Competing with Yesterday…

Let me say up front that there is a lot I like about Win Phone 7.  And its very clear why, at this stage, Microsoft really has no choice but to keep making a run at this segment.  There were things they could have done long ago that would have brought them to a different place today, but that is the topic of another blog.  At this point, they have no choice.

I have many friends who are super bullish on WP7.  Most of them fall into two categories: MSFT employees, or XBox fans.  The press has been kind, but I think it is primarily because the UI is refreshing.  Realistically, I think WP7 is facing some enormous challenges and I am skeptical it can overcome them.

The challenge is that Windows Phone 7 is entering a market far different than the one Apple entered.  One must understand the dynamics of the mobile industry, and its history, in order to really have the full context here.  Apple really did revolutionize the smart phone market and in doing so, consumerized it.  Nokia and RIM had both made it clear that there was an emerging market, and that it was big, for phones that were essentially tiny computers.  Carriers also were slowly being dragged along into realizing that data networks were their future.  This situation posed a big challenge for handset manufacturers and of course for the carriers as well.  Samsung, LG, Motorola, Sony Ericsson…. All shared the same failure in that they were unable to produce a compelling smart device experience.  Symbian, EPOC, Windows Mobile, and others all presented a potential solution for the industry in the form of an adaptable platform, but without a supporting ecosystem (no one knew this at the time), they were failing to capture any real mindshare.  Windows Mobile got some traction in the enterprise as a result of Microsoft platform synergy, but it never caught up to RIM.  In the consumer space, interesting experiments like the Sidekick found more success then anything from the more traditional players.

Into this market, Apple entered with the iPhone.  Sure it had some glaring capability omissions, but it brought along a very slick UI, a really nice bit of hardware, a jarring new business model and a brilliant web experience.  Alone, this was enough to get some attention, but wouldnt have been enough to really change the landscape.  Fortunately for Apple, they have gotten very good at being very agile and they went down this road before with the iPod.  They understand the power of a rich ecosystem.  They quickly course corrected and released the app store.  They also iterated the device quickly and addressed the initial shortcomings.  The rest is history.

These moves by Apple had a chilling effect on the handset manufacturers and carriers whose names didnt consist of three letters, starting with an A, ending with a T and featuring a symbol.  Things were starting to look grim.  While it was unlikely that the entire world would shift to one phone made by one manufacturer on one carrier, it was certainly true that a huge opportunity was being left ignored while AT&T and Apple raked in cash.  Into this tough situation, swept Google with a nearly perfect answer.  Google was brilliant in recognizing that they needed everyone on the web all the time, that handsets were key to expanding the internet demographic, that Apple would simply never be all things to all people, and that no one was providing the handset guys or the carriers with what they needed.  The Android effort was open source, mature, and enormously low risk for Google.  In short, it was perfect.  Once they put their enormous resources into legitimizing it, and wisely aped the best of what Apple was doing, it was a pretty quick trip to massive commercial viability.  A very short time later, they are now shifting millions of handsets a month and surpassing the iPhone.

Make no mistake in this… This was an inevitable outcome.  It is not “Apple vs Google”.  Not really.  You have to understand the market for these things.  An average person goes into a cell phone store based more on carrier selection than anything else.  The iPhone was revolutionary in shifting lots of behavior to “platform before carrier”, but again, this will never be universal.  For most folks, it is still a commodity.  The iPhone is a halo device for AT&T, but even for AT&T users, it doesn’t have 100% penetration.  People like choice.  Android put LG, Samsung, Moto, Sony, et al back in the game.  It is now the iPhone vs the Moto Droid, or vs the Samsung Galaxy, etc.  Once the iPhone shifts to other carriers, it will doubtless have even bigger success and remain a popular premium choice, but it will not single-handedly outsell all other handsets combined.  Nor does it need to…

OK, so the history lesson is over… Where does this leave Windows Phone?  Microsofts strategy, in my opinion is both high risk and overly optimistic.  Microsoft is assuming they can replicate what Apple has done, but using Googles execution.  Microsoft wants the OS on a ton of different handsets, across all of the carriers, but wants the Windows brand and Microsoft approach front and center.  The problem is, who exactly is asking for this at this stage?  Are people truly out there just waiting for a Windows phone?  The handset manufacturers now have Android powering their traditional offerings and giving everyone an “iPhone experience”.  They no longer need another player to even the field at all.  If Windows had a brand that was more powerful than the iPhone, and also more powerful than any individual handset manufacturer, that might be compelling to any carrier who isn’t AT&T, but I don’t believe that is the case.  What we will have is the Motorola that looks sort of like an iPhone and has some cool unique things (the Droid one), and then a Motorola that is doing this “Windows” approach and looks like a Zune.  Same story will be repeated across any OEM willing to try Windows Phone (or forced into trying it by MSFT)  How the consumer will vote is tough to predict, but Windows Phone is a hugely immature product coupled with a very new UI paradigm.

Which brings me finally, to the main point and (mercifully) the conclusion of this!  Launching with any sort of deficiency is a very bad move.  And there is a big list of them.  Most obvious is the iPhone 1.0 feature set – no copy/paste, no multi-tasking, newborn ecosystem – but no less important is the total abandonment of whatever share Windows Mobile did manage to have.  Gone are S/MIME, RMS and various other management and security bits that secured WinMo the enterprise share.  Sure all of this will be “added”, but you get one chance to make a first impression really.  Windows Phone isn’t entering a market magically reset to the early days because MSFT really wishes it could be.  It is now entering a hugely mature market.  To make things more complicated, it comes to the table with some bold, and potentially polarizing, new UI paradigm decisions.  Reviewers and technophiles are finding this “fresh and interesting!” in the same way film critics really like conceptual art house experiments.  At the end of the day though, Transformers 2 is what brings in the $100M+ box office receipts even though it is “same old same old”.  If Windows Phone 7 ends up being the equivalent of the “flawed but charming art house favorite”, it is going to be a case of too little too late.  Unfortunately for my ‘softie and XBox fan friends, the road looks to be heading in that direction…


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