Daniel Eran Dilger in San Francisco
Random header image... Refresh for more!

Microsoft frets Google’s Nexus One will suffer Zune’s failure

platform business models

Prince McLean, AppleInsider

Microsoft announced to the press that Google will face a series of Zune-like problems with its Nexus One as it tries to balance its Android platform.

Microsoft frets Google’s Nexus One will suffer Zune’s failure
.
Speaking at the Consumer Electronics Show in Las Vegas, Microsoft’s Robbie Bach, president of the company’s Entertainment & Devices Division, told Bloomberg that he envisioned that Google’s foray into directly selling and marking the phone could scare away other Android licensees.

“Doing both in the way they are trying to do both is actually very, very difficult,” Bach said. “Google’s announcement sends a signal where they’re going to place their commitment. That will create some opportunities for us and we’ll pursue them.”

Speaking from experience

Bach presided over Microsoft’s own “PlaysForSure” Windows Media strategy for delivering a licensed software platform that hardware makers could use to build MP3 players, in competition with Apple’s iPod. When that program failed to gain much traction, Microsoft took matters into its own hands by announcing a plan to deliver a Microsoft-branded Windows Media player under the Zune brand.

The company insisted that the Zune would only compete against Apple’s iPod, leaving PlaysForSure licensees to continue their growth in parallel. However, as was obviously the case even at the time, the Zune only managed to kill off PlaysForSure devices and assume their small share of the overall MP3 market without making any progress into Apple’s territory.

Bach recently told analysts who were critical of the company’s foray into music players that it continues to feel it has a shot in the music business and that it views the market as critical to the company’s overall strategy. However, he also admitted that given the chance to do things over, the company would have done things differently, although he didn’t explain what he thought would have worked better.

Regardless of the path Microsoft had taken, its Windows Media platform appeared headed for disaster. Without the Zune, the company would be dealing with the same kinds of problems that it faces in smartphones, where it has (so far) avoided releasing its own branded phone in deference to its Windows Mobile licensees, primarily HTC.

But that alternative strategy hasn’t stopped Microsoft’s phone platform from quickly sliding into irrelevance in terms of actual sales, consumer mindshare nor in developer attention. Consumer products benefit from tight integration to a greater degree than PCs, where Microsoft has successfully ruled the roost as the world’s dominant PC operating system provider.

platform business models

Microsoft vs Google: don’t follow our lead

Bach’s warnings to Google aren’t the first time a Microsoft executive has scoffed at its rival for doing the same thing it had done previously. Chief executive Steve Ballmer laughed off Google’s Chrome OS initiative last summer, telling the crowd at the company’s Worldwide Partner Conference, “I don’t know if they can’t make up their mind or what the problem is over there, but the last time I checked, you don’t need two client operating systems [Android and Chrome OS]. It’s good to have one.”

Ballmer’s comments were curious because his own company maintained two distinct PC operating systems throughout most of the 90s: the consumer Windows 95/98/ME based on DOS, and the completely separate Windows NT/2000 operating system it targeted at business users.

Additionally, the company launched the entirely new Windows CE operating system targeted at handheld devices and embedded apps in parallel to its desktop offerings. Even today, Microsoft still maintains two very different client operating systems in its primary offerings: Windows 7 for desktop PCs and the Windows CE-based Windows Mobile platform.

The company is also struggling to wean PC users and licensees from Windows XP to the latest Windows 7 release, so that the company can at least narrow down its primary support efforts to one PC client operating system. It’s not there yet.

Microsoft vs Google: don’t follow our lead

Google isn’t managing its Android platform as strictly as Microsoft ran Windows, allowing its licensees to incorporate their own user interfaces and not forcing them to follow a strong reference design in terms of hardware. This may allow the company to escape from the same fate Microsoft faced with the Zune, and allow the company to successfully do what Microsoft hasn’t yet dared: ship smartphones and PC devices that directly compete with its partners.

At the same time, Google’s Nexus One has almost universally been described by tech observers as a “Droid killer” in reference to its one-upmanship of last season’s flagship Android model. The company has tried to play off any threat by advertising the Droid as Verizon’s alternative to Nexus One for users who prefer that carrier. However, it has also announced plans to bring its own branded model to Verizon in the near future.

Whether this will alienate Motorola as an Android partner just after the company focused all of its resources on Google’s platform remains to be seen. Google has indicated that it may launch new Nexus One successors in partnership with other manufacturers.

The move may also intimidate the beleaguered Sony Ericsson, which has floundered from Windows Mobile to Symbian to Android looking for a sophisticated phone platform that could allow it to compete with the iPhone. Sony has indicated that it will pull out of its partnership with Ericsson if the group does not return to profitability, a move that would kill what is the third most significant Android licensee.

Meanwhile, LG has worked to keep one foot firmly planted in the Windows Mobile camp while talking about Android products, while Samsung has announced that it will launch its own Bada platform rather than focusing on Android. Even the maker of the Nexus One, HTC, has floated the plan to build BREW phones that it can sell for cheaper than its array of Android or Windows Mobile devices.

