How Well Do Microsoft's Xbox, Skype, Office, and SkyDrive Work Together?

An employee at the Microsoft Store at University Village in Seattle assists a customer during the store's grand opening Photograph by Stuart Isett/Bloomberg

Over the last 18 months, Steve Ballmer has been insisting that Microsoft is evolving from a software maker to a “device and services company”—a distinction that’s supposed to focus consumers on the company’s tablets and phones and the programs that are designed to seamlessly link them. As someone who covers Microsoft, I need to be familiar with the company’s products. To that end, I have actually purchased the whole shebang:

  • Skype Premium ($60 per year for unlimited calling to U.S. mobiles and land lines)
  • Xbox Live Gold ($60 per year for online gaming and TV from ESPN and other cable providers)
  • Office 365 Home Premium ($100 per year for running Office on up to five computers)
  • Xbox Music Pass ($100 per year for unlimited streaming of music)
  • SkyDrive ($10 per year for 25GB of extra storage in Microsoft’s cloud)

After using all of them extensively, I can safely say that if Ballmer and Microsoft really want consumers to make this turn, the interconnections between all of these services still need a lot of fine-tuning.

For example, I spent more than an hour with Skype customer support last weekend trying to figure out a way to sign in to Skype on my Windows Phone. Normally, this is an easy process. You download the Skype app onto your phone, use your Skype credentials to log in, and off you go. Microsoft, though, has found a way to make this not work.

At Microsoft’s prompting, I set up a new Skype account using my Microsoft log-in name and password instead of a Skype name and password. I did this to get a new Skype number to use on my smartphone. But the Skype app on my Nokia 710 Windows Phone does not let you log in with Microsoft credentials instead of Skype credentials. It took three Skype customer support people to conclude that what I wanted to do—use my Microsoft phone to access a Microsoft account to use a Microsoft service—was impossible.

Similarly, only some of the movies I have purchased on my Xbox show up, as promised, on my other Microsoft devices like Microsoft’s own Surface tablet. I’m not sure how Microsoft’s services pick and choose what I get to watch, but they seem to have a real thing against cartoons.

At the same time, life in Microsoft Land can also be quite wonderful. My young son is enthralled when he watches the interactive version of Sesame Street on the Xbox. Via the Kinect sensor, my son appears in the show and can jump around with Big Bird and punch letters and numbers. This is streaming, immersive television, and it really does feel as if it’s from the future.

More practically, I’ve ditched Google Docs. I now save all of my work directly to SkyDrive from the new version of Office. This has made it much easier to keep all of my notes and stories in one place. I’ve also really enjoyed the vast selection of songs I can beam into my living room or onto my smartphone through Microsoft’s music service; I’m listening to much more music these days than in years past.

About that smartphone. I’ve been trying out the HTC Windows Phone 8X in addition to the Nokia. I have to say, the HTC is a thing of beauty. It’s almost impossible to convince anyone in Silicon Valley to even touch the device, but as far as I can tell, it’s much more elegant than any of the Android devices out there, and it gives the iPhone a serious challenge when it comes to the design of the hardware and user interface. Does Microsoft have lots of apps to complement the shiny device? Well, no. And thanks for asking.

To that end, Microsoft has much to do if it wants to become a devices and services company. For the company, the gains are obvious. Customers who used to pay for Windows and Office only when they bought a computer are now encouraged to renew every year for software services. Excluding the cost of Windows, Microsoft could look to earn about $350 per year in software services from each of its most loyal customers.

How many people are out there buying all this Microsoft stuff? It’s not just me. About 50 million pay for an Xbox Live Gold Account. Office subscriptions for consumers are new, so we’ll have to wait for an update on the numbers. Skype has an unbelievable number of users, but only a small fraction of them pay for services. What’s more, the whole model makes the most sense when there’s a smartphone in the mix, and, well, Windows Phone users remain rare creatures.

That’s all the more reason for Microsoft to get cracking, and fast. After all, some of us are actually trying to use its products.

Before it's here, it's on the Bloomberg Terminal.