Was anyone else dumbfounded by the idea of selling the Xbox business? That's been one of the only bright points in MSFT's consumer products for the past decade.
The only reason XBox360 made any money was because of XBox Live subscriptions and Ad Revenue. Neither selling consoles, nor games have made any money for Microsoft.
That's exactly what I was thinking. Even if it was barely breakeven, I'd think that the value of having a consumer product with recurring revenue and [generally] positive customer experience is of greater value than its cash flows.
Its easy to have a positive brand image if you're bleeding money. See Youtube, before the advertizements. The real trick is capturing a positive brand image while still making the company money.
The XBox One tried to refocus itself as a more profit-oriented machine. Why is it "always online" ??? Because XBox Live subscriptions and Ad-revenue were the #1 source of revenue for XBox.
Why is the XBox One weaker than the PS4?? Because XBox never made money off of games. In fact, Microsoft lost money as far as games themselves are concerned.
Microsoft made a decision: they decided to attempt to make the next generation XBox One profitable at all. Those decisions have cost the XBox One its reputation... but were probably necessary so that the XBox division actually could make money.
When you have a part of your company that is continuously bleeding money, with an inability to actually monetize your brand... you need to spin it off. Its basic business strategy. The other possibility is if they could find a way for XBox One to make money while still keeping a positive brand image.
At the end of the day, Microsoft needs to make money, but the XBox isn't doing that for them.
Not when looked at from a return on investment perspective. The profits, when they've existed, are dangerously close to being totally eclipsed by the truly massive occasional losses/write-offs.
MS have a problem in that they don't really have a successful consumer products division. One way around that is to stop worrying about it, which seems to be an increasingly popular point of view.
Can someone provide some analysis and numbers to support this? Creating a gaming hardware console is naturally capital intensive, but has the PlayStation always generated losses for Sony? How about the Wii for Nintendo? What is the breakdown on the Xbox P/L statement? (I realize this doesn't exist in the wild, but someone knowledgeable feel free to hazard a guess, case-study style ...)
Can't Microsoft do better than Elop ? Gates and Balmer were visionary founders in their time. I am not sure Elop will measure up ; he seems to be only looking out for himself.
Apple miscalculated the optimal price initially and then changed it a few months later. No, obviously he couldn't anticipate that.
Microsoft squandered their lead in smartphones, you can blame them and Ballmer for that, but the particular video people love to continuously bring up has nothing to do with where MS made mistakes.
I would on the contrary take it as obvious that any CEO of a competing company would take the iPhone as a threat, and anticipate and plan for any possibility, just from having looked at history and seen where Apple went with for instance the iPod.
I think this video very clearly shows how Ballmer managed to not take the iPhone seriously, and that has everything to do with why Microsoft made mistakes and were slow to respond from 2007 onwards. The same thing happened with the iPad as well. From everyting he said, you could see that he regarded them as toys.
Do you remember that "developers developers developers .." bit. Can you recall any other executive of a multi-billion corp who was that passionate about developers? I appreciated a executive who was that passionate about third party developers. Also, he was part of a founding team that built a software giant ! I am a *NIX/Java guy but I appreciate Microsoft SDKs and Tool sets. Ballmer has not been as successful as hoped , but he is ok in my book.
Ballmer was at Microsoft when they were sub 50 people. Maybe he's not a visionary founder but potentially a visionary foundational employee? Considering how long he's been at the company, I'm not sure how one separates Microsoft's high in the 90s from Ballmer.
Only if you believe he left Microsoft and worked for Nokia. If you consider he has always been working for Microsoft all the time, he successfully completed the mission of running Nokia into the ground so Microsoft could buy the salvage.
Yeah, as an investor, that's the kind of guy I'd like to have managing my company (not).
Hatchet men are useful, well paid, but definitely not high-profile, except to knock down and make their successor look better by comparison (see HP: Apotheker and Whitman).
Maybe the age of HN is too low to remember, but Gates wasn't visionary. Microsoft's entire business was built on embrace-and-extend strategy. Gates was shrewd and ran Microsoft like the mafia ran Chicago.
All this talk of MS needing a forward-thinking visionary with ideas is just wrong. Just look at the environment these tech companies inhabit. You have Google, Samsung, and Apple all declaring patent war. That's how it has always been. Go back to Sun and Microsoft. Or Netscape. Or what MS did to IBM. It goes on and on. Oh, sure, on the consumer side all these companies appear to be innovating and everything is peachy. But that's marketing. In reality it's a cut-throat, winner-takes-all game they are playing.