The more different competitors Apple faces in smartphones, the better it fares. One major reason why Apple lost its pioneering position in graphical desktop PCs to Microsoft in the 90s was related to the company’s efforts to stamp out rivals in “look and feel” lawsuits during the late 80s that shut down windowing products from HP and GEM, leaving Microsoft free rein to consolidate a competitive-free monopoly juggernaut around its own Windows product.

In this decade, Apple has conspicuously refrained from attacking rivals on copyright or patent infringement issues in both the iPod and iPhone markets, outside of defensive measures it has taken against patent challenges from Creative and more recently Nokia. Competing in the market has historically worked out much more successfully for Apple than trying to compete in court.

25 comments

1 Rich { 01.11.10 at 5:17 pm }

The first graph is wrong. The smartphone column should be mostly open now that Symbian is open. At the very least it should be mostly licensed.

2 danieleran { 01.11.10 at 5:35 pm }

@Rich

Symbian is working to be open, but there’s no significant licensees that have been using it as an open platform, nor anyone attracted to the idea.

3 roz { 01.11.10 at 6:29 pm }

“he also admitted that given the chance to do things over, the company would have done things differently, although he didn’t explain what he thought would have worked better.”

Well another approach would have been to make Zune a plays-for-sure device, which if I recall correctly, it wasn’t. Then even though the partners would have been annoyed, MSFT’s marketing would have reenforced the platform rather than work against it. This would sorta be what Google is doing with the Nexus. Nexus is Android so they are at least eating their own dog food. To really have copied the idiocy of what MSFT did with plays-for-sure Google would have had bring out a phone that used an entirely different OS than Android and then marketed the hell out of that.

In the case of Android is hard to tall what will happen. Really, I can’t understand why Google brought out the Nexus under their brand. It could have easily made a deal with HTC to have them offer the phone and come up with some extra terms to make sure google got things the way they wanted. There is no reason to risk disrupting the Android partners. But it is also not clear that the Android partners are as threatened by the Nexus and the coverage suggests that they are. It’s just another Android device of many. And what option does Motorola have? They have to stick with Android or they will fail in the marketplace. They are better off tweaking Android and sticking with it than going somewhere else.

One question I have is that if Microsoft approaches Moto and asks them to put a Bing search widget on the Droid homepage in place of Google, who is to stop them? And if Google has killed the goodwill of the OHA then we may see the case that Google has to pay for prominence on the homepage of the platform they created. That can’t be the ideal scenario Google has in mind but it is the inevitable outcome of their opening the platform the way they did.

4 qka { 01.11.10 at 7:55 pm }

What is your source for the numbers in the graph?

Or is that graph attempting to illustrate your hunches or beliefs? If so, attempting to present qualitative information in a quantitative way is absolutely bogus, and undermines your credibility.

I thank you for all your work, and believe you are one of the more truly savvy commentators in the tech field. That is all the more why I cringe when you use sloppy presentations to support your arguments.

5 roz { 01.11.10 at 11:54 pm }

how do you know they are sloppy? looks about right to me. what is your point anyway?

6 Berend Schotanus { 01.12.10 at 1:49 am }

Robbie Bach must be a reader of RoughlyDrafted Magazine ;-)

I like the graph, not because its sources are undisputed, but because it is a very accurate illustration of the line of thinking that RDM is following

7 Rich { 01.12.10 at 1:51 am }

@danieleran
That’s incorrect. Both Samsung and Sony Ericsson have released phones based on the first open source release, Symbian^1 (aka S60 5th edition). The code is available from the Symbian Foundation’s website: http://developer.symbian.org/main/source/browse/index.php

It’s a moot point anyway since Symbian has been historically a *licensed* operating system rather than an *embedded* operating system.

Whichever way you look at it, the graph is wrong.

8 dallasmay { 01.12.10 at 11:16 am }

Okay, well, if you are going to through MP3 players into the mix, shouldn’t you include other CE as well? What about DVRs, DVD players, and Cable boxes? These days most of those run Linux. I mean, you wouldn’t recognize it as such, but it’s Linux under the hood. Where does that fit in?

9 Microsoft frets Google’s Nexus One will suffer Zune’s failure « iNewΙΤ { 01.12.10 at 12:08 pm }

[...] frets Google’s Nexus One will suffer Zune’s failure Microsoft frets Google’s Nexus One will suffer Zune’s failure Bach’s warnings to Google aren’t the first time a Microsoft executive has scoffed at its rival [...]

10 bartfat { 01.12.10 at 12:31 pm }

I thought the PC market was almost all Microsoft and Apple. So frankly shouldn’t that graph be fixed for PCs, because Linux is not even a minor player in the PC market. Servers, they actually dominate. So I don’t know where you get your numbers… but they’re pretty off this article. thanks for trying, though.

11 gus2000 { 01.12.10 at 12:45 pm }

New Reece’s ad: “Hey, you got your chocolate in my business model!”

12 SteveD { 01.12.10 at 5:22 pm }

Personally I think the problems listed above is the least Google has to worry about.

