I Still Believe in a Microsoft Phone
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News Commentary. Michael Gartenberg says I'm wrong about the Microsoft phone. Not so fast, Michael. |
Yesterday, I blogged, "I believe in a Microsoft phone." There has been lively Microsoft Watch commenter debate and even some outside commentary.
Early this evening, I got an IM from Michael, my former JupiterResearch boss turned MobileDevicesToday analyst/blogger/editor. He had posted that "Microsoft will NOT do their own phone anytime soon." Michael reasons:
[Windows Mobile] is a core platform and OS. No one has ever been successful licensing technology platforms to others and then competing with a device of their own. Apple failed (twice), Palm and Nokia all tried it and it just can't be done. Microsoft now has traction with more than 20 million licenses out there and a great stream of partners and new phones for consumer and business use. A Zune phone from MSFT would potentially hurt all that.
Michael is an undisputed expert with respect to Microsoft and mobile devices. So my gooseeh, turkey for the seasonis cooked. Or is it? Gobble, gobble, gobble. Over at Silicon Alley Insider, Dan Frommer makes a case for "Why Microsoft should make its own phone":
Windows Mobile isn't Windows, lacking both its market share and price tag. Those 20 million licenses don't make much for Microsoft, which only charges $8 to $15 per phone, according to research firm Strategy Analytics. Even at the high end of that range, selling 20 million licenses in a year is just $300 million in revenue for Microsoft. That's couch lint for a company whose sales are expected to near $70 billion next year.
Dan observes that Apple earned $4.9 billion during calendar third quarter by selling 6.9 million iPhones. To get that kind of revenue, Microsoft would have to sell 300 million Windows Mobile licenses at 15 bucks a pieceor for nearly a third of the phones sold each year. A phone makes more sense and more revenue. Dan writes:
What's the payout? Even if Microsoft can sell just 1 million Microsoft-brand phones next year at a very low, $300 wholesale pricehalf of the iPhone'sit could equal that $300 million in hypothetical Windows Mobile revenue. Plus commissions on app sales, a few pennies of search revenue from built-in Live Search, potential Xbox tie-ins, etc. Not the dumbest idea we've ever heard.
My thinking on this isn't complicated: Microsoft's mobile operating system and browser strategies are a mess. Either that's because of mismanagement or some secret project (e.g., the Microsoft phone). I'd like to think Microsoft was doing something (the phone) rather than nothing. Michael may be right, but it would be wrong for Microsoft not to do something.
The holidays are coming, when kids believe in Santa Claus and grownups believe in goodwill. In the 2003 movie version of Peter Pan, kids chant, "I do believe in fairies! I do! I do!," to bring Tinker Bell back to life. Do you believe in a Microsoft phone? I do! I do! Otherwise, Microsoft's mobile phone strategy surely is dead.
[Please send your tips or rumors to watchtips at live.com.]
Related Posts:
- I Believe in a Microsoft Phone, Microsoft Watch, Nov. 24, 2008
- Will Your Next PC Be a Smartphone?, Microsoft Watch, Oct. 31, 2008
- iPhone 2.x Beats Windows Mobile 6.x into a Coma, Microsoft Watch, Oct. 23, 2008
- Windows Mobile Is an Also-ran, Microsoft Watch, Oct. 16, 2008
- How Android Hurts Microsoft, Microsoft Watch, Sept. 23, 2008
- Hi, I'm an iPhone and You're Nobody, Microsoft Watch, Sept. 11, 2008
- iPhone Storms Smart Phone OS Market, Apple Watch, Sept. 11, 2008
- How Shiny Is Google Chrome?, Apple Watch, Sept. 2, 2008
- Chrome: The Google OS, Microsoft Watch, Sept. 2, 2008
- Microsoft's Pie in the Skymarket, Microsoft Watch, Sept. 2, 2008
- iPhone 3G: Software + Hardware + Services, Apple Watch, July 22, 2008
- Windows 95, Only Better, Apple Watch, July 14, 2008
- Do IT Simply with Sync, Microsoft Watch, March 11, 2008


Comments (11)
I believe there will be a Microsoft phone, but I think it will be about as popular as the Zune.