Want Microsoft to succeed? I don't think most people on HN have the stomach for it. You like open source. Open standards. Playing fair. When Microsoft was good, they were really bad.
They need young, real "down to Earth" technology people like Scott Hanselman or J Allard to run that old monolith. I would list other people from tech but those people would never tolerate working for the Microsoft board.
Anyone that wears a suit and tie to work is going to just steer Microsoft further and further into the ground. Elop needs a hoodie.
If the next Microsoft CEO doesn't have a github account it will clearly show the company is heading in the wrong direction and needs to put some serious consideration towards a pivot.
Scott Gu or Scott Forstall would be good, or maybe Scott Hanselman. It's any Scott's race. Basically they need to get back to their developer/engineer focused products to innovate. They are riding off the fumes/grace of the last innovations still. Maybe someone that will take Visual Studio and Azure cross platforms and really build tools the developers love not things that they hate like Sharepoint (and for some, Windows).
Tech is not Microsoft's problem per se. Microsoft has great tech, they are building some great products, and are genuinely getting a lot better at a lot of things pretty fast. They just don't know how to sell to consumers well yet. They haven't had to do that until the last 5-10 years.
J Allard, Ray Ozzie, and the like have the potential to do great things, but honestly CEO of Microsoft is maybe not what they would do best at or enjoy.
Microsoft needs a systems thinker, someone who gets the business side and the tech side, while having the ability to shepherd great products on the consumer side and service the business needs of their huge enterprise customers. That is a ridiculously tall order and I'm not sure that anyone would do an outstanding job with it.
What does further and further into the ground even mean? Increasing revenues year after year?
Microsoft only looks like a bad company when you compare it to the (very!) short list of tech companies that have been better than it for the last 10 years.
These people are technology people, and good speakers. But I think it's a bit naive to assume that translates well into running a massive corporation like Microsoft. The skills needed there would be completely different.
It wouldn't help their bottom-line. If office on android is good enough that you can give people a tablet instead of a windows laptop then microsoft loses out on a windows license. Also, pricing on android would have to be much lower than on the desktop to get any traction, again cutting into revenue. iOS is no better, given they are competing against the free iwork alternative in the consumer space, and would end up replacing more profitable laptops in the business space.
I don't see an office on android / ios strategy as anything but a money loser in the short term. In the long term there is a risk of a competing product stepping in where they are not, but office has no cross-platform competition right now worth worrying about, and definitely nothing on mobile. I still think the windows on tablets strategy is the most likely path to long-term profit.
> analyst Rick Sherlund said the sale of Bing and Xbox, along with other moves, could lift fiscal 2015 earnings by 40 percent
Short term, quarterly numbers-focused business people. Lying off 50% of their employees will also improve their numbers by 2015.
Apple and Google have become the largest tech companies thanks to their consumer facing products. Selling Xbox and Bing will only seal MS's faith as another IBM. Windows Phone and Surface will stagnate (even more) and eventually they will have to be let go too.
Non-tech people often ask me if IBM still exists when it is mentioned in a conversation. They'll be asking the same thing about Microsoft in a decade or two if Elop takes over.
IBM not only still exists, they are massively successful. Today they're worth more than Microsoft, in fact, because of a strategic decision to refocus on selling to businesses that has worked out extremely well. They've stopped being a household name since they stopped selling to households, but I doubt they're losing much sleep over that.
Microsoft's ratio of popular to unpopular consumer products has been dismal for years; it's hardly unreasonable to think they might likewise do better by refocusing.
I'm not too sure about that. A lot of Microsofts dominance in business comes from the ubiquity of its operating system, while IBM has _always_ been big in enterprise / mainframe computing and research regardless of their "foray" into PCs.
Giving up the consumer market to focus on business puts this dominance in danger (even more so than the mobile/tablet threat), because someone might very well and up doing to Microsoft what Microsoft did to the minicomputer makers, and eat their business "from the bottom up".
So I think the interesting question is whether Microsoft could survive and thrive on enterprise software/services in an environment where neither Windows nor Office were dominant.
MSFT's market cap at the moment is 313.5B. IBM's is 193.4. Microsoft turning into an IBM would be a major win (and I mean in structure, not a literal 50% drop in market cap), not some sort of worst-case scenario. It's arguably even the best case scenario. IBM has been sustainably doing their thing for a long time now.
