"Microsoft's execution in mobile has been excellent".
This could not be farther from reality. Microsoft has consistently lost money in the mobile market, to a point they are ashamed of it, and don't even give sale figures for the Windows Phone OS anymore. Profits from this business unit is reported in the "Entertainment and Devices" unit, which has turned a loss this quarter, again, of $229M.
The only argument the author makes for claiming Microsoft's execution has been excellent is that "Windows Phone 7 is really good". Well, guess what? It may or may not be true that Windows Phone 7 is good, but it takes a whole lot more than a good OS to make a profit. You need to establish a community of developers who will write apps for your platform, you need to create an easy-to-use market place for end-users, you need to talk to phone manufacturers to make plenty of phones running your OS, you need to make deals with carriers to sell your phones, etc.
Microsoft has failed at most of this, hence their financial losses. Microsoft's execution in the mobile market is, so far, a failure, and Ballmer is partly responsible.
Exactly. Microsoft has been sitting on the smartphone market. For. A. Decade. And they took that commanding lead and had their lunch eaten overnight by iPhone and Android. It took them NEARLY FOUR YEARS to respond to the iPhone with Windows Phone 7.
Yes, WinMo 7 is a good product as far as platforms go, but it may not be good enough to catch up. They still have a lot of catch up to do with the marketplace and the ecosystem and with courting developers and manufacturers to their cause. They need to be making dramatic plays at this point, but they're not. When MS needed to bootstrap the XBOX gaming ecosystem they went out and straight up bought gaming companies, bringing Halo (one of the most popular game franchises in history) to their platform. When Sony needed to rescue the PS3 from a poor game library they bought media molecule and made Little Big Planet an exclusive title, among other purchases they made. Both companies also did a lot more to encourage developers to make games for their platforms. WinMo needs to make the same sort of efforts, but they haven't.
Meanwhile, look at the state of hardware. The best Windows Phone you can buy is 2 to 3 generations behind the state of the art relative to the iPhone or Android. You can't expect to push single core WVGA phones into a market where 300+ dpi screens, dual core CPUs, and a gig of ram is rapidly becoming the norm.
Even if we were to accept the notion that Windows Phone was the best mobile OS on the market the overall experience of using a Windows Phone (which is heavily influenced by the apps and games available, the speed and quality of the hardware, the quality of the screen, etc.) is not even remotely the best. Similarly, while Google and Apple have been adding new capabilities, better performance, and new features to their phones by leaps and bounds with each release, the Windows Phone has comparatively stagnated.
And there's every indication that each one of those gaps will continue to grow wider over time. Microsoft managed to catch up just barely by putting forth a concerted effort, but if it takes such a diving-catch sort of effort to continue to catch up at every step in the future then they will invariably miss on a few occasions and fall behind for good.
This isn't really an issue that you can take an extreme on. Even in relative "failure," Microsoft has executed correctly in mobile.
Actually, their execution has been way better than I would have expected. It is losing money, sure, but short term losses are not important when you're talking about entering a market as large as the mobile phone market after the existing players are firmly entrenched. The traditional metrics of success only matter after you've been successful.
No, they didn't. Over the course of its life, the XBox brand is still billions in the red. It only started turning up a relatively small profit a year or two ago. It has a long way to go before anyone should consider it successful.
The problem with consoles is that there's no brand loyalty (except for Nintendo). It only takes 1 bad console for an established player to vanish, and 1 good console for a newcomer to succeed.
Xbox live might be changing that, but it's still waayyy too early to call it either a success or failure. Though, certainly financially, it's been a small disaster so far.
I won't make any judgement on leadership, and want to just point out this fact. A peer of Microsoft is succeeding very well in consumer electronics, meaning Microsoft could potentially as well and would become insanely successful (big profits beyond enterprise). Disclaimer: I work for Microsoft and so would love for them to realize that potential. I'm sure it is much more complicated than "replace CEO" to get there.
Everyone on this thread has to realize that they're effectively rebooting with Windows Phone 8 later this year again.[1] Maybe not to the degree of WinMo -> WP7, but it's certainly another disruptive (to the app devs) refresh.
As far as I know, they have yet to disclose the full developer story around WP8. We can certainly speculate, but I doubt they'll do anything too disruptive or they'll risk losing the small amount of market they've worked so hard to gain.
If you consider the Windows Phone line to be merely the next iteration of Windows Mobile, then, yes, thus far it has been a complete failure.
