Microsoft has a few ways it goes about building out a presence in a market. The first, and the most rare, is that the develop a product in house from scratch to compete directly in a market that’s currently booming. The most recent examples of these sorts of products are the Xbox and the Zune both wholly developed by Microsoft to compete in the gaming and portable music player industries respectively. The second way they establish themselves in a market is to buy out either the top competitor or one of the more successful competitors as they did for things like Softricity who were the leaders in application virtualization software. Lastly sometimes they’ll say they’re getting into a market but will never make any serious attempt to do so just to kill off any potential competition, which they attempted to do back when the iPad was still a rumor and they announced the Courier tablet which failed to materialize.
Whatever strategy they adopt to establish themselves in a chosen market there’s always one common theme to their approach: throw money at the problem until it becomes successful. Now this isn’t a strategy that every company can adopt (realistically only a minority can) but Microsoft is usually so flush with cash that they can afford years of losses without it posing any sort of risk to their core business. Most notably they did this for a good 7 years with the Xbox division before it managed to turn a profit, sinking billions of dollars into the product before it actually made them any sort of money. They also continue to do it for products like the Zune which continues to languish behind Apple’s iPod but that’s still got a couple years before it reaches the 7 year mark that the Xbox did, but there’s really little hope for that product.
Their latest endeavor which is seemingly flush with cash is their Windows Phone 7 product. Whilst the sales of the devices haven’t been that stellar they’ve still managed to take a small percentage of the smart phone market. Their partnership with Nokia sets the scene for them to become a potential juggernaut in this sector but they’ve got a long uphill battle ahead of them and the gamble isn’t a sure thing for either side. Microsoft now appears to be looking to strengthen their WP7 offering even further by shelling out a cool $8.5 billion dollars for everyone’s favorite communications app, Skype:
The purchase price includes the assumption of Skype’s debt.
The agreement has been approved by the boards of directors of both Microsoft and Skype.
Whilst the acquisition is not solely dedicated to the WP7 product line it’s still the one that has the most to gain from it. WP7 doesn’t currently support any form of video calling like Apple’s FaceTime or Google’s Video Chat does and Skype could provide a good chunk of the underlying infrastructure, saving Microsoft a lot of work. Skype’s vision of being available everywhere lines up quite well with Microsoft’s three screens idea and I’m sure they’ll be looking to leverage Skype’s vast network to push their cloud products further. Still one has to wonder if the $8.5 billion price tag they paid for Skype is worth it, considering its Microsoft’s biggest acquisition to date.
When I first heard of the news that Microsoft had bought Skype my first reaction was that this was a maneuver to deny Facebook the chance at getting it. There were rumors of Facebook testing the waters of an acquisition for a while but it seems that in the end the only serious bidders were Microsoft and Google. It then becomes clear that Microsoft simply did not want the Skype network in the hands of one of its largest competitors and Facebook was probably not that interested in the first place, especially if Microsoft (who owns 1.6% of Facebook) was going to pony up the cash for them anyway. Google might not have been completely serious about their offer anyway since they already have most of what Skype has to offer and might have just been making sure Microsoft spent more than it had to (hey they’ve done it before).
It will be interesting to see how Microsoft leverages this investment, especially with its current product lines that have direct synergies with Skype. They’ve certainly been doing all they can to make sure their mobile sector succeeds and if Gartner is to be believed then we’re less than 4 years away from them becoming the dominant platform. I’m not so sure about that idea but I do know that Microsoft does have the resources to throw at this problem until they become big in this sector, and the Skype acquisition is a testament to that fact.
You know I was pretty hyped about getting a WP7 handset after having a short play with one in the store. The slick interface and overall usability of it was so high that I thought it was worth a shot and I had really nothing to lose since my work would be paying for it. The NoDo update was on the horizon however so I decided that I’d hold back until it made its way into production so that I wouldn’t have to deal with the same frustrations that day 0 customers had. Most notably this would be the inclusion of copy and paste, but there were also a few other fixes that I thought would be good to have and worth the wait.
The problem is however that unlike regular Windows patching there’s a gate keeper between me and Microsoft’s patches for their new mobile platform. You see the patches have to pass muster with the carriers first before they can be distributed to the handsets although Microsoft had said in the past that they were working with them to make the process as quick as possible. Unfortunately for us Australian customers looking for a WP7 handset you really only have one carrier to go with: Telstra. Now this wouldn’t be so much of a bad option normally since Telstra had to start playing straight after their retail and wholesale arms were broken apart but it seems that they’re not up to the job of testing WP7 updates:
Universal availability of the copy-and-paste update to Windows Phone 7, codenamed NoDo, is almost here, according to Microsoft’s latest schedule update. The final unpatched phone available in the US market, the HTC Surround sold by AT&T should start to receive its updates within the next ten business days. The network’s other two handsets, the Samsung Focus and LG Quantum, have been receiving updates since last week.