>Selling Xbox and Bing will only seal MS's faith as another IBM. Windows Phone and Surface will stagnate (even more) and eventually they will have to be let go too.
These types of comments sealing the fate of MS comes up at any post relating to Microsoft. However its far from the truth, Microsoft isn't going anywhere as much as Adobe, whether someone likes it or not. Xbox is one of the major revenue earning division for MS (not from console but from games, digital rights and live) and it is going thrive despite their PR clusterf*ck with Xbox One. Windows Phone and Surface slowing gaining momentum and WP is starting to see large market shares outside of U.S.
He is clearly a mistake. In the consumer space it is always innovate or die. For PCs people buy Windows because they are cheaper than Macs and linux is a nonstarter. Chromebooks are the new ultra low end. For Tablets: Apple is the high end, Android is the low end. Kindle Fires are niche, and everything else is basically worthless.
In the business space they need to counter the cloud and APIization of the market. They need to make it simpler, integrated and more effective on Windows devices. And they need to target small businesses. The need to cloudize workgroups/domains and make it simpler.
The rest of the cloud market being built on linux/open source and relies on web browser standards to achieve cross platform penetration. But in the current reality, Windows PCs and iPads are all that matter.
This is a very unusual kind of planted leak in the context of a candidate who is in the reckoning for being CEO. There are only two possible motives behind this story - either to scuttle or to aid Elop's chances of becoming CEO.
Given that Bloomberg seems to cite three sources who vouched for Elop's thinking on this, I think this could be a tactical move from Elop (because it would be relatively harder for his opponents to get three senior Microsoft sources to smear him).
Elop is shadow signaling his thinking to various Microsoft stakeholders. "I am not status quo. I will reconsider all old notions. I know Microsoft needs radical change. The era of Windows is over."
So Windows is a "burning platform"? I'm sure his hatchet-man reputation (and consequent results) aren't impressing long shareholders.
It could also be a reminder to shareholders of what happened to Nokia. Elop's vision of "burning the village in order to save it" sounds pretty apocalyptic.
Concur with this analysis. This is an unofficial official strategy statement, done with plausible deniability. Effectively, he is stating what the board would be hiring if they hired him. It also effectively puts the option on the public discussion board.
>As he formulates some broad strategic outlines for Microsoft, Elop is drawing on his years as CEO of Nokia Oyj, where he showed he wasn’t wedded to homegrown software by canceling the company’s then-dominant Symbian phone software in 2010, said the people
What? He was purposefully planted there by Microsoft for that exact purpose- kill symbian so microsoft can buy nokia for a steal.
So basically Elop has just publicly ruled himself out of contention with these ridiculous opinions.
Casting off Xbox at this critical point would be a disaster and massively weaken Microsoft's position. The post-PC era is dictating very clearly that Xbox may be the last "full PC" device remaining in the modern home... and he wants to cast it off?
Bing... it's better than defaulting their products to use Google.
Microsoft Office is a fine product but it is a legacy one.
I wonder what Elop's "opinion" is of Azure? That ridiculously high productivity and highly agile team that's been pumping out releases on a 2-3 weekly cycle for the past 2 years?
Wait. What? Why is Elop even in the running at all for the CEO position? That itself is fucking insane. Look what he did to Nokia!
First off, MS's answer to the question is more than enough - "We appreciate Bloomberg’s foray into fiction and look forward to future episodes". Three unnamed people? Really?
Sherlund is an idiot. The proposition, if you ask any consultant/financial analyst/Rick Sherlund is to maximize shareholder value. The problem with MSFT, Apple, Google is that shareholders are short sighted and don't understand how technology works or the charms of integrated offerings. They only see Product/Service/Capability-Cost mappings and see that by disposing money losing assets, they can enhance value proposition through the remaining assets.
Elop's strategy is fine if MS is in a money crunch and wants to undertake Cost Optimizations. It's not fine when MS is in the midst of their "3 screens, one cloud" transformation. If XBox and Bing continue their trend of losing money in the next 5 years, then yes, I would do things that Elop is fictionally proposing to do. Until then, hell no.
The real question here is whether operating systems have been commoditized, and if so, what Microsoft should do about it.
It's certainly true that I can get the windows-on-a-desktop paradigm from Windows (pre-8), OS X, or GNOME or KDE from five years ago. I could probably get the Metro user experience from an especially clever KDE Plasma plugin too.
