS may give them a chance on the software side but if they can’t sell the right combination of hardware and software, the company stands to find its long-term productivity-based future in jeopardy. Even though we often think of Office 365 as being untouchable in the enterprise, in the next decade, 80 million people raised on Chromebooks are going to find themselves in the corporate world and will undoubtedly have an influence on the tools used.
For Microsoft, the only hardware battle it needs to win is in the education segment. This is far from a lost cause and they do have devices in schools around the globe. But going forward, the competition from Chromebooks and iPads will not diminish and if Microsoft can’t find a way to simplify Windows 10 for this segment and also make it an attractive option, it’s long term productivity outlook will be significantly impacted.