Mobility is always one of the topics I like to write most about as I find the world fascinating. From the carrier networks and billing systems down to the actual consumer devices. I was at Microsoft in Bldg 117, home of Microsoft Mobility, when the first Windows Phone was released. I had every Windows Phone OS from v1.0 on up to 6.5. I won’t go through the whole history, but needless to say, things started to fall apart for the Microsoft Phone business after the release of the Apple iPhone. With the latest release of Windows Phone, code-named Mango and the flowering relationship with Nokia, Microsoft at long last seems in a position to compete with Apple and Google. However so far Windows Phone, despite every positive reviews seems to be at a cross roads.
Recently former Microsoft Windows Phone GM, Charles Kindel on his blog wrote about his thoughts as to why, despite in his view, WP7 is a superior product, sales were so lack luster. Though I don’t agree with all his points some are very valid. He highlights four areas of the mobile eco system. They are as follows:
- Device Manufacturers
- OS Providers
- Developer **
As noted in his blog he intentionally left the developer community off the list, but I shall add it back in. So there you have it 5.
Carriers are kind of the Mitt Romney of tech, he wants to be popular to the conservative base of voters but he is not. The carriers want to be like Silicon Valley, but they are not. Telco execs are closer to Depends than Huggies. Silicon Valley kids are definitely in the Huggie category. Carriers at the end of the day own the last mile to the customer. Any service for mobile devices will run through them. They get us all connected. It’s exciting stuff. That being said no one gets excited by their carrier. High School kids do not say they are cool now that they have Verizon Wireless. Kids are excited by the device and the functionality it provides them. Voice and data plans are a necessary evil. The only talking points are quality of service and the cost of the service. But make no mistake these old boys wield a lot of power and would like nothing better than to be recognized as “cool” for it. If you want your device sold you have to play with them…unless you are Apple which managed to dictate their own terms. This leads us to the next category.
Device Manufacturers do some of the really cool stuff that make the handsets we buy..well cool. But how do carriers select which handset they will place in their storefronts and promote? Well we have two different approaches. One is very monolithic and takes control away from the carriers. That of course would be Apple. Apple s the only device manufacturer that I can think of that was able to dictate how their phone would be sold , which at first was sold exclusively through AT&T. Steve Jobs knew he had broken new ground when Apple created the iPhone. It was a leap-frog step in mobile phones. He knew it and he negotiated it. AT&T sold voice and data plans for the iPhone, but Apple got the rest, including the App Store. All AT&T could hope for was that the iPhone would drive more subscribers to their network. It did. a lot of new subscribers. On the flip side is Google and what they have done with Android. Buy a mobile OS, leverage open source and let device manufacturers create. It was a good plan that gave some leading handset manufacturers cool software so that they could compete and sell against the iPhone. Quickly HTC went from being a dominant Windows Phone shop to a dominant Android shop. Other handset manufactures fell quickly into line such as Samsung and Motorola. Device manufactures had the flexibility to innovate and not have to adhere to a rigid set of software design practices. Charles Kindel highlighted this in his blog and I am in strong agreement with him on this. Microsoft has not done this and it has caused friction with device manufacturers. The carriers liked this model as it was less friction between the carriers and device manufactures. It gave carriers more variety to sell and also more inexpensive devices. Cost was an area where Google could innovate and compete with Apple.
For the providers of OS’s there are primarily three: Apple, Google and Microsoft. Apple is a walled garden or prison cell, which ever analogy you prefer. Google is on the flip side as it pursued more the open source model and courted developers heavily to their Android platform. I flatter Microsoft by putting them here as they are around 2% in terms of market share, but they have over $30 billion in cash so I guess I should. Operating systems, whether they are on a tablet, laptop, phone or other don’t matter as much as the makers would like to think. But they do enable our experiences so to minimize them would also be wrong. Really Apple is a soup to nuts shop so they own hardware and software design, Google and Microsoft differ in approach and cost. Google has a better developer model and doe snot cost. Microsoft is less open and does charge for the OS to hand set manufacturers. In my view these two things will slow down their progress in the market place and to get to a substantial market share is going to be a hard journey.
Users in the end decide where they want to invest their money. Sp much of what they invest is not necessarily for cool features and cutting edge technology. It is for how the product makes them feel. Don’t get me wrong all the technical stuff is very important in making the end product successful, but at the end of the day users want to feel good. Apple has been far and away the best at this. Android is good, but it is a cheap alternative to Apple. Though Charles Kindel claims the Windows Phone is the best bar none, it is hard to substantiate when it’s hard to find anyone (as of yet) who owns one. My view is tainted toward the positive as I live in Seattle so I have plenty of Microsoft employees happy to show me all the cool features. Note to Microsoft employees here. Stop showing features and hand the phone to whomever you are talking to, so they can “experience” the phone. Feature demo’s are for geeks.
Finally we come to developers. The are the Windows Phone is weakest in. Remember Steve Ballmer saying, “Developers, Developers, Developers” . Apparently he forgot. Recently Apple hit 500,000 applications, Google has a few hundred thousand. Microsoft announced they hit 50,000.. Apple amazed me as they used Object C as the development language for the iOS. I sold C compilers in the early nineties. It seemed dead. However after the release of the iPhone it went from dead to one of the top ten programming languages. Developers g where the money is. The development language they use is secondary. Google use of open source made sense, since the open source community is a whole lot of developers at heart. It’s a large community so leverage their brain power. Which brings us back to the Microsoft developer. Who is Microsoft asking to write Windows Phone apps? Simple the large and robust Microsoft developer community and yet they are still not even visible in the rear view mirror of Apple and Google. Why? For starters mobile apps are simple and cheap. It is based on a high volume lower margin principle. Plus a lot of Microsoft developers are not targeting consumer apps. One of two things has to happen. Either Microsoft has to create enough consumer demand for Windows Phone to bring developers over to Microsoft or they need to attract non-Microsoft developers to the Microsoft brand. Not easy but it has to be done.
In the long run I expect that Microsoft will pour enough money into Windows Phone to drive some success, but how much and what is deemed a success is to be determined. I think short-term it makes more sense for Microsoft to go after Google and Android as Apple has extremely high consumer satisfaction. A recent study cited 85% of Apple iPhone users would buy Apple again. Android is ow cost but it is also in danger of fragmenting as the OS layer as more handset manufactures modify the OS , thus creating apps that are compatible on some devices but not all. This needs to happen fast as Android sales are sky rocketing. Microsoft and Nokia will have a successful launch and Windows Phone will increase in market share (how much?!?), but the next big question will be can it create and sustain momentum? Though Charles Kindel claims the Windows Phone is the best mobile phone on the planet, that does not translate into success. Technology is littered with products that were deemed the best and yet failed to catch on. It is early for Windows Phone 7 and Microsoft is way late to the game. Their key partner, Nokia, is making a last stand with the Microsoft mobile platform. In the mean time Apple and Google have not slowed down. It seems impossible to overcome. But what does Microsoft have to lose except for ….the future.
Good Night and Good Luck.
Hans Henrik Hoffmann – January 9, 2012