However, despite free software versions being widely available, we've only seen two windows-on-a-desktop operating systems in wide use, and one of them (OS X) has a very limited install base. This means that the free versions are not equivalent to Windows, as much as I'd like them to be.
I see two reasons for that:
1) Getting the details right is really, really hard. This is especially true when there are a large number of computer users who are used to Windows - I don't think it's impossible to make another OS that they would use, but it would take a huge amount of usability engineering. (This is basically what Ubuntu is trying to do; but that's a side note here.)
2) Application compatibility is really, really important. In other words, even if GUIs are a commodity, the APIs underneath them aren't. This is something that is currently being attacked on two fronts - the Web is providing an alternative, standard API across desktop platforms, and non-Windows mobile devices are forcing developers to use non-Windows APIs. That makes Windows just another incompatible system to weigh the costs and benefits of developing for, rather than the standard which every program must support.
Elop isn't just looking at the explosion of tablets and smartphones, markets where Microsoft doesn't have much marketshare. He's also looking at the fact that the Chromebook has been the best-selling laptop on Amazon for at least a year, if not more. That shows that (2) is no longer enough of an advantage to keep Windows on consumer computing devices. It probably is enough to keep it on business workstations for a while longer, but he's smart enough to know that won't last forever - business IT is becoming increasingly consumerized. (1) is still an advantage, but the Chromebook and tablets both show that people will use a simplified, well-designed interface that's not Windows - hence the move to Metro with Windows 8.
Given all this, what is Microsoft going to do? The operating system cat is out of the bag, and it's probably not going back in. People are going to increasingly expect to bring their own devices into work, and some of those devices are not going to be running Windows. If platforms that don't run Office gain significant marketshare in the business world, then businesses will have to start considering alternatives, and maybe even start using formats that aren't doc and xls.
Thus, Microsoft's next move is clear. It offers Office on all popular platforms, allowing businesses to continue to not think about alternative office software. Apple makes its money from devices, and probably won't even fight if Microsoft does this. Google won't be happy because of Google Docs, but Microsoft has enough legacy support and can offer good enough enterprise management features that they'll still do well in this market.
In the meantime, Microsoft continues working full-tilt on Windows - just because it's no longer dominant doesn't mean that they can't make significant amounts of money from it. My thought would have been to bring the Metro interface to Xbox, although apparently Elop is thinking differently. It might even be true that the Office programs continue to work best on Windows. But whatever happens in the OS market, there's no reason Microsoft can't extend its office software dominance for a while longer.
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[ 2.9 ms ] story [ 145 ms ] threadhttp://www.businessinsider.com/microsoft-earns-2-billion-per...
From a business standpoint, the XBox is one of the worst performers in the entire Microsoft company.
Dude, its a known fact that the XBox division is a dog from an investment perspective.
Nope.
The only reason XBox360 made any money was because of XBox Live subscriptions and Ad Revenue. Neither selling consoles, nor games have made any money for Microsoft.
The XBox One tried to refocus itself as a more profit-oriented machine. Why is it "always online" ??? Because XBox Live subscriptions and Ad-revenue were the #1 source of revenue for XBox.
Why is the XBox One weaker than the PS4?? Because XBox never made money off of games. In fact, Microsoft lost money as far as games themselves are concerned.
Microsoft made a decision: they decided to attempt to make the next generation XBox One profitable at all. Those decisions have cost the XBox One its reputation... but were probably necessary so that the XBox division actually could make money.
When you have a part of your company that is continuously bleeding money, with an inability to actually monetize your brand... you need to spin it off. Its basic business strategy. The other possibility is if they could find a way for XBox One to make money while still keeping a positive brand image.
At the end of the day, Microsoft needs to make money, but the XBox isn't doing that for them.
MS have a problem in that they don't really have a successful consumer products division. One way around that is to stop worrying about it, which seems to be an increasingly popular point of view.
http://www.youtube.com/watch?v=eywi0h_Y5_U
Microsoft squandered their lead in smartphones, you can blame them and Ballmer for that, but the particular video people love to continuously bring up has nothing to do with where MS made mistakes.
I think this video very clearly shows how Ballmer managed to not take the iPhone seriously, and that has everything to do with why Microsoft made mistakes and were slow to respond from 2007 onwards. The same thing happened with the iPad as well. From everyting he said, you could see that he regarded them as toys.
Hatchet men are useful, well paid, but definitely not high-profile, except to knock down and make their successor look better by comparison (see HP: Apotheker and Whitman).