The Android platform was created to give Google a presence on the smart-phone platform to protect their search revenue’s.

But there is a problem…. I have owned a smart-phone for a year and have done maybe 3 google searches. People are not searching on their smart-phone nearly as much as their desktop. And if they do search, it is outside the Google eco system (think inside iTunes).

So while DROID may have great sales for Moto and Verison, Google makes nothing. Zilch. Zero.

So what does Google do? They have to create their own phone to make money through hardware sales. This is an interim solution.

The Nexus One is the first phone that has a Google search bar placed prominently on the homescreen. Google is trying to encourage users to search.

If people don’t search though (which is 99% of Google’s revenue), they have a big problem as more punters migrate.

One other problem for Google too, which they have faced head on with the acquisition of AdMob. If Apple has had 3 billion app downloads, that is 3 billion searches that did not take place on Google. This equates to potentially hundreds of millions of dollars in revenue for them. Add in all the music being searched for in iTunes and you can see why Google is fretting.

Google only exists if you search on their eco system. This is happening less with smart-phones.

13 roz { 01.12.10 at 6:10 pm }

If MSFT was smart they would move into Android big time and just build on it. Build Bing into it and make a competing version of it for makers.

14 SteveD { 01.13.10 at 4:27 pm }

@roz : this would not be possible. the terms of use for Android clearly state that Google’s search engine must be used for all internet searches. This is why Google created Android in the first place.

15 JohnWatkins { 01.13.10 at 7:38 pm }

@SteveD
“@roz : this would not be possible. the terms of use for Android clearly state that Google’s search engine must be used for all internet searches. This is why Google created Android in the first place.”

You mean . . . (gulp) . . .
Android is not free and open?
The Droid doesn’t ?!!

16 The Mad Hatter { 01.13.10 at 9:35 pm }

Here’s an article from 2000 in which they viewed a Microsoft future. The article’s predictions didn’t come true, but it’s still interesting.

17 roz { 01.13.10 at 9:55 pm }

@SteveD :

Re:
“the terms of use for Android clearly state that Google’s search engine must be used for all internet searches.”

Please provide a link.

18 roz { 01.13.10 at 10:01 pm }

@SteveD:

I find this:

” Licensing
With the exception of brief update periods, Android has been available as open source since 21 October 2008. Google opened the entire source code (including network and telephony stacks[23]) under an Apache License.[24]
With the Apache License, vendors are free to add proprietary extensions without submitting those back to the open source community.”
http://en.wikipedia.org/wiki/Android_(operating_system)

Also, in the section on that page about restrictions, no mention of any special limitation regarding tying search to google.

19 Wesware { 01.14.10 at 8:51 pm }

Mobile searches will increase dramatically in the near future as networks get faster and hardware becomes more user-friendly to such. Google PC search dominance will carry over to this growing market. Users will demand Google Search, manufacturers will comply, and Google profits. Let us not forget that Google is an advertising company.

20 uberVU - social comments { 01.20.10 at 8:32 am }

Social comments and analytics for this post…

This post was mentioned on Twitter by DanielEran: Fixed URL: Microsoft frets Google’s Nexus One will suffer Zune’s failure #NexusOne #Android #Zune http://tinyurl.com/yaaqdes

21 Ten Myths of Apple’s iPad: 4. It was over-hyped and under-delivered — RoughlyDrafted Magazine { 02.03.10 at 12:18 am }

[...] Microsoft frets Google’s Nexus One will suffer Zune’s failure [...]

22 Ten Myths of Apple’s iPad: 10. It needs Mac OS X — RoughlyDrafted Magazine { 02.26.10 at 3:19 pm }

[...] Spectacular Failure of WinCE and Windows Mobile Why Microsoft’s Zune is Still Failing Microsoft frets Google’s Nexus One will suffer Zune’s failure The scalable Mac OS Interestingly however, Apple’s chief operations officer Tim Cook [...]

23 Google I/O 2010 takes on Apple with PlaysForSure strategies — RoughlyDrafted Magazine { 05.25.10 at 9:44 am }

[...] Microsoft frets Google’s Nexus One will suffer Zune’s failure Why Microsoft Will Slaughter Its Windows Mobile and PC Partners [...]

24 Apple’s iOS WWDC strikes back after Google’s Android I/O — RoughlyDrafted Magazine { 06.09.10 at 12:17 am }

[...] Google Nexus One vs Apple iPhone 3GS Google struggling to support angry Nexus One buyers Microsoft frets Google’s Nexus One will suffer Zune’s failure [...]

25 nextguy { 05.31.12 at 8:45 pm }

“In this decade, Apple has conspicuously refrained from attacking rivals on copyright or patent infringement issues in both the iPod and iPhone markets, outside of defensive measures it has taken against patent challenges from Creative and more recently Nokia. Competing in the market has historically worked out much more successfully for Apple than trying to compete in court.”

2 years later and 50+ lawsuits over frivolous stuff like design patents over rectangles, ITC bans, yep, it seems apple can’t follow this advice.

You must log in to post a comment.