Microsoft needs to get serious about mobile phones
Software giant to unveil latest effort in lucrative smartphone niche on Monday
Published On Fri Oct 08 2010
Carmi LevySpecial to the Star
As Microsoft gears up to launch Windows Phone 7, the next major version of its mobile operating system, in New York City on Monday, you’d be forgiven for thinking the company had any presence at all in a market long dominated by Research In Motion and Apple.
Although Microsoft-powered devices never challenged BlackBerrys and iPhones at the top of the sales charts, its mobile software, variously called Windows CE, Pocket PC and, most recently, Windows Mobile, predates both RIM and Apple, and was once widely available on devices from Motorola, HP, HTC and others.
While enterprises appreciated its secure technology and relative familiarity with desktop Windows, it failed to keep pace with competitors, especially as they introduced new touchscreen-driven devices.
The resulting decline has been staggering. Market share figures from comScore show 10.8% of all smart phones in the U.S. ran Microsoft’s Windows Mobile in August, barely half the 19.1% share in November 2009. Over the same period, Google’s Android mobile operating system skyrocketed from 3.8% to 19.6%.
At a conference earlier this year, Microsoft CEO Steve Ballmer admitted his company dropped the ball. “We were ahead of this game, and now we’re not,” he said. “We haven’t fallen off the planet, but we’re not where we should be.”
The new operating system, then, needs to generate more than just sales, says Rob Enderle, principal analyst with the Enderle Group, a San Jose-based technology advisory firm. It needs to rebuild Microsoft’s reputation in the exploding smartphone and tablet markets.
“In terms of market perception this may actually be Microsoft’s most important platform this decade and its success or failure could have broad implications relating to Microsoft’s continued relevance.”
Describing the new OS as “a massive restart for Microsoft’s mobility efforts,” Avi Greengart says Microsoft can’t afford to fail.
“The competition in this space is fierce and Microsoft’s timeframe for success is long,” says Greengart, research director for consumer devices with technology research firm Current Analysis. “Even if Windows Phone 7 sells poorly initially, this is an area where Microsoft simply has to be a significant player over time.”
That’s because its traditional revenue powerhouses, Windows operating systems and Office productivity software, are under threat from cloud-based offerings from Google and others. Microsoft need to transition away from the desktop.
Because Microsoft doesn’t build the hardware, however, it can’t go it alone. Unfortunately, many of its allies moved on as Microsoft’s mobile fortunes fell.
“Handset vendors have been eyeing, and continue to do so, the opportunities that Android offers,” says Michelle Warren, principal of MW Research & Consulting. “As a result, Microsoft has to work to maintain, strengthen and revitalize these partnerships.”
Microsoft doesn’t seem fazed by the challenge. The company sees ample room to re-establish its mobile brand as millions of conventional phones are replaced with data-capable devices.
“We see tremendous opportunity in the smartphone space with the market poised to nearly double during the next four years,” says Greg Milligan, Microsoft Canada’s mobility solutions manager. “Windows Phone 7 represents our long term commitment to making mobile an important pillar of our software business.”
Uniqueness will be critical. The world doesn’t need another iPhone clone, and Microsoft seems to have gotten the message.
“Microsoft is finally leveraging assets from across the company in Windows Phone 7, including Bing, Exchange, Sharepoint, and others,” says Greengart. “The one that will really jump out at consumers is the Xbox Live integration.”
“Like a lot of consumer products, the success of one over another is largely connected to the status the buyer believes they get from buying it,” he says. “The iPhone is far from the best phone on the market but it provides the highest level of status to its purchasers.”
Enderle says while Microsoft has what it takes to succeed, it hasn’t always stuck with it for the long haul. That needs to change.
Carmi Levy is a London, Ont.-based independent technology analyst and journalist.carmilevy@gmail.com
ANALYSIS: Microsoft needs to get serious about mobile phones, Carmi Levy, Friday October 8, 2010, The Toronto Star
According to the article, Microsoft is releasing a new phone with a Windows 7 based concept. Even if it's never rivaled RIM's Blackberry or Apple's iPhone, it predates both as its mobile software is on many other phones including Motorola, HP, HTC and others. Even Microsoft's CEO Steve Ballmer says they need to step it up, but it is also said that this new release will be a giant restart to Microsoft's mobile phone history. If the new phone isn't successful in the markets, Microsoft's mobility streak will be impacted and it will fall behind even the Google Android phone which sales went up recently. As it says in the article, "Uniqueness is critical, and the world does not need another iPhone, which Microsoft understands". Microsoft is not fazed by the competition and is determined to launch the phone with a Window's 7 concept. It is after all, the interface "powerhouse" for most phones out there.
Strands it relates to:
This article heavily relates to "Factors influencing success in global markets". Competition is a crucial factor which will determine whether Microsoft's new phone will be successful or not. It's going to be going head to head with two of the bestselling phones in the market after all, and since Microsoft has unique idea that doesn't relate to the iPhone or Playbook in any way it has a good chance of passing them. However, another factor that may influence Microsoft's new phone negatively is the fact that they do not make their own hardware. In other words, since Microsoft mostly makes computer based devices their phones may not be the same as other phones. That can also be an advantage though, depending on what customers look for in a phone. This also closely relates to the "Marketing Challenges" strand because the success or failure of Microsoft's phone will have an impact on their mobile phone business. It can also make it questionable whether money should be invested on Microsoft for phones rather then computers and software.
Thoughts and Opinions:
Since Microsoft already has Windows 7 and will be using that concept to make a new phone, it has a good chance of competing against Apple's iPhone and RIM's Blackberry. Personally I would buy a phone from a company that doesn't usually make mobile phones just to try it, but other customers may not buy a phone from Microsoft regardless if it makes the software for other phones. But, if Microsoft's phone is really different from the iPhone and Blackberry then people may buy that more to get the next best thing after the iPhone. I predict the Microsoft phone will do fairly well considering its a fresh idea, and based on one of the best operating systems for computers.
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