Now What's Microsoft's Play in Mobile? Mostly Missed Opportunities

Microsoft is the ultimate under-achiever in mobile. They have always talked the talk, and consistently failed to walk the walk. But as a corporation they are as big as Nokia, a giant. And Microsoft have said that they see the transition from the PC metaphor IT and internet world to the mobile metaphor for a decade already. Why are they not dominating the mobile world like they do the PC world?

IN THE BEGINNING THERE WAS SENDO

Many recent to mobile may be surprised that Microsoft has been in smartphones more than twice as long as Apple's iconic iPhone. They launched into mobile a decade ago. Their first launch customer was a brave British smartphone maker called Sendo. You never heard of Sendo? Thats because Microsoft crushed this partner who spent years in litigation with Microsoft, won in the end but the company was kaput by then. Early on when Microsoft brought its Windows to mobile we had plenty of other long-gone smartphone platforms like Palm, like Compaq's iPAQ etc. Oh, and there was something called Symbian also back then.

Microsoft did launch with Taiwanese HTC and then we would occasionally see some activities from Microsoft. Much more talk than walk, they would announce great things, which would inevitably be delayed, ship late, ship with bugs, and missing promised components. Microsoft Windows Mobile became known as the operating system that was even worse than Windows on a PC and most developers hated it.

Microsoft built its ecosystem acound Windows Mobile for nearly ten years and landed as handset makers the 'rest' of the top 5 biggest handset makers, when you remove Nokia. So Samsung, LG, Motorola and SonyEricsson were all suppliers of Windows Mobile handsets. When you add HTC into the mix, it is the six bestselling phone makers now doing Android phones for Google. Microsoft owned this field, had all those makers, and by every tiny bit of logic, if Google can take 45% of all smartphones sold now in July to be on Android, made by Samsung, HTC, LG, SonyEricsson and Motorola - why didn't Microsoft - after ten years of trying - not own 45% of the smartphone market?

Microsoft Windows Mobile did, briefly hold onto number 2 ranking a couple of times in the past decade. But they got there with total market share of just over 10%. Then they were overtaken by RIM Blackberry and Apple iPhone. The last guys Microsoft were able to 'defeat' in the smartphone battles were Palm. They were defenseless against the Blackberry and the iPhone. And Nokia's Symbian phones outsold Windows Mobile always by at least 5 to 1. In the latest quarter we have data, Q1 of 2011 - when Nokia had killed Symbian, Microsoft's Windows Mobile sold 1 handset where Symbian sold 14. I have made the analysis that if you remove Nokia branded Symbian phones, and only take the 'other' Symbian phones like those made by Sharp and Fujitsu etc - even those Symbian phones outsold all Microsoft phones in Q1. Thats how bad Microsoft had become.

Microsoft made many relaunches of Windows Mobile which reached its 6th iteration by 2010. Every relaunch came with top management commitments of learning from the past, of fixing the problems and taking mobile seriously. Along the way Microsoft convinced several handset makers to focus on Microsoft Windows Mobile, including Motorola at one stage and LG at another. Even with Nokia, Microsoft didn't get Nokia to run Windows Mobile, but got Nokia to integrate with its E-Series enterprise/corporate business phones, the Microsoft Office Suite (when that project coordination with Nokia was led on Microsoft's side by Stephen Elop, yes who now is Nokia's CEO).

That great collaboration between Nokia and Microsoft resulted in colossal global market success in the enterprise/corporate space, using Nokia E-Series phones and Microsoft's global Windows PC platform and the Office Suite.. When I say 'colossal global market success' of course I mean 'nothing'. There was zero success, even when Microsoft made this a 'top priority' and placed their wonderboy Stephen Elop in charge. While this is not a blog about Nokia, one should take from this the lesson, that Microsoft's power in PCs and the Office Suite are not a strong factor in helping Nokia sell more smartphones. But I digress. That was failure of Nokia partnerships. What of Motorola and LG?

Both felt they had wasted their effort with Microsoft, nothing delivered on time, nothing worked and their effort was wasted. Both saw their Microsoft efforts being a drag on profits - both saw their profitable phone business go unprofitable during the Microsoft phase - and both left in disgust. Motorola was so upset, they said they will no longer do any Microsoft phones and went 100% Android. LG said they were shifting from a Microsoft based strategy with Android as option, to an Android based strategy with Microsoft as the option.

