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Microsoft CEO Satya Nadella has just raised the white flag on their half-hearted competition with the Amazon Alexa and Google Assistant digital voice assistants.
“We are very mindful of the categories we enter where we can do something unique. A good one is speakers. To me the challenge is, exactly what would we be able to do in that category that is going to be unique?,” Nadella told journalists invited to a company event on Monday this week.
Nadella decided the Microsoft could in fact not compete in the field without being an also-ran, and said the company would instead look to make Cortana available on other voice assistant platforms.
“Would it be better off, for example, to make Cortana a valuable skill that someone who is using Alexa can call? Or should we try to compete with Alexa? We, quite frankly, decided that we would do the former. Because Cortana needs to be that skill for anyone who is a Microsoft Office 365 subscriber,” he said.
While Microsoft has not announced a deal with Google, Microsoft has already closely partnered with Amazon to offer Cortana on Alexa.
“And you should also be able to use [Cortana] on Google Assistant. You should be able to use it on Alexa, just like you use our apps on Android or iOS. So that’s at least how we want to go,” he said.
Like in the smartphone field, Nadella felt Microsoft could benefit from the burgeoning smart speaker market without competing directly. We have also seen this approach more recently in the browser rendering engine area, with Microsoft planning to abandon EdgeHTML for Google’s Chromium.
A generous interpretation of this strategy is that Microsoft is merely conceding to reality and focussing on markets where they really need to compete, rather than peripheral markets which are not money spinners. A less generous interpretation is that Nadella needs to support Microsoft’s stratospheric share price by reducing R&D and other development expenses and slim-lining the company, thereby increasing profits even while revenue growth slows.
I suspect very few of us care about Cortana’s demise, but this is likely because we never embraced her in the first instance, as we suspected Microsoft would not be able to compete effectively. Following each failed new venture by Microsoft (Windows phones, Microsoft Band, now Cortana speakers) it is likely any new device Microsoft launches will come with a perceived expiration date which will cast a shadow over its prospect of success, making for a self-fulfilling prophecy. It seems likely devices such as the HoloLens 2, any radically different Surface device (such as a foldable) or a new generation of Xbox devices will all be affected.
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