But I don't think that's a very holistic viewpoint. Despite how terrible Windows Mobile was, it had a good hold of the market until the iPhone came along. It wasn't really a "failure" until it started declining in 2008. Microsoft's response, Windows Phone 7, was a complete reboot of their mobile line, and we have yet to see how it will perform in the long run.
What I expected was for Microsoft to react as quickly to the iPhone as they did to Netscape. They didn't. Google did that however, and today Android has a chance at getting the 80% market share that Ballmer talked about when he laughed about the iPhone and said that he was pretty happy with their efforts in the mobile industry (Windows Mobile).
Not seeing what they were up against with the iPhone was not "executing correcly", it was incompetence. The same kind of incompetence that is killing Nokia today.
In order to dominate the mobile space now, Microsoft has to not just make something comparable to iOS and Android, they have to out-innovate them.
> It is losing money, sure, but short term losses are not important when you're talking about entering a market as large as the mobile phone market after the existing players are firmly entrenched.
I think the point on mobile is that Microsoft itself was a well-entrenched player in mobile, and they laughed[1] while allowing that position to get completely eroded by less experienced competitors.
It's true that after that happened, they've seemed to build a pretty good project in Windows Phone 7. But I don't think it's really accurate to start the scorekeeping so recently.
They've managed to avoid electrocuting any of their users. Other than that, if they've done anything "competently" in the mobile space, I haven't seen it.
Look at recent US (and global) adoption rates of Windows Phone [1]. It's increasing, and with Nokia and their Lumia phones it is bound to continue. WP7 is a good OS, and more and more developers are backing it, and consumer satisfaction is excellent, and more and more people are starting to realize all this.
"Market research company Kantar WorldPanel has revealed in the last 12 weeks to mid-April Windows Phone has shown strong growth in the 7 major markets they monitor on the strength of Nokia’s offerings.
In 5 of the 7 markets (Germany, Britain, Italy, France and United States) Windows Phone market share is now in the 3-4% range, up from less than 2% in January 2012. In Germany Windows Phone market share more than doubled year on year to 6%.
In contrast RIM saw its US market share collapse to just 3% from 9% a year earlier, suggesting Windows Phone may have matched or even passed RIM’s market share in USA.
Kantar has predicted in January Windows Phone market share may hit 10% in Europe in the second half of 2012, and it seems to me with more Windows Phones being announced all the time that this may very well be achievable."
1. The "marketshare" that is referenced by Kantar is new sales marketshare, not overall marketshare. Its an important difference to point out.
2. Even with these gains in WP, iOS and Android are seeing similar absolute gains (e.g. in the 2-3% absolute marketshare growth). All WP is currently doing is taking a small piece of the symbian/BB pie
3. Given Microsoft's track record, the problem with WP is how long it takes for them to release a new product. Mango was what WP should have been initially, yet took a year to release. By the time WP8 is out, we will be looking at iOS6 and the Android version AFTER Jelly Bean.
Overall, I believe WP will not go away, but will stabilize at around 5-6% overall marketshare. The problem then is that given Microsofts development costs, they will continue to lose money. (Just look at Bing vs Google and even with 30% of US search shared, Bing loses billions of dollars a year)
"The "marketshare" that is referenced by Kantar is new sales marketshare, not overall marketshare."
The point is that the number of users of WP is increasing at a fairly decent pace. The most important thing is that people are using the phone.
"All WP is currently doing is taking a small piece of the symbian/BB pie"
That seems very difficult to prove and I don't believe there is anything out there that states this. I know several people who switched from Android to Nokia WP phones, and several more that are intending to make the change. This isn't proof necessarily but I could see it happening.
Concerning #3: It's hard to say what the first version should have been. The iPhone didn't have many of the "standard" features either in version 1. The main question is whether the pre-mango version hurt or has helped Microsoft's cause. The fact that they've had the phone out there for a larger period of time I would think would be a positive thing, being that they've had so much more feedback as a result.
"Overall, I believe WP will not go away, but will stabilize at around 5-6% overall marketshare. "
That's reasonable, however I'm curious why you believe this? You don't believe many Android or iPhone users would be interested in switching?
I think people are also conveniently forgetting that the first Windows Mobile reboot was ACTUALLY the Kin. Its funny to look back at it now, but the Kin cost Microsoft 2 years as well as a ton of talented engineers.
