Dear Satya Nadella,
Congratulations on your new role. It comes with a lot of useless advice that suggests Microsoft (NASDAQ:MSFT) emulate others, tweak product strategy, or make small course corrections. Instead, you have the opportunity to continue Microsoft's legacy of creating the future.
Can we start with something obvious? The changes in fortune that raises, say, Apple and Samsung, and lowers Nokia and Blackberry, aren't the result of chance. Instead, disruption comes from an unexpected angle. Every time, the winner has played a different game than the leader.
You know this: Microsoft started the last game, which was to put Microsoft software on every desk everywhere, and then won it. And what a job Microsoft did, in every category: the OS, applications, Internet access, and software infrastructure. Microsoft won so decisively that real, direct competition will probably never emerge. Everyone else who played that game lost to some degree.
But the game changed to one with different rules, and the old rules just didn't work any more. Today's game, putting a mobile computing platform in every hand, has been won by others. Why? Microsoft clearly didn't understand the new rules, the new playing field, and used moves that were tried and true. And inappropriate. "No compromise" doesn't mean no compromise, it means compromising something different and probably wrong.
There is an even newer game to play, one that Microsoft can win.
At the highest level, it is making the world around us smarter than we can currently imagine. It isn't about information, it is about context and responsiveness. It is about making our built environment our servants, enhancing health, suggesting wisdom, and providing guidance. Not today's game, putting a device in every hand, but tomorrow's, getting a hand from every device.
The components are already coming into focus: sensors, micro-payments, real-time analytics, security, and identity, all based on inexpensive intelligence and ubiquitous connectivity. Who better to navigate this incredibly complex, interconnected, transformative world than Microsoft?
The biggest hole in this strategy for Microsoft is the business model of those providing that ubiquitous connectivity. Metering access to scarce bandwidth is their leverage point, and they have built a device-licensed strategy to exploit it.
There is a response you can make: take over T-Mobile (NASDAQ:TMUS) and change the rules.
That "change the rules" part is important, and will only work with a radical rethink. Not just finding a tradeoff between buying a phone upfront and paying for it over time, but thinking through issues like delinking accounts and payments (so one person might have one account and three devices, and another one device and three accounts, as needed), connecting people to services rather than products (so services follow the user, not the device), sponsored network packets (so those near a sporting event, say, get bandwidth in exchange for ad display), monetizing services by consumption (so a sponsor pays if the user chooses their service), etc.
What buying T-Mobile will do is give Microsoft degrees of freedom enjoyed by no other technology company. Freedom to create truly unique and compelling combinations of devices and services.
Microsoft is in a unique position to buy T-Mobile. Enough resources to pull it off, no anti-trust concerns, and, despite a great deal of effort, insufficient business at risk from making competitive carriers upset.
Microsoft is one of the greatest success stories of our age. With some new thinking, it can be one of the greatest success stories of the next age as well.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.