European carrier Deutsche Telekom (which includes T-Mobile UK) has at last finished its testing, as has Australian carrier Optus. Updates from phones on these networks should also appear within the next ten business days or so. This leaves only two carriers still delaying the updates due to “testing”: Telefonica, in Spain, and Telstra, in Australia.
This was the one area where I was expecting Microsoft to shine through since their bread and butter products have depended so heavily on their patch services for well over a decade. Sure the vast majority of the blame should be leveled at the carriers since they’re the ones causing the delays, but Microsoft isn’t innocent of incurring delays either. Of course the original iPhone and Android handsets weren’t immune to problems like this either but I had expected Microsoft’s late coming to the party to be at least coupled with a strong patch and feature release scheme so they could play catch up quickly.
It might seem like an extraordinarily small gripe considering the rest of the platform looks solid but when minor feature releases like this take so long to get through the pipeline it makes me wonder just how long I’ll have to wait for the next update, codenamed Mango, to drop. Amongst other things Mango will bring full HTML5 support to WP7 something which it currently lacks in its browser. Whilst the IE9 implementation of HTML5 does leave some things to be desired (my newest app idea uses HTML5 bits, and IE9 mangles it) it is a lot better than not having it at all, especially when so many mobile versions of sites rely on HTML5 functionality. With speculation now brewing that this update might slip to next year that’s starting to put WP7 at a serious disadvantage, unless some enterprising browser developer ports to WP7 ala Opera et al.
I’m still planning to nab myself one of these handsets if only for the few times I’ll want to try my hand at developing an application for it but with such delays piling up on each other I could very well see myself changing to Android or back to iOS until they’re finished playing the catch up game. I’m sure as time goes on they’ll develop a much better relationship with the carriers and hopefully they’ll be able to leverage that to remove some of the roadblocks to getting patches and updates out to us consumers. Until then however WP7 users are going to be at the whim of the carriers, even more so than they are normally.
Whilst the only current smartphone platform I’ve had any decent experience with is Apple’s iPhone I’m still not completely tied to it. Sure the platform is great and I’ll always be keeping an iOS device around for as long as I keep developing for the platform but my next handset purchase is more than likely not going to be another Apple device. The case is strong for a Windows Phone 7 handset thanks to its great tool set and general esoteric-ness (I don’t yet know anyone who’s bought one) but that same air of mystery is a double edged sword. Sure most of my general applications will be available on it, like Twitter and Facebook, but past that there’s not a whole lot of interest in the platform.
It’s not surprising really considering that slice of the mobile market pie that Microsoft commands is only a mere 5.5% according to the IDC, which includes all handsets that come under the Windows umbrella. The nearest rival to them is RIM (creator of the Blackberry handset series) who nearly triple their share at a whopping 14.9% and even they don’t seem to command a 3rd party developer army comparable to that of Android or Google. Still with them sealing the deal on a partnership with Nokia recently the IDC has reported that Microsoft’s WP7 platform will begin to surge ahead, overtaking iOS and being second only to Android.
The intial reaction to this was of course, utter disbelief:
In the close to six months that WP7 has been available, it has failed to set sales on fire. In fact, Microsoft hasn’t provided any metrics on how many WP7 handsets have been sold. Also, the 5.5% market share that Microsoft has now represents both WP7 and the old Windows Mobile 5.x and 6.x systems, which are still being sold on enterprise handhelds.
Further, Microsoft has stumbled badly with the first two system updates for its smartphone platform. First by delaying it for nearly two months, and second by bungling the actual delivery of the updates. Things are not going so smoothly for Microsoft. Heck, WP7 champion Joe Belfiore actually wrote a public apology to its WP7 customers about the whole update debacle.
Zeman makes some good points about the WP7 ecosystem and the troubles Microsoft has faced in dragging their Windows Mobile platform into the modern age. The sales figures aren’t that impressive when you compare them to iOS and Android, heck they’re not even that impressive compared to single handsets on either platform. Still this ignores the fact that WP7 is still a nascent platform and it will be a while before it reaches the maturity level that everyone’s expecting of it. If we’re fair and compare the initial WP7 sales to the initial release of Android you’ll actually find them quite comparable with the G1 selling some 600,000 handsets in the first couple months and WP7 cracking 1.5 million in its first 6 weeks. It took quite a while for Android and even the iPhone to hit the fever pitch that they have today so the current market share of WP7 devices shouldn’t really come as a surprise.