All this talk of MS needing a forward-thinking visionary with ideas is just wrong. Just look at the environment these tech companies inhabit. You have Google, Samsung, and Apple all declaring patent war. That's how it has always been. Go back to Sun and Microsoft. Or Netscape. Or what MS did to IBM. It goes on and on. Oh, sure, on the consumer side all these companies appear to be innovating and everything is peachy. But that's marketing. In reality it's a cut-throat, winner-takes-all game they are playing.
Want Microsoft to succeed? I don't think most people on HN have the stomach for it. You like open source. Open standards. Playing fair. When Microsoft was good, they were really bad.
Anyone that wears a suit and tie to work is going to just steer Microsoft further and further into the ground. Elop needs a hoodie.
What kind of experience and character traits do you think the next Microsoft CEO should have? I'm having trouble deducing those from age/clothing.
J Allard, Ray Ozzie, and the like have the potential to do great things, but honestly CEO of Microsoft is maybe not what they would do best at or enjoy.
Microsoft needs a systems thinker, someone who gets the business side and the tech side, while having the ability to shepherd great products on the consumer side and service the business needs of their huge enterprise customers. That is a ridiculously tall order and I'm not sure that anyone would do an outstanding job with it.
I don't know why Scott Guthrie isn't on the list.
Microsoft only looks like a bad company when you compare it to the (very!) short list of tech companies that have been better than it for the last 10 years.
Getting their stuff on the Android and Linux platforms would help a lot, but then again, Linux has plenty of Open Source alternatives already.
I don't see an office on android / ios strategy as anything but a money loser in the short term. In the long term there is a risk of a competing product stepping in where they are not, but office has no cross-platform competition right now worth worrying about, and definitely nothing on mobile. I still think the windows on tablets strategy is the most likely path to long-term profit.
"We appreciate Bloomberg’s foray into fiction and look forward to future episodes"
http://www.theverge.com/2013/10/23/4975448/microsoft-frank-s...
http://www.businessinsider.com/microsofts-david-pogue-tweet-...
http://pulse2.com/2012/07/28/frank-x-shaw-responds-to-micros...
Short term, quarterly numbers-focused business people. Lying off 50% of their employees will also improve their numbers by 2015.
Apple and Google have become the largest tech companies thanks to their consumer facing products. Selling Xbox and Bing will only seal MS's faith as another IBM. Windows Phone and Surface will stagnate (even more) and eventually they will have to be let go too.
Non-tech people often ask me if IBM still exists when it is mentioned in a conversation. They'll be asking the same thing about Microsoft in a decade or two if Elop takes over.
It's not necessarily a bad fate for the stockholders, even if it's way more cool to be Apple than to be Oracle.
Microsoft's ratio of popular to unpopular consumer products has been dismal for years; it's hardly unreasonable to think they might likewise do better by refocusing.
http://en.wikipedia.org/wiki/Ibm#1980.E2.80.932013
Giving up the consumer market to focus on business puts this dominance in danger (even more so than the mobile/tablet threat), because someone might very well and up doing to Microsoft what Microsoft did to the minicomputer makers, and eat their business "from the bottom up".
So I think the interesting question is whether Microsoft could survive and thrive on enterprise software/services in an environment where neither Windows nor Office were dominant.
These types of comments sealing the fate of MS comes up at any post relating to Microsoft. However its far from the truth, Microsoft isn't going anywhere as much as Adobe, whether someone likes it or not. Xbox is one of the major revenue earning division for MS (not from console but from games, digital rights and live) and it is going thrive despite their PR clusterf*ck with Xbox One. Windows Phone and Surface slowing gaining momentum and WP is starting to see large market shares outside of U.S.
This isn't even remotely accurate. Xbox barely draws a profit in comparison to it's office, windows, and services groups.
In the business space they need to counter the cloud and APIization of the market. They need to make it simpler, integrated and more effective on Windows devices. And they need to target small businesses. The need to cloudize workgroups/domains and make it simpler.
The rest of the cloud market being built on linux/open source and relies on web browser standards to achieve cross platform penetration. But in the current reality, Windows PCs and iPads are all that matter.
Given that Bloomberg seems to cite three sources who vouched for Elop's thinking on this, I think this could be a tactical move from Elop (because it would be relatively harder for his opponents to get three senior Microsoft sources to smear him).
