Microsoft’s Mobile Makeover

Sometimes you have to make painful decisions in order to survive. Charlie Kindel, who runs the Windows Phone 7 developer ecosystem at Microsoft, likens the company’s mobile makeover to the true story told in the 2010 film 127 Hours about an American mountain climber who gets trapped by a boulder and saves his own life by amputating his lower right arm with a dull knife.

 

Despite deep pockets and more than a decade of effort, Microsoft has found that getting a significant toehold in the mobile market is as tough as climbing a mountain. “We got stuck,” Kindel said from the stage at a recent tech conference in Paris.  So the company decided to take extreme action.

 

First, Microsoft gave up its long slog to push the Windows Mobile platform and allowed designers to use fresh thinking, starting largely from a blank sheet of paper. The result, Windows Phone 7, which was launched Oct. 11, represents a radical departure for the company.

 

Then, on February 11 the company announced a wide-ranging strategic partnership with Nokia, the world’s largest maker of smartphones (See story page X.)

 

Microsoft had good reason to throw in its lot with Nokia. Nomura Securities had been predicting that even with all the advantages Windows Phone 7 has to offer, Microsoft’s mobile operating system would capture only 3.5 per cent of the global smartphone market this year. In comparison, Nokia was expected to grab 31.8 per cent, Google Android 27.8 per cent, Apple 17.5 per cent and Research in Motion 14.8 per cent.

 

In late January Microsoft reported that it had sold 1.5 million devices to mobile operators during the first six weeks after launch but only 500,000 in the five weeks that followed. Analysts say that those sales numbers illustrate that even with its radical new approach, Microsoft was likely to lag significantly behind competitors for some time.

 

Microsoft’s new strategic alliance with Nokia is not a guaranteed silver bullet for either company, say analysts, but it does change the playing field, as Nokia will make Windows Phone 7 its primary smartphone platform going forward.

 

“This is a big win for Microsoft,” says Ben Wood, research director at UK consultancy CCS Insight.  Three of the top five mobile handset manufacturers – Nokia, Samsung and LG – are all now making Windows Phone 7 phones.   Nokia is also teaming with Microsoft on services.

 

For example, Microsoft development tools will be used to create applications to run on Nokia Windows Phones, allowing developers to easily leverage the ecosystem's global reach. Nokia's content and application store will be integrated with Microsoft Marketplace. And the two companies will mash existing offers. Nokia Maps, for instance, might be integrated with Microsoft's Bing search engine and adCenter advertising platform to create a new type of local search and advertising service.

 

The battle is over the future of computing, given that mobile phones are now the most prolific computing platform.  Succeeding in all aspects of the mobile market will be critical to Microsoft’s future if it wants to effectively compete with Apple and Google on all fronts and diversify from a software license business to one specializing in hardware and services, says UK-based mobile consultancy CCS Insight.

 

The challenge is to gain both market share and developer attention in a sector that has not only been radically changed by the Apple iPhone but a skyrocketing number of smartphones built around Google’s Android, as well as those powered by Nokia’s Symbian, Research in Motion’s BlackBerry and Palm’s WebOS operating systems.  The name of the game is now about building ecosystems and buzz.

 

New Direction

Microsoft and Nokia need to whip up developer enthusiasm in order to succeed. The US company has been unilaterally stepping up efforts in that regard in recent months. The week that Windows Phone 7 launched, Microsoft chief Steve Ballmer came to France to help judge an American Idol style- contest near Paris that attracted entries from some 250 French developers. (See photo.)

 

 Of course, the end goal is to get more start-ups and developers to use all sorts of Windows technology. Ballmer waxed enthusiastically about finalists who managed to work in multiple Windows platforms on the Windows Phone 7. "These guys hit the big three," said Ballmer of one start-up. "Windows Phone 7, Windows Azure, Windows PC, Windows! Windows! Windows!"

 

Even before Nokia announced that it would be using Windows Phone 7 as its smartphone platform going forward, Microsoft was offering developers plenty of incentive to build on its platform. Consider the case of Daniele Calabrese, a native of Italy who founded Soundtrckr, a San Francisco start-up that blends Internet radio, social network and location.  Soundtrckr was first developed for the iPhone, but Windows Phone 7 was quickly added to the mix. "That turned out to be a good move", says Calabrese.

Microsoft not only gave Soundtrckr technical support but also significantly raised the start-up’s profile, he says. Soon after Soundtrckr was included on Microsoft’s Marketplace, its app shot up to the Top 10 music and entertainment apps. Soundtrckr has been invited to join Microsoft’s BizSpark One, a program aimed at convincing start-ups the world over to run their businesses on Microsoft's Windows platform, and has been selected to get one year’s worth of marketing and technical support in 2011. The start-up plans to use the aid to integrate its service within Microsoft’s Xbox gaming platform as well as Microsoft tablet devices. “This has been an amazing opportunity for us,” says Calabrese.

That is the kind of enthusiasm that Brian Hoskins, Director of Business Development on Microsoft’s Emerging Business Team,spends his time trying to encourage. “We are very pleased with the traction we are seeing in the development community,” says Hoskins.

 

To date, Microsoft reports that 24,000 developers worldwide have signed up to create content for the Windows Phone 7, ranging from young start-ups building their first mobile applications to more established venture-backed companies with successful iPhone and Android titlessuch as Digital Chocolate, a San Mateo, California-based virtual goods games company.

 

Microsoft’s Marketplace (the company’s answer to Apple’s App Store) now has 6,500 apps.  That is low compared to the more than 300,000 apps available in the Apple store and the more than 100,000 apps on Android, but under the new strategic alliance with Nokia, Marketplace will be merged with Ovi, Nokia’s app store, with a goal of creating a third ecosystem that can compete with those created by Apple and Google’s Android.

 

The new strategic alliance with Nokia  is sure to grab the attention of some of the 5,000 developers expected to attend this year’s Mobile World Congress, which will take place Feb. 14-17 in Barcelona. Whether it ends up significantly boosting Microsoft Phone 7 market share remains to be seen.


This story appeared in a print publication Informilo produced in partnership with Raconteur Media, which was distributed at The Mobile World Congress in Barcelona February 14-17 and in a regular issue of the Times in the UK. The print publication is the second in a series  on innovation and technology that Informilo and Raconteur Media have produced.

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