Why Microsoft Will Slaughter Its Windows Mobile and PC Partners, and What it Means for Apple and Google
August 20th, 2009
Daniel Eran Dilger
If you’re thinking that Microsoft’s reported plan–to pit Windows Mobile 6.5 against Android and then wait for another year to issue Windows Mobile 7 as its “iPhone killer”–sounds inane, wait till you hear what the company intends to do to its current mobile partners. It’s a brutal strategy that promises to radically change both the smartphone and PC landscape.
The Windows Mobile Roadmap.
Microsoft hasn’t yet formally announced the “dual-mobile OS” strategy that DigiTimes reported to be in the cards. Steve Ballmer just finished castigating Google for adopting a dual-OS strategy with Android and Chrome OS, but Ballmer also seemed to be ignorant that his own company already maintains a “dual-OS” strategy for PCs and mobiles, even if they’re both branded as Windows.
We don’t have to speculate about the certainty of the DigiTimes story however; the company has already released enough roadmaps to make the new report uncontroversial. This spring, at Mobile World Congress, Microsoft released Windows Mobile 6.1, an ineffectual update that fixes some bugs, and then officially announced the release of 6.5 for the end of this year.
That update promises to deliver the first functional version of Pocket Internet Explorer, the same browser Microsoft has been touting, but not demonstrating, to be part of the Zune HD release. Windows Mobile and the Zune HD are both based upon the same underlying operating system.
Sometime in 2010, Microsoft says it will release Windows Mobile 7 (originally promised in late 2009), with support for features comparable to the 2007 iPhone, including support for capacitance touch screens rather than the stylus tap screens used by Windows Mobile devices that have some kind of screen sensitivity (devices that were once called “Windows Smartphone,” like the Motorola Q, don’t have any sort of touch or tap screen input, just external buttons).
Windows Mobile 6.5 shows clever burst of originality. Haha no.
Microsoft’s Zune, Vista, and Windows Mobile 7 Strategy vs the iPhone
Did Microsoft kill Android at Mobile World Congress 2009?
Microsoft’s Basic Vaporware Strategy.
That Windows Mobile roadmap sounds more like a scenic route for Microsoft, which has rapidly lost mobile platform market share (just a few years ago, it could claim a 24% share of smartphones, now it’s down to around 9%) and has been embarrassed by the rapid rise of the last three generations of iPhone.
How can it possibly afford to piss away another full year with just incremental improvements to its crusty old Windows Mobile platform before delivering its promised vaporware panacea? Oh wait, that’s the company’s normal business plan: deliver crap into the market and then float a toxic cloud of promises that kills off superior products until there’s no options left but to buy Microsoft’s crap.
After several years of this, Microsoft’s crap hardens into something that can be used to make tools or start fires, allowing the company to continue selling its crap without competition. This worked well for Windows on the PC desktop and in the server market, but isn’t working well at all in consumer devices. Windows Mobile and the Zune and the Xbox are all failing to kill off their competitors, outsell them, or even make much of a profit after a decade of trying.
CES: Fear and Loathing in Las Vegas
1990-1995: Microsoft’s Yellow Road to Cairo
Microsoft Plans a Sneak Attack, Gets a Waterloo.
Microsoft has learned that the Windows vaporware strategy isn’t working at all in music players and cell phones (and in fact isn’t even working that well on the PC desktop anymore, either, as the Vista disaster indicates). This calls for change.
Three years ago, Microsoft decided to shake things up in the Windows Media Player / PlaysForSure business by introducing the Zune to compete directly with Apple’s iPod. It assured its partners that, somehow, the Zune would only compete with Apple’s products and would have no effect on existing sales of PlaysForSure players.
This wasn’t true of course, and nobody believed it at the time outside of a few gullible pundits who just repeat the company’s talking points. It was pretty clear that if Microsoft built its own music player, there would be no way other vendors could compete with their own Microsoft-platform devices. Sure enough, while the Zune had no impact on the iPod at all, it stomped PlaysForSure into the ground and made all of Microsoft’s hardware MP3 partners out to be rubes.
Had Microsoft been able to sacrifice its backstabbed partners and use their bodies to create a pile that it could climb atop and battle the iPod, the PlaysForSure killing spree might have made some sense. All that really happened is that Microsoft proved itself wildly incapable of delivering its own hardware, marketing it, merchandizing it, supporting it, advancing it, and building any sort of installed base.