I can’t provide an excuse for their botched update schedule however. Apple seems to be the only major competitor that’s nailed this completely with Android and WP7 both suffering from the same carrier induced delays and fragmentation problems. It’s actually one of the reasons why I haven’t already lashed out for a WP7 handset since the main carrier of them here in Australia, Telstra, is still testing the pre-update update and has no schedule for the release of the coveted Nodo update. Since there doesn’t seem to be any way to route around the carrier and install the patch manually (although I’ll admit I haven’t done a ton of research on this) it means I’m wholly dependent on someone other than Microsoft to get my handset updated. With Telstra’s track record that doesn’t exactly inspire much confidence in the platform.
Both Android and iOS faced similar problems in their infancy and I’m sure WP7 will be able to overcome them in the future. Whether it will become the second most popular platform though remains to be seen as whilst the Nokia relationship means they have a strong possibility of gaining some serious traction it’s not a sure bet that every current Symbian customer will convert over to WP7. With Microsoft being particularly coy about their sales figures its hard to get a good reading of how their new mobile platform is trending but it will definitely be interesting to see how their market share changes as Nokia begins releasing their WP7 handsets.
The date is fast approaching April and that means the Fringe Benefits Tax year is about to roll over. For most people this is a non-event unless you’re salary sacrificing a car but for contractors like me it means I can write off another phone and laptop device on tax, effectively getting them for half the market price. Whilst it’s not as good as it used to be (you were also able to depreciate them, making said devices basically free) there hasn’t been a year yet when I haven’t taken advantage of at least getting a new phone, and last year was the first when I purchased my Macbook Pro. So of course I’ve spent the last couple weeks looking through the available selection of phones and tablets with which to gorge myself upon and the more I look the more I get the feeling I won’t be able to leave my iPhone behind like I did with my other smart phones.
The tablet choice is pretty easy since I’m not particularly fond of the iPad (I don’t need another iDevice) and getting something like the Motorola Xoom would cover off my need for an Android device to code against. To have all current platforms covered then the smart phone choice (HA! See what I did there?) would be a Windows Phone 7 handset. Taking a look around I found a few pretty good deals on various handsets with contracts comparable to what I’m on now with tons of extra value. My handset of choice is the HTC Mozart which appears to be the cream of the current crop of WP7 handsets, anything else is just too far off on the horizon to be worth considering.
Of course whenever I’m contemplating a new phone I’ll always compare it to what I currently have to see if it fixes the things that bug me and whether or not it will be worth it. Whilst my 3GS is less than a year old it’s nipping on the feet of being 2 generations behind the current trend so any recent handset should beat it hands down. A quick look at the similarly priced handsets shows this to be true all of them bristling with bigger CPUs, more RAM and better dedicated graphics. Unfortunately however there’s one thing that all the other handsets I’ve been looking at don’t cover.
That unfortunate beast is the Apple App Store.
Despite the insane growth that Android has shown over the past year Apple is still the platform of choice for many early adopters and developers. It’s extremely rare for a company to attempt to launch a mobile application on anything but Apple first, simply because the user base tends much more towards that early adopter mindset of trying things out. Sure there are many examples of popular apps that made their debut on the Android markets (although none that I’m aware of for WP7) but when you compare them to the number of success Apple can count using its platform there’s really no contest. Couple that with the fact that despite Android’s runaway popularity the App store is still by far more profitable for developers looking to sell their wares and you’d really have to be crazy not to launch on their platform.
For me this presents an interesting conundrum. Whilst I was never going to sell my 3GS since it will make a good test bed for at least another year or two I do use it quite extensively to test out potential competitor’s applications. Since most of them launch on iPhone first this hasn’t been a big deal but with me planning to move to WP7 (or possibly Android) for my main handset I can’t help but feel that I’ll probably want to keep it on hand so that I can keep a close eye on the market. Sure I could just make a note to try an application later but many up and coming products are based around using them for a particular purpose, not booting them up occasionally to see the new features. Granted this is probably limited to social applications but any new product is almost guaranteed to have some kind of social bent baked in (heaven knows I tried to avoid it for the longest time with Lobaco).
The market could change and with the growth that Android is experiencing I may be singing a completely different tune a year from now. Still until the Android store starts pumping out billions of dollars to its developers I can’t see a future where any serious developer isn’t focused primarily on Apple first with Android planned down the line. For now I think I’ll stick with my plan of a WP7 phone and an Android tablet, keeping the gaggle of devices close at my side at all times so that I can test any app regardless of its platform. It’s the same line of thinking that lead me to buy every major console, although the Wii has only ever been used a couple times.
There’s an analogy in there somewhere 😉