Nobody in their right mind would want a MS phone. I hate to break it to you, but they just aren't cool. Businesses are the traditional market for MS, but because of the EU they have plenty of choice in business phones these days. The MS phone would have to be astounding to get even near to the sales of the iPhone. Knowing MS, they would price it below cost and still sell less.
I think that their relationship with partners and businesses is suffering because of their obsession with the living room. They should concentrate on bringing the same innovation to the OS that Apple brought to the iPhone. That would solve all their problems tomorrow.
Posted by billybob | November 26, 2008 7:51 AM
Even if Microsoft were to develop a phone, it would take time to get some traction in the market place. Apple has worked extremely hard and in most case unprecedented to make the iPhone a success. Controlled advertising, hype building and a controlled user experience with of course the most important part being how the phone works. Microsoft is a Company known to burst their balloon before it launches in the sky. Meaning, they announce products before they are released and when they are released to market in the hands of consumers, it does not have that same level of anticipation.
Microsoft is a different Company compared to Apple, Microsoft has obligations based on third party vendors to meet. So they can't do launches and advertising like Apple, that's the only thing I can see holding back Microsoft with phone on the market. A debut is always critical. Apple's debut of the iPhone in January 2007 was the best launch event for a phone I have ever seen, it left people salivating and pumped, curious, crazy, speculation for 6 months straight, sleepless nights. Can Microsoft pull that off?
Posted by Andre Da Costa | November 26, 2008 9:22 AM
Sure Microsoft could release a Zune phone. Hell they might even do so (although I doubt that). If they however are going to why ditch Windows Mobile?
The worst part about WM are the absolute crappy user interface, but other than that it is not a bad mobile OS. It has integration features (exchange), mobile office etc. And as HTC and Sony Ericson have proved it is well skinable.
If MS would provide an easier way to put a skin on it, an app delivery tool (why not the Zune/Xbox store) they'd have a winner. The sales of HTC devices proves it.
Especially with Windows 7, Server 2008 R2 and WinMo all sharing the same codebase.
My money is against you Joe.
Posted by Charlie | November 26, 2008 9:36 AM
"My money is against you Joe."
In regards with WinMo being dumped that is.
Just imagine the power of Zune if it would be a plugin in regular WinMo devices... that would be the way to beat Apple. Microsoft's install base would soar. The only way it will be able to give Apple a run for their money.
Posted by Charlie | November 26, 2008 9:38 AM
Hi Joe,
I've complained to my friends about my Windows Mobile phone and how much it drives me batty. But here's the deal: the gripes I have are not, in fact, about the OS itself. The gripes are about the software that was created by the hardware vendor to run on the OS.
But how many people even realize that some of the applications (such as the phone-calling itself) are created by the manufacturer and not Microsoft? And those programs are where I encounter problems. But most people probably think those are made my Microsoft and from there decide they don't like the Windows Mobile phones -- based on their impression of the manufacturer's software, not Microsoft's OS.
From a branding perspective, you would think Microsoft would want to avoid this situation. And so by building their own phones they would have more control over such issues.
Posted by Jeff Cogswell | November 26, 2008 9:53 AM
If you'd had much of MS's hardware in the past, the last thing in the world you would want is a Microsoft Phone.
They have the single worst history of creating hardware and then flat out abandoning it.
Thankfully, keyboards and mice don't need drivers to work - it's the only MS hardware I will touch.
I just keep remembering what happened to my Microsoft mp900 phone, and sidewider joysticks, and forcefeedback joysticks, and wheel, and voice puck, and other various bits of hardware.
