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Some hints of progress but no giant leaps for Microsoft this week

Aaron Pressman
Daily Ticker

Microsoft (MSFT) had a busy week at their developers conference. Announcing Office for the iPad, unveiling a new line of phones, and even a Siri like competitor for their mobile operating system. Where did they hit and where did they miss?

Incremental improvements for consumers

Windows Phone 8 and the bizarrely named “Windows 8.1 Update” (they issued Windows 8.1 last fall) offer a bevy of improvements, but most are pretty minor – like displaying three columns of tiles on small phone screens instead of just two, making the power and search buttons much quicker to find on Windows PCs, etc.

The one big new feature on the phone was Cortana, a digital assistant that’s sort of a combination of Apple’s Siri and Google Now. It’s a little less full-featured to start, but has a useful way to establish detailed privacy boundaries that the others lack. And it’s named after a cool character from the Xbox game Halo.

Yeah, but Nokia introduced three phones. Super cool, right?

Nope, warmed over yesterday’s news. The new Lumia 930 is just a version of the already announced Lumia icon, which is exclusive to Verizon. Nokia wouldn’t even say when it plans to bring this phone to the U.S., probably because of the Verizon Icon exclusivity deal.

Related: Microsoft Could Be Obsolete By 2017: Gartner Report

Two other new handsets, the Lumia 630 and 635, are just tweaks to the previous Lumia 520 line of low-end phones announced over a year ago. But the new phones have new colors and beyond black and white, the yellow, orange and green seem kind of garish and toy-like. The 635 version, which includes faster 4G LTE, is coming to the US in July for $189 without a contract. Windows Phone has been more successful at the low end, especially in developing countries where, in some places, it outsells the iPhone. This should keep the momentum going, but it’s pretty much what you’d expect on an annual upgrade cycle.

Incremental improvements for corporate users and developers

The two software upgrades also have some features aimed at corporate users, like additional security and device management options. There is also a special mode in Internet explorer 11 that can run more of the ancient web-based apps that were never updated.

And in its Azure cloud service, Microsoft added dozens of new features to make it easier and cheaper for companies to build their web sites and apps on top of Microsoft’s infrastructure. The impact of these improvements is by far the hardest to handicap both because it requires incredibly specialized knowledge to even grasp what’s being discussed, and because this is such a hyper competitive space with players including Google, Amazon, Cisco, IBM, and more.

Related: Why Microsoft Really Bought Nokia

Developers got a potentially important present as Microsoft tries to encourage more people to write mobile apps for its phones and tablets, the great failing holding back those platforms. The company says it is making it easier than ever to reuse the same code in, say, a desktop app and a phone app or even on Xbox – 95% of the code could be shares. I don’t think this will significantly bolster Windows Phone, however, because the huge app gap isn’t from apps that are already being written for Windows but apps that are being written for iOS and Android, like Uber, Spotify or Youtube, not to mention tons of useful apps from banks, gadget makers and other big companies that are all over iOS and Android.

Some of the best stuff is not coming soon

Microsoft clearly confused some onlookers with screen shots of further improvements that aren’t scheduled for the upcoming round of upgrades. A hybrid start menu, more like Windows 7, and Windowed versions of new apps looked cool but came with no ETA from Microsoft.

Does this move the needle for Microsoft?

Microsoft’s biggest problem is that it’s way behind in tablets and phones, where sales are still growing, and strong in PCs, where sales are shrinking. The new path for developers to write programs for all versions of windows could more easily bring mobile apps to Windows, the great failing of the system so far. But it's not clear how much money Microsoft can actually make in this segment, since it doesn't sell ads like Google.

Satya Nadella – How is the CEO doing?

Mr. Nadella has been in the CEO chair for less than three months so he probably could not have orchestrated a conference built solely around all his ideas and strategies. But his weakness as the presenter-in-chief, as the face of the company, was somewhat exposed in a brief talk he gave on Wednesday. There were some extremely hopeful signs, consistent with last week’s “radical” (for Microsoft) step of unveiling Office for the iPad ahead of the version for Windows tablets. Microsoft will give away software for phones and smaller tablets, a la Android, abandoning a previously ironclad rule of charging for operating systems. And Xbox links are much more prominent than ever before, indicating willingness to finally leverage that popular and valuable brand.

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