Thompson was high on Office as a platform, in part because of its importance to the company's revenue -- in the most recently reported quarter, the division responsible for Office accounted for 36% of the firm's total, the most of any group -- but also because of Office 365, the software-by-subscription service Microsoft significantly expanded earlier this year.
"Over time, value moves up the stack," said Thompson. "First from the chip to the OS, then to the software, and on to the services. That's just the way technology goes. I think there's room for a premium service ecosystem built on their Office layer. Office is further up the stack than the OS, and they could leverage that to be the major player in the cloud."
In a post to Stratechery last week, Thompson was more specific in his advice. "They ought to pursue a strategy -- services -- that entails being everywhere," he wrote.
The problem is that while "services" is part of Microsoft's new slogan, the purchase of Nokia makes Thompson suspect that that half will not be the one calling the shots.
"The issue for Microsoft is that a services strategy and a devices strategy are fundamentally opposed to each other," he said [emphasis in original]. "Your services will be forever paying a strategy tax to support your devices, which won't even be fully differentiated."