Thanks, but if MS releases a cellphone, I wouldn't touch it with a 100 foot pole. Somehow it will require a PC and USB drivers and will be unsupported inside of 18 months.
Posted by Xepol | November 26, 2008 12:07 PM
Vista was released too early, so it to this day suffers from a tremendous backlash that M$ must correct in the W7 release. Personally, the info I've heard about WM7 makes it a very promising major upgrade. In addition, M$ seems to be on the right track with W7. Finally, everyone that's owned a Zune and hasn't had a premature hardware failure seems to love the device and its capabilities.
As such, my money is on Joe with this one. I think M$ has be quietly working with NVidia to move to this next generation Tegra chip that's going to push MID video playback to a fairly ground breaking level. Moreover if M$ is able to launch it's online MID app store before the phone ships and learns from any mistakes made by Apple and Google, then they will be well positioned going forward. Finally, I think M$ has to deliver a smartphone that it specs from the ground up like Apple does and works with a vendor to produce this MID that moves beyond the iPhone in a few key design features that creates sufficient differentiation.
Personally, I think M$ believes they are on the cusp of releasing a smartphone, app store, and rebranded live.com web site that should allow them to compete very effectively against Apple and Google. They know this, so this is why they're being so coy about getting into a big transaction with Yahoo, which I think is possibly the worst decision on their part. If they don't buy yahoo, then they have to go after Facebook. M$ needs a major online presence with the younger crowd, so this is what would make a Yahoo and Facebook hookup over the next 12 months very compelling. If M$ did this, and executes extremely well on a smartphone that's owned and branded by M$, then I think this would force Apple and Google to combine withing three years of M$ closing the Yahoo and Facebook deals. It would take M$ that long to see the success of creating the sort of competition to Apple and Google that's sorely needed in each of these company's respective core business segments (i.e., iPhone/iPod & Internet search/advertising) that M$ must overcome.
Posted by jay | November 26, 2008 1:16 PM
I agree with Andre on this.
Posted by Ralph | November 26, 2008 4:37 PM
Something else that just popped in my mind...
Seeing smartphones are getting ever more powerfull. Won't the next version of Windows Mobile be the next version of XP Embedded too?
The hardwarecapabilities are getting ever closer. So they'll be hitting two birds with one stone.
Posted by Charlie | November 27, 2008 4:47 AM
@Andre, I don't understand what type of "obligations based on third party vendors to meet" does Microsoft have on their hypothetical mPhone. Unlike PCs, were they only deliver the OS and yes they have an obligation with the OEM, the mPhone is build entirely by Microsoft. At best they'd have an obligation with the local carrier.
An mPhone would be a great extension to the PC if coupled correctly with the whole Live experience and of course Azure. Microsoft has more of an online platform than Apple and is still getting whipped silly by Apple and other mobile competition.
Posted by Gerardo Tasistro | December 1, 2008 10:01 AM
@Jeff
Thanks for that, but its a pretty lame excuse. Thats like saying it wasnt Vista's fault there were so many issues on numerous hardware configurations....wait...that IS what they were saying (IMO)...that and Andre blaming the seller.
It seems nobody is willing just to put their hands up and say sorry.
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If what you say is true, shouldnt MS have ensured that if people are PAYING for a product with WM, that it did actually work, regardless of the phone system it was intended for? Are you saying the problems of WM are the fault of the phone manufacturer?
Call me ignorant but if I am selling an OS to go onto a mobile phone, then I ensure its compatible or I inform the manufacturer that it isnt. I dont keep quiet and then claim theres no problem with the software.
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Maybe thats a lesson for everyone here when we finally see Windows 7 - its the best O/S on the market, but if you have problems dont blame MS, its the manufacturer of your PC's fault.
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Does that mean I have a case against MS for NOT informing me that the issues I experienced with my MDA mail were a fault of the phone? I could have saved alot of time and money if Id known that.
Posted by Goblin | December 1, 2008 3:46 PM