Windows Phone 7: Microsoft’s (Considerable) Challenges and its Surprising Opportunity

As I discussed in my last post, mobile is a space Microsoft needs to win if it’s to remain as relevant in this decade as it was in the last two.  I’ll never underestimate Microsoft’s power and, more importantly, its stubbornness/tenacity in battles it must win.  However, there are so many moving parts in this space and so much potential for Microsoft’s efforts to go awry that it’s very hard for me to develop any enthusiasm for Windows Phone 7, launched yesterday.

Let’s just look at some of those challenges:

  • User interface.  Microsoft looked at the iPhone and unlike Google, which said “we should copy that,” instead said “we can do better than that.”  Trying to out-interface Apple is a daunting proposition.  Has anyone done that?  Ever?  And in any event, is this the time it’s going to happen?  I’ll give Microsoft credit for realizing that perhaps the market didn’t need yet another iPhone clone.  However, its approach is actually at odds with how it has succeeded on the desktop.  The desktop and to a large extent the iPhone and Android worlds have succeeded because they’re open platforms upon which application developers can unleash their creativity and users can freely and equally access that creativity.  Instead here Microsoft has said “we know what activities you do with your phone and we’ll make those more prominent.”  If this is actually a static set of activities common across a wide enough range of users, I’d actually applaud that approach.  However, I don’t believe it’s at all a static set of activities and I think there’s sufficient variation from user to user that this approach will generally suffer.  Sure, if you’re a Zune person, great for you.  Both of you.  But I don’t think many users are thinking “wow, this iPhone is too tough to use; I wish someone would simplify my choices for me.”
  • Does Microsoft’s approach make it harder for application developers to achieve prominence?  With Microsoft controlling so much of the initial user experience, applications are relegated to a less prominent position.  This might discourage application creativity in areas Microsoft considers “core,” like pictures or social networks, and might hurt application developers whose applications might otherwise be considered core by users but are relegated to less prominence on WP7.
  • How many platforms can the market support, anyhow?  It’s clear Apple is a long-term survivor.  I don’t say “leader” because ultimately that’s not their business model.  They don’t play in high volume, low margin spaces and make no mistake about it, the smartphone market is going to be high volume in very short order.  Blackberry is positioned to be a survivor as a niche solution.  Their investments in corporate-relevant infrastructure mean that they can be a trusted provider for key scenarios even while other providers infringe on them at the margin.  That means that Android, HP/Palm, Nokia/Symbian and Microsoft are left fighting for markets that can only support one or two of those parties.  The decision may actually rest on more than just smartphones, which leads us to our next discussion.
  • Whither the tablet.  Android needs rework to adequately support tablets.  HP is going to move Palm into a variety of Internet-connected devices, including tablets, printers and more.  What’s Microsoft’s tablet strategy?  I’ll need more time looking at WP7 to assess whether this is a viable UI for tablets or whether it’s more likely to be some evolution of Windows not-Phone 7.  If, however, WP7 is not a tablet or other embedded device OS, that constrains the market opportunity for WP7 and thus its attractiveness to application developers.
  • Velocity.  Microsoft’s track record at getting operating systems out the door is, well, spotty.  (I’m feeling charitable today.)  The velocity in the phone market is a radically different dynamic than on the desktop.  Upgrade cycles are measured in weeks and months, and certainly not years.  Is Microsoft going to be able to maintain that pace and do so in a way that doesn’t jeopardize product quality.  Their track record is sobering.

However, Microsoft is in an interesting position when it comes to the carriers, especially here in the States.  The carriers have a love/hate relationship with Apple.  They’d love to have the iPhone.  They hate that Apple gets to dictate all of the terms.  With Google, it’s more of a wary situation.

While Google is more complicit with the carriers than Apple, the carriers are (rightly) suspicious of Google’s motivations.  If Google isn’t exactly making money licensing the core platform, then what’s in it for Google?  Clearly Google views this as an essential step in moving its ownership of the search space on desktops into a mobile world.  Thus, at some level, Google’s economic rationale and that of its partners are competitive and/or misaligned.  That doesn’t make for a great partnership.  Google competitors all around are trying to drive stakes into that misalignment with these patent lawsuits that further the economic risk elements and point out some of the inequities in the relationship (I get the benefit, you assume the risk).  That said, unless we’re about to change the patent landscape and head to Armageddon like situations, these things usually resolve themselves with small amounts of money changing hands.  I actually think that should one of the involved parties pursue these patent matters to full resolution, it will be counter-productive and will in fact hasten the time when we see patent reform up to and including the elimination of software patents, many of which, to this outside observer, seem, well, patently absurd.

So where does this leave Microsoft?  To the carriers, Microsoft may actually seem like the most benign of the three partners.  At least they understand Microsoft’s licensing model and appreciate the fact that Microsoft was their complicit partner on earlier Windows Mobile platforms (even while such complicity rendered the platform in need of its very replacement).  Again, I’ll write about my dislike for the carriers in a future posting.  They still hold to a desire for control that is unhealthy for the ecosystem and for us users.  But given that they hold on to these notions, their desire to partner with someone who will cow-tow to their mandates is strong.  If Microsoft’s willing to be that partner, all may not be lost for them.

Of course, that means that a Microsoft victory could be very bad for the rest of us…


6 Responses

  1. Jonathan,

    It seems to me this could be a major blow for RIM. RIM filled a (sorely needed) gap in MSFT’s Unified Communications strategy. With proliferation of W7 it seems obvious that MSFT will want to take that over as well. How do you see it?

    -Alan Berkson

  2. I still think RIM’s investments in its network operations center infrastructure makes it valuable and differentiated. Yes, Microsoft will want to wean the casual user to WP7 devices but for mission-critical and secure operations, RIM still fills a need that Microsoft, or anyone else for that matter, isn’t filling. The recent issues with India and various Arab states are actually wonderful marketing for RIM. “We’re so secure that governments have thought about banning us.” You can’t pay for that kind of endorsement.

  3. I understand the RIM value prop, but if noone wants to use Blackberry’s, where does that leave RIM? I already know many C-level execs with two devices, a Blackberry and their mobile device of choice. How long can that last?

    • The very first research note I ever wrote, in 1987, posited the belief that the single converged device will never exist. If you look, we carry more and more devices. A list of gadgets could include laptop, netbook, tablet, MP3 player, book reader, digital still camera, digital video camera, SmartPhone, corporate email device…and the list will only grow, not decrease. Certainly general purpose devices will fill as adequate substitutes for some of these devices some of the time but I think people will use different devices for different requirements.

      I was one of those people who carried two devices. I used my Droid for most uses but there were a few situations where I used my Blackberry. (1) For longer email where the keyboard was more comfortable to use than Swype, the Droid keyboard or the native screen input mechanism. (2) When I was travelling internationally, where my Droid didn’t work on GSM networks.

      I still believe we’ll carry more devices, not fewer. And we’ll find more services — docking capabilities, screens, keyboards — when we’re mobile, to extend the functionality of those devices.

  4. I understand your point about multiple devices. But that doesn’t rule out convergence. I used to carry a pager and a cell phone. Now I carry a cell phone which has “pager” functionality. I used to carry a cell phone and carry around my laptop to read email. Now I can read email on my cell phone.

    My question is at what point can/will convergence impact RIM in regard to the proliferation of highly functionally and flexible mobile devices? Wouldn’t it make sense for them to embrace these devices and focus on their core strength, infrastructure?

  5. Jonathan and Alan – you can debate all you want – I’m waiting for the Dick Tracey watch. Until that time, I admit to having two phones (1 a RIM BB and 1 an iPhone), two laptops (different purposes, both business) and an iPad.

    One of the two phones is going into the recycle bin shortly and the other may migrate to an HTC. One of the laptops will likely become an audio/video streaming device. And as for the iPad, it will likely become my eldest son’s game-toy of choice when I finally find a “travel-pad” device that can replace my laptop and the iPad (both of which I carry on the road). That means removable/expandable storage, docking station to home network/PC (so I can support the multiple monitors), full frontal video, etc. with a fold-out keyboard. In that scenario, I’m looking at two devices – a small phone and a pad (two devices that should NEVER converge – sorry, but these over-sized phones/undersized pads are not what I’m personally looking for, which means they will probably sell like crazy).

    My point here is that there is a wave of consolidation and convergence, and that is good to a certain point. Personally, I don’t like Apple’s closed approach – but everything they make works together. I don’t trust Microsoft’s overt attempts to dominate the world – but it would be great to have native app support across multiple devices (like Apple does). As for Google, I don’t trust their overt OR covert schemes for anything – although I do like their “beta” driver-less car.

    As for RIM, their HW attempts are falling just a bit short (like requiring a BB tethered to the Playbook for 3G access). From a device perspective, the best thing that RIM has going for it is the BB keyboard – everything else is either breakable or breakable (yes, you read that right). Unless they quickly improve their hardware, then infrastructure is their most logical play.

    Now that I’ve disrupted your discussion…

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