Since Microsoft’s core competency and basic business model is billowing vaporware smoke, the Zune’s crushing collapse could only clear the air, making the path for rival competitors even easier. The incompetent Zune only made the iPod family look better than it already did.
The Spectacular Failure of WinCE and Windows Mobile
Microsoft Plans the Same Sneak Attack Again.
Back to Windows Mobile: Microsoft now finds itself in the same position in smartphones today as it was in MP3 players in 2004. Back then, its plan for dominating the music player market using a licensed operating system and DRM mechanism were slowly failing to congeal even as Apple was enjoying wild success with its iPod.
Microsoft planned to out-do the iPod by offering support for video and perhaps games and various other vaporware ideas. Apple incrementally delivered photos, then video, then gaming and podcasts, and eventually apps, an online software store, touch controls, and a web browser, all things Microsoft has struggled to copy while it perpetually remains a year or two behind, stymied by problems the company first blamed on its partners and eventually tacitly admitted were its own fault when the Zune failed to gain any traction under Microsoft’s full control.
Today, Microsoft sits in a very similar position in smartphones: unable to even define a vaporware vision of the future that hasn’t already been delivered by Apple. Does it retrench to rally the support of its partners, at least those that haven’t yet abandoned Windows Mobile as their flagship mobile platform (as Sony Ericsson and Samsung have)?
According to the DigiTimes report, Microsoft will take on the currently nonexistent threat posed by Google’s Android using the Windows Mobile 6.5 release, the only software it has any hope to actually ship this year. That software doesn’t offer anything comparable to iPhone experience however, so next year’s Windows Mobile 7 will need to hang out as a vaporware ghost, attempting to scare buyers from getting the iPhone.
Microsoft will then purportedly continue to sell Windows Mobile 6.5 alongside 7.0, but somehow they won’t compete with each other, just one taking on Android while the other aims at the iPhone. That’s a pathetic strategy, but pathetic circumstances call for pathetic measures.
What is less pathetic and more hysterical is the other, “less-openly reported” strategy Microsoft hopes to enact in between. I’d call it a “closely guarded secret” but this is Microsoft, and there really aren’t any secrets about what the company plans to do.
Zune II: the Same Strategy Again.
Are you ready? Microsoft plans to dust off the Zune strategy and use it again. Under a project known as Pink, Microsoft plans to release its own mobile phone based on elements of its Zune HD and Windows Mobile 7.
This too sounds about like the best of what one could expect Microsoft to do, if only the company hadn’t already tried this and ended up killing off its remaining partners without actually establishing its own sales. The only difference this time around is that Windows Mobile has fewer partners than PlaysForSure had, giving Pink fewer bodies to climb on top of to battle the iPhone 4.0 a year from now.
This does, however, explain why HTC, the Taiwanese company that has built 80% of all Windows Mobile phones, has publicly announced plans to ship half of its phones next year using Android. Motorola, once hailed by Steve Ballmer as producing a Windows Mobile phone that was cheaper than the iPhone (the Q, and it really wasn’t), is also done with Windows Mobile and has officially moved toward Android.
It also explains why Sony Ericsson and Samsung, both of whom tried to rival the iPhone over past years using fancy new hardware running Windows Mobile behind a custom UI burka, abandoned those efforts and have since retooled with new flagship phones running Symbian.
Microsoft is planning to annihilate the Windows Mobile market so that it can fire a single shot at the iPhone with all it has left. It’s no doubt prepared to do this because it recognizes that Windows Mobile has been a failure over the last decade. Despite the Zune being a major failure relative to the iPod, it is at least offering the potential of someday earning Microsoft some hardware profits, something Microsoft’s PlaysForSure partners were never going to do for it.
The Second Slaughter.
Slaughtering its Windows Mobile partners will be even easier than killing off PlaysForSure; there’s hardly any left. However, once Microsoft enters the ring with the only viable Windows Phone (as it will be calling it), it will be the only mobile running the antiquated Pocket IE, have no installed base to build anything upon (take a wild guess if WiMo 7 and its apps will work on today’s WiMo phones!), and will have no hardware vendors pushing it, a luxury Microsoft now enjoys with LG and HTC phones, which still sell in some quantity.