Just imagine what things would be like if WP7 was released when the Kin was ... it probably would have been even earlier than that if they had focused all of their effort on WP instead of fragmenting the company (and causing a ton of internal strife) between the Kin and WP. We would be looking at a much different situation right now.
Can you give us a realistic game plan that starts with the iPhone launch & WinMo6 and ends better? After iPhone excellent execution gets you failure, that's just the current state of the market.
They've made awesome deals with companies like HTC, even convincing HTC to pay them $15 for every Android phone they sell, etc.
They've pretty much got Nokia on lockdown almost exclusively WinPhone7.
"They've made awesome deals with companies like HTC, even convincing HTC to pay them $15 for every Android phone they sell, etc."
Suing hardware companies like HTC is not "convincing" them of anything. It's strong arming them using "software patents" (aka. patented math) because they realized they were losing. I believe I read somewhere that microsoft makes more money from suing manufacturers over Android than they make on their own mobile platform/software. Seriously... WTF kind of business plan is that?
Can't innovate and make something amazing? Just sue the company that does!
1. Start working on the reboot immediately, rather than dismissing the iPhone as a fad for over a year.
2. Include at least some source-level backwards-compatibility so existing developers don't have to start over from scratch, even though the foundation is changing.
3. Be nicer to your existing OEMs (early OS access/input, wider hardware support, skip royalties for a year or two, etc.)
1-3 are just about cutting off the next potential disruption (which, in this case, turned out to be Android) off at the pass. To be successful in mobile, Microsoft didn't have to beat the iPhone. They just needed to defend their position against everything else, which they spectacularly failed to do. There's also:
4. Don't buy Skype or if you do, give up on carriers and work on direct-to-consumer (and direct-to-business) "Skype smartphones" using data-only SIMs.
A realistic game plan would be for Microsoft to immediately recognize iPhone as a threat and immediately start improving or rewriting WM6, just like Google did with Android.
Remember, Android looked more or less like WM6 and Symbian before the iPhone was introduced, and you can hardly call Android a failure today. Basically, Android is exactly where Microsoft would have loved to be with WP7, but it's pretty much not going to happen now unless they pull a bunny out of a hat with WP8.
Balmer's and Gate's 9% ownership stake allow Microsoft to be organized into a divisional structure along the lines of profit and cost centers. Wall Street can fuss and fume about Online Services or Entertainment and Devices quarter after quarter but Balmer is free to run them as the massive R&D organizations which they are (e.g. field testing of Kin, development and support of Metro, and social graph construction via Xbox Live).
Windows Phone 7 is a field test of the technologies which allow Windows on ARM to scale. Five years after the iPhone Microsoft has a competitive OS that scales and is robust enough for their enterprise customers.
Balmer understands that Microsoft's success in the consumer market segment comes from treating those relationships as B2B by providing long term support - my 8 year old laptop still gets OS updates - they sell on improvements not by breaking systems into obsolescence.
Windows Phone 7 could have the slickest API, the best hardware, the largest numbers of users, and the most developer and customer-friendly application market and I would still resist making apps for them. This is a company that has a long and storied history of sitting on their ass and doing nothing to push the state of the art, once they've captured market share. Their mobile strategy over the past decade is itself a good example of this. And it isn't like there has been some big culture shift over there that might put the lie to this, either. In fact it seems to be getting worse.
(Although, in fact, if they were to pull off all of the above without e.g. first buying Samsung or some bullshit, my opinion of their capabilities and culture might need some reworking at that point.)
Unless you're really exciting by the prospect of developing for Windows Phone 7 for the next fifteen years, you should be glad MS barely qualifies as an also-ran in the smartphone game, and hope that never changes.
This could not be farther from reality. Microsoft has consistently lost money in the mobile market, to a point they are ashamed of it, and don't even give sale figures for the Windows Phone OS anymore. Profits from this business unit is reported in the "Entertainment and Devices" unit, which has turned a loss this quarter, again, of $229M.
The only argument the author makes for claiming Microsoft's execution has been excellent is that "Windows Phone 7 is really good". Well, guess what? It may or may not be true that Windows Phone 7 is good, but it takes a whole lot more than a good OS to make a profit. You need to establish a community of developers who will write apps for your platform, you need to create an easy-to-use market place for end-users, you need to talk to phone manufacturers to make plenty of phones running your OS, you need to make deals with carriers to sell your phones, etc.
Microsoft has failed at most of this, hence their financial losses. Microsoft's execution in the mobile market is, so far, a failure, and Ballmer is partly responsible.