Elop is shadow signaling his thinking to various Microsoft stakeholders. "I am not status quo. I will reconsider all old notions. I know Microsoft needs radical change. The era of Windows is over."
http://emuneee.com/blog/2012/11/12/microsofts-org-chart/
It could also be a reminder to shareholders of what happened to Nokia. Elop's vision of "burning the village in order to save it" sounds pretty apocalyptic.
https://www.microsoft.com/en-us/news/press/2001/nov01/11-11c...
What? He was purposefully planted there by Microsoft for that exact purpose- kill symbian so microsoft can buy nokia for a steal.
Casting off Xbox at this critical point would be a disaster and massively weaken Microsoft's position. The post-PC era is dictating very clearly that Xbox may be the last "full PC" device remaining in the modern home... and he wants to cast it off?
Bing... it's better than defaulting their products to use Google.
Microsoft Office is a fine product but it is a legacy one.
I wonder what Elop's "opinion" is of Azure? That ridiculously high productivity and highly agile team that's been pumping out releases on a 2-3 weekly cycle for the past 2 years?
Wait. What? Why is Elop even in the running at all for the CEO position? That itself is fucking insane. Look what he did to Nokia!
Sherlund is an idiot. The proposition, if you ask any consultant/financial analyst/Rick Sherlund is to maximize shareholder value. The problem with MSFT, Apple, Google is that shareholders are short sighted and don't understand how technology works or the charms of integrated offerings. They only see Product/Service/Capability-Cost mappings and see that by disposing money losing assets, they can enhance value proposition through the remaining assets.
Elop's strategy is fine if MS is in a money crunch and wants to undertake Cost Optimizations. It's not fine when MS is in the midst of their "3 screens, one cloud" transformation. If XBox and Bing continue their trend of losing money in the next 5 years, then yes, I would do things that Elop is fictionally proposing to do. Until then, hell no.
It's certainly true that I can get the windows-on-a-desktop paradigm from Windows (pre-8), OS X, or GNOME or KDE from five years ago. I could probably get the Metro user experience from an especially clever KDE Plasma plugin too.
However, despite free software versions being widely available, we've only seen two windows-on-a-desktop operating systems in wide use, and one of them (OS X) has a very limited install base. This means that the free versions are not equivalent to Windows, as much as I'd like them to be.
I see two reasons for that:
1) Getting the details right is really, really hard. This is especially true when there are a large number of computer users who are used to Windows - I don't think it's impossible to make another OS that they would use, but it would take a huge amount of usability engineering. (This is basically what Ubuntu is trying to do; but that's a side note here.)
2) Application compatibility is really, really important. In other words, even if GUIs are a commodity, the APIs underneath them aren't. This is something that is currently being attacked on two fronts - the Web is providing an alternative, standard API across desktop platforms, and non-Windows mobile devices are forcing developers to use non-Windows APIs. That makes Windows just another incompatible system to weigh the costs and benefits of developing for, rather than the standard which every program must support.
Elop isn't just looking at the explosion of tablets and smartphones, markets where Microsoft doesn't have much marketshare. He's also looking at the fact that the Chromebook has been the best-selling laptop on Amazon for at least a year, if not more. That shows that (2) is no longer enough of an advantage to keep Windows on consumer computing devices. It probably is enough to keep it on business workstations for a while longer, but he's smart enough to know that won't last forever - business IT is becoming increasingly consumerized. (1) is still an advantage, but the Chromebook and tablets both show that people will use a simplified, well-designed interface that's not Windows - hence the move to Metro with Windows 8.
Given all this, what is Microsoft going to do? The operating system cat is out of the bag, and it's probably not going back in. People are going to increasingly expect to bring their own devices into work, and some of those devices are not going to be running Windows. If platforms that don't run Office gain significant marketshare in the business world, then businesses will have to start considering alternatives, and maybe even start using formats that aren't doc and xls.
Thus, Microsoft's next move is clear. It offers Office on all popular platforms, allowing businesses to continue to not think about alternative office software. Apple makes its money from devices, and probably won't even fight if Microsoft does this. Google won't be happy because of Google Docs, but Microsoft has enough legacy support and can offer good enough enterprise management features that they'll still do well in this market.
In the meantime, Microsoft continues working full-tilt on Windows - just because it's no longer dominant doesn't mean that they can't make significant amounts of money from it. My thought would have been to bring the Metro interface to Xbox, although apparently Elop is thinking differently. It might even be true that the Office programs continue to work best on Windows. But whatever happens in the OS market, there's no reason Microsoft can't extend its office software dominance for a while longer.