In February, I asserted that Windows Phone 7 “is a lost cause.” Matters are worse following this week’s KIN killing and late May’s Entertainment and Devices division reorganization. Microsoft mobile development has run aground, and at the wrong time. The company is poised to miss two crucial platform transitions that will doom its mobile strategy and assure that the Office-Windows-Windows Server applications stack will join the mainframe in gradual obsolescence.
There’s irony here: Microsoft succeeded during the 1990s by driving platform changes that doomed competitors. Companies like Lotus and WordPerfect had market-leading products that fell away after they missed operating system changes that Microsoft lept on (and through its market dominating position helped push forward). Now it is Microsoft that will miss crucial platform changes: Smartphones replacing dumb phones and the mobile Web (including services and resident applications) diminishing the PC’s computing and informational relevance.
Microsoft’s problem is time. Short of bribing developers and customers to use Windows Phone 7, Microsoft cannot correct its mobile platform mistakes fast enough. Apple and Google will lock in customers the way Microsoft and its partners did with DOS/Windows PCs during the late 1980s and throughout the 1990s.
The Ghost of Windows Vista
All signs point to fundamental leadership problems within Microsoft, which culture seems incapable of separating from legacy platforms Office and Windows. Late on June 30, one of my journalist buddies IMed and asked: “Joe, what the heck is MSFT thinking? With this KIN thing?” I responded: “The enterprise hawks have killed the consumer and cloud service doves. It’s all about keeping Office and Windows revenue streams and extending them. These guys — and the analysts consulting them — are lost.”
Yesterday morning, I read a previous-day post at Engadget that confirmed my suspicions. In post “What killed the Kin?” Joshua Topolsky writes:
According to our source, the birth of these devices began with a decision at Microsoft to create a platform agnostic, cloud-centric featurephone. A featurephone that could be had at a relatively low cost, and sold to a burgeoning market of teens and young adults who had little need for a BlackBerry-level device (or pricing)…It seems that after doing some initial work on these phones based around Danger’s proprietary Sidekick OS, Andy Lees — the SVP of Microsoft’s mobile division — instructed everyone to go back to the drawing board and rebuild the OS based on Windows CE. It appears the company didn’t want a project that wasn’t directly connected to its Windows kernel. This move allegedly set the release of the devices back 18 months, during which time Redmond’s carrier partner became increasingly frustrated with the delays.
The scenario is eerily similar to Windows Vista’s first reboot, in early 2004, about six months after Microsoft touted glorious new features for the operating system then codename Windows Longhorn. Microsoft later dumped most of Longhorn’s best and most highly touted features, as product managers struggled to aright badly listing software development. Other reboots followed, leading up to Microsoft’s horrific Spring 2006 announcement: The operating system would not be ready to ship on holiday PCs. How the hell do you miss Christmas!
The events leading up to KIN’s killing are like those plaguing Windows Vista’s development, and they raise serious — I do mean serious — concerns that Microsoft has produced in Windows Phone 7 another lame-duck operating system. Shall we call it Windows Vista 2? I’m not too enthralled by what little chatter I’ve heard from developers about Windows Phone 7, and it feels like Vista talk. By measures of mismanagement — Windows Mobile falling from a leading smartphone OS position five years ago to No. 5 in Q1 2010, according to Gartner — Windows Phone 7 is Vista redux.
Microsoft can’t move Fast Enough
What Microsoft doesn’t have is time to fix the problems. Under Windows & Windows Live president Steven Sinfosky’s direct and Ballmer’s indirect leadership, Microsoft turned around flailing Windows development. Windows 7 is everything Vista should have been and wasn’t. But Microsoft could take three years because of monopoly. The company had locked in customers, the majority of them businesses, years ago. They would go nowhere (which the majority did) before moving to something else (incurring hefty switching costs along the way). There is no Microsoft monopoly in mobile. Microsoft doesn’t have three years to realign management, refocus software development and produce the necessary single OS for all devices — PCs, PDAs, smartphones and tablets.
CEO Steve Ballmer should have taken my advice and bought Palm. Instead, in another indication Microsoft bungled mobile, HP acquired Palm; now a major OS partner is a competitor in mobile. Microsoft could have sold Palm devices while getting its Windows Phone together or simply gone WebOS (a tough sell, I know, given the corporate culture).
DaveN wrote in comments to last night’s post “What does it mean that KIN, Sidekick and Symbian-Guru went R.I.P. within about 24 hours?“:
One thing about the phone market is that because people replace phones so often, it’s always possible for a new player to enter the market, or an existing but poorly performing one to come back to life. No matter how far a company like Microsoft or Nokia gets beaten into the earth, if their next product is great, it will succeed.
Once people invest in accessories or buy lots of mobile apps, switching will be more difficult, like during the early DOS/Windows PC and Macintosh wars. People may switch handsets often but the time is coming when they won’t so easily swap mobile operating systems. Microsoft will miss the crucial lock-in period for smartphones, as they rapidly replace so-called dumb phones.
In a follow-up comment, DaveN agreed. Once people lock into a platform, they don’t easily switch. The greater their financial commitment, the less likely they are to switch. Windows is classic example. Even for products where something as good or better comes along, switching is slow. Internet Explorer is good example. Even after losing about one-third of it usage share since 2005, IE still is the market leader by huge margins.
Smartphone adoption is accelerating, and the leaders are pulling fast ahead of Microsoft. Earlier this week, Apple announced that it had sold 1.7 million iPhone 4s during the launch weekend. In May, Google revealed 100,000 Android activations a day. This week, the company upped the number to 160,000. Activations equate to actual sales, not the unit shipments Apple calls sales. That puts Android sales at 4.8 million units a month, or 14.4 million a quarter, up from a 9-million sales rate based on the earlier activations figure. Android sales rate per quarter is just a few hundred thousand units less than Windows Mobile license shipments for all 2009; Android would be greater per quarter against Windows Mobile’s year when measuring sales against sales.
Mobile Applications are Enough
Microsoft’s big problem is what Apple and Google have got plenty of: Mobile applications. Apple’s application store exceeds 225,000, and the company has paid developers more than billion. The Android Marketplace is now adding an average 10,000 new applications a month (Caveat: Google recently purged presumed malicious apps, which reduced the total from more than 50,000 applications).
Last week Altimeter partner Michael Gartenberg posted “App Stores are not enough.” He writes:
There’s a battle going on for mobile platform supremacy, and right now there are simply too many platforms to succeed long term. And the old rules simply don’t apply any more, as the criteria for mobile platform success in mobile reaches beyond simply having a well-stocked app store. It will take much more than an app store to drive success — the key factor between success and irrelevance will increasingly be the cohesive application story each platform provider can tell. Look for the platforms with the out of-the-box and core experiences that also allow developers to best leverage and monetize their apps to make the cut long term. The wise vendors will figure this out sooner, while the others will begin a long slide into irrelevance
I disagree with his first assertions about there being “too many platforms to succeed long term.” It’s absolutely clear from the last 12 months of handset sales that the mobile market is consolidating around three mobile platforms: Android, BlackBerry OS and iOS. Nokia may be the global handset leader, but it’s poised to get caught in the same smartphone transition that will pummel Windows Phone 7. Nokia’s smartphones aren’t good enough, and future models will move from Symbian to Meego. Timing is terrible.
The math for mobile platform success isn’t that much different than PCs:
- The products must deliver satisfying consumer (or business) user experiences
- There must be plenty of applications for consumers (or businesses) to choose
- Developers of these applications and other partners must make lots of money
There are a few fundamental differences that matter:
- Connected consumer electronics will drive the next wave of computing
- Smartphones and fuller-featured dumb phones are more personal than PCs
- Buyers care more about benefits than any platform provider’s “cohesive application story”
Applications hugely matter for smartphones — much, much more than PCs — because the devices are so much more personal and socially used (after all, phones are about communications). It’s clear that Apple and Google are rapidly approaching the tipping point where buyers will make handset buying decisions based on the applications as much as hardware features or design, just like the PC era.
That’s the transition Microsoft will miss, again, short of paying customers or developers to adopt Windows Phone. Once customers lock into two or possibly three dominant mobile platforms, Microsoft will be locked out. Then the good old boys of Redmond can sit back in the porch swing, sip their wine coolers and dream of the days when Office and Windows ruled the world.