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Microsoft Doubling Down on Failing Mobile Strategy?

February 19th, 2010 Leave a comment Go to comments
Steve Ballmer Video re iPhone

Click for Video of Steve Ballmer predicting success of Zune over iPhone, back in 2007.

Steve Balmer made an appearance at Mobile World Congress this week. He’s far richer than I am ever likely to be, so maybe I’m the wrong guy to listen to, but Microsoft has been having trouble with their mobile strategy for a long time now, and Windows Phone 7 doesn’t seem to address the key issue.

The great stuff Ballmer promised for Phone 7 doesn’t seem likely to save their rapidly listing mobile ship. To me, their strategy seems to be a doubling down on the same strategy that has been failing them for the last decade in the mobile OS space. ┬áThe bottom line on Windows Phone 7 is that it has a lot of great OS capabilities, but doesn’t address the most fundamental strategic challenge Microsoft faces in the mobile OS space: iPhone, Android, and BlackBerry have superior go to market strategies.

It seems that Microsoft is a victim of their own tremendous success in the PC OS business, where they are THE Platform company. When it comes to their mobile OS efforts, they seem to have forgotten two very important things:

  1. The reality is that people buy solutions to their need and wants. In the early days of a sector, there cannot be a supply of third party applications/services that turn a Platform into a solution to any needs/wants. It is only after some maturation of a sector that the third party applications/services make it possible for people to recognize their need/want for a Platform.
  2. Microsoft’s PC OS was installed into The Platform position by IBM in the early 1980’s, with IBM’s enterprise marketing clout and bundled/available applications. Simplistically, one could say that Microsoft has never had to go through the phase of delivering solutions to meet the needs/wants of end users, and lack that DNA.

Look at how BlackBerry stole the mobile enterprise business that by all rights should have gone to Microsoft. BlackBerry’s core usage is BY business/enterprise users, OF data in Microsoft Exchange Servers. How could Microsoft have lost in that arena? BlackBerry delivered a solution to the need/want of having mobile access to Email, Calendar, Address Book, etc (all functions sitting in Microsoft Exchange Servers!). Instead of delivering a solution, Microsoft tried to skip straight to offering a Platform, hoping they could go straight to the more developed phase of an ecosystem, where there are third party apps and services that do the dirty work of addressing the pesky needs/wants of the end users. Oops!

Now, I think there is a very difficult question for Microsoft to address, which is How to Compete with Apple, Google, and BlackBerry? I don’t see a silver bullet here. ┬áThe default Microsoft strategy of attempting to deliver a “better” OS seems even less likely to work now than it has the last handful of times they’ve tried this approach.

Apple monetizes their OS through tight bundling with wonderful hardware, creating a better user experience. Given this strategy, Apple can’t “run the table” given the diversity of desires/interests of the handset vendors, mobile operators, and end users, which does create something of an opening for Microsoft. But that iPhone is a darn nice device to compete against, as Microsoft learned the hard way.

Google (plans to) monetize their OS through the ads/searches resulting from increased mobile Internet usage. How does Microsoft compete against a better whole product offering (inclusive of the existing huge installed base of third party apps that add the value that Microsoft lacks), which Google gives away FOR FREE to the handset vendors, and where Google hands all the app store revenues over to the mobile operator? That sounds just about insurmountable.

BlackBerry has just plain out-executed Microsoft. It’s simply too late for Microsoft to (i) develop the whole-product DNA/mentality, (ii) develop the solutions, (iii) get the range of devices into the market, and (iv) build the brand, to effectively compete against BlackBerry with an end to end solution. Microsoft was widely rumored to have been in discussions to buy RIM in the previous years. With 20/20 hindsight, whoever was the champion of that deal within Microsoft deserves big kudos.

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  • Bob Geiman

    Well said. I sat through the windows mobile 7 demo. It was far and away the best product that Windows has ever produced. And, had the product been released in 2005 or 2006, we might very well see a different mobile landscape that we have today. But it was released in 2010 and, before it goes commercial, it will already be far behind Apple and Android on the consumer front and Blackberry on the enterprise front. Android had a very interesting week in Barcelona. Over 15 new platforms announced. It will be on over 100 million devices sometime in 2011.

    PCs will matter for a long time and so Microsoft will matter. But it has lost the mobile computing war globally. To me, the big question becomes can Android or Apple make a major move in the enterprise and challenge bberry, or will apple and Android remain consumer focused. Extending mission critical enterprise applications to mobile is the next big thing and will enable someone to carve out another period of significant growth. I just don’t see it being Microsoft.

  • admin

    @Bob. Thanks!

    Yes, I think the question of who will win in the enterprise is going to be a wonderful contest to watch. BlackBerry starts with a great installed base of users and BlackBerry Enterprise Servers, but iPhone and Android bring so much momentum and a model to effectively incent the creativity of third parties to add value to their platform.