NO MIGRATION PATH

Microsoft was lumbering along with Microsoft Windows Mobile, until their nemesis, Apple, entered into the phone space. And before you could say 'Palm' Microsoft's market share was in freefall.. So Microsoft said they'd abandon the Windows Mobile platform, because that was now a decade old, and release a whole new operating system in 2010 for smartphones, Windows Phone, which would be totally new, and be optimized for touch-screen phones. Now, as this was 'totally new' it meant that there was no migration path for developers who had made apps for Windows Mobile.

To me at the time, that seemed truly odd. Microsoft if anyone, should have known better. It was DOS that built Microsoft. Then came Apple with the Mac (like now with the iPhone) and showed a far better way to do personal computers than DOS. So Microsoft had to reverse-engineer the Mac OS and try to create a clone, which we now know as Windows. And today DOS is dead. But Microsoft had a massive global PC lead in DOS based machines in 1984 when the Mac was announced. Even as Macintosh PCs were sold, Microsoft based PCs sold more. And Micrsosoft made Windows first as an add-on over DOS, as a 'GUI' (Graphical User Interface). The first versions of Windows were horrible, it wasn't until Windows 3.0 that it was in any way usable, but the point was, that all Windows PC's were also using DOS, and any recent DOS machine could be upgraded to run Windows (while the older the machine, the more slow this made it). Anyway, it took years, but Microsoft patiently migrated all DOS based PC users to Windows and kept its massive market share edge over Apple. Why they would not do it now, is a mystery to me. But clearly Microsoft messed up big time with Phone 7 (and incidentially, this is why I am so adamant about the migration path from Symbian to MeeGo but thats another story)

And Microsoft didn't really care about that. Right after they announced that there was no migration path, the market share crashed. It was devastated from 9% at Q4 of 2009 to 3% by Q3 of 2010 when the new Windows Phone handsets started to arrive. So Microsoft lost two thirds of its customers in a period of 9 months.

This is incidentially the model I used to estimate what happens to Symbian when Nokia announced on February 11 that they will no longer support the previously-announced migration path from Symbian to MeeGo.

Now, how well did that go with Microsoft partners? They have been bailing out of Windows Mobile for a while. The biggest partner, HTC - who had produced half of all Windows Mobile phones ever made - said they will not even launch smartphones on the last editions of Windows Mobile. But they returned to Windows Phone and gave it a try. Now the latest numbers we have from Q1 is that HTC's Android phones have been outselling HTC's Microsoft Windows Phone smartphones of similar specifications and in essentially the same markets - by about 9 to 1. The new Microsoft OS, which is optimized for touch screens, is doing so badly, that Microsoft's longest running handset partner sells 9 times more on Android than Windows Phone. And HTC was so disgusted by this new boycott against Microsoft (because of Skype) that they shifted their emphasis now to more Android from Q3.

And meanwhile, LG, another maker who does both Android and Windows Phone, has just today announced that they are lowering their target for total smartphone sales from 30 million to 24 million this year. This comes on the heels of Android growing dramatically and activating 500,000 new handsets per month. And LG has been selling tons of Android phones. The annual target lowering is - my analysis, not LG's words - the result of dramatically underperfoming Microsoft Windows Phone smartphone sales. Android is doing just fine for LG, but the reseller boycott is killing Microsoft.

So where was Microsoft's new Windows Phone now? Funny you'd ask. Those who use it, love it. It is a very modern and easy-to-use operating system for modern touch-screen smartphones. But. There aren't any users. In Q1 of 2011 Microsoft Windows Phone had 1.6% market share. While Microsoft had been trying to kill of Windows Mobile, WinMo was still outselling Windows Phone in Q1 ! And the upstart, Samsung's new bada, as old roughly as Windows Phone 7 was not just selling more than Windows Phone, bada was outselling both Micrsosoft operating systems combined! So all Microsoft based phones sold by LG, SonyEricsson, HTC ... and Samsung itself - were outselling bada which is only one of three OS's that Samsung supports, and is not its best-selling OS (Android is, obviously) and yet bada on only Samsung and only as one of 3 OS's is already selling better than all makers of Microsoft smartphones.

ITS EXECUTIVE ATTENTION