This almost requires Microsoft to build out its own copycat retail stores (were you wondering why?) so that it can attempt to sell the Windows Phone and the Zune to customers without any distracting Android, Symbian, and RIM alternatives, and particularly no iPods or iPhones around. However, building out a nationwide network of retail stores will literally cost Microsoft billions, and there is more than a significant risk of failure.
With Apple aggressively pushing down the cost of mobile devices and software, there won’t be fat margins for Microsoft to earn on its own hardware or its software. Microsoft will basically be left trying to create more loss leader Xbox-businesses without any potential for taking a cut of $60-$80 game titles.
The Third Slaughter.
This will subsequently make it tempting, if not simply necessary, for Microsoft to release its own PC in order to keep its retail stores afloat, just as every other retailer sells its own house brand. After killing off its PlaysForSure partners and Windows Mobile partners, how secure will HP, Dell and Acer be in thinking that Microsoft won’t take away their businesses as well? After all, it makes no sense for Microsoft to operate retail stores that do nothing but lose money while its PC makers profit.
This obvious eventuality for PC makers has them scrambling for alternatives already. Linux proved to be weakly popular for Acer when its netbooks first arrived, and both HP and Dell have toyed with building Linux-powered products. However, none of the big three PC makers have any special competency in software, let alone building a platform.
This presents another opportunity for Google, offering Chrome OS to serve the same need in PC devices that Android hopes to deliver in smartphones. If successful, Google could inherit the DOS throne, becoming the mass market operating system vendor without actually making any of the money Microsoft has extorted throughout its reign as the PC software platform monopoly.
But what if Google fails? What if Android can’t manage to deliver a phone that is broadly popular, and what if Chrome OS fails to capture the market for the low end of PCs? The desktop operating system as we know it is far too complex to develop from scratch in a half decade, as witnessed by the decade long efforts to build Windows, Linux, and Mac OS X. That leaves little hope of a magical deus ex machina alternative dropping from the sky.
Will Google’s Android Play DOS to Apple’s iPhone?
Myth 6: iPhone Developers will Flock to Android
Myth 7: iPhone Buyers will Flock to Android
What Might Happen?
This leaves Apple an enormous potential for expanding the Mac installed base, potentially leaving it and Microsoft locked in a fight over the huge, if plateauing, PC market. With Microsoft weakened, Apple could potentially begin licensing Mac OS X to other PC vendors, something that isn’t viable for the company today.
Alternatively, Apple could sell a Mac OS X application environment that ran on top of a basic GNU/Linux system installed by future PC vendors. This might play out somewhat like OpenStep attempted to do: create a rich operating environment that could run on top of any modern operating system.
More likely though, Apple will continue to transition the conventional PC market from cheap hardware running sloppy and ugly software to one more like the auto market, where vendors sell finished goods rather than fusing two separate products together, poorly, from awkwardly partnered companies.
In fact, Apple is almost certain to continue developing integrated products where the hardware and software fit together seamlessly, from iPods to iPhone to tablets to notebooks to workstations. We’ll likely see Windows and its “my OS with your hardware” business model slowly fade away, leaving Microsoft to build its own competing Zune, Windows Phone, and Windows PCs against Apple’s.
PC competitors, from HP to Dell to Acer, are most likely to begin copying RIM and Palm’s strategy in the smartphone space, building a customized shell on top of Java or Linux to differentiate them from both Microsoft’s Windows and Apple’s Mac OS X. The computing world will rewind back into the late 80s, when vendors like Acorn, Atari, and Commodore could compete with their own integrated systems in a pre-Windows world.
This is already happening in the smartphone space, where the winners are clearly RIM and Apple, the Palm Pre looks to have some potential, and Android, Symbian and Windows Mobile are all struggling to keep themselves afloat as “my OS, your hardware” platforms.
What about compatibility, the main reason everyone flocked to Microsoft’s PC platform in the first place? Well, today we have the web, where standards-based apps can run regardless of the OS platform. Tomorrows web will enable even more sophisticated web applications, and there will also be customized, native apps for each platform, just as today’s smartphones are all achieving basic competency on the web while attempting to each offer a native platform, too.
It’s also possible something dramatically unforeseen might happen and change the course of the tech industry in a way that is difficult to comprehend or fathom from our current perspective. Speaking as a tech futurist, I am of course compelled to ignore any such possibilities. What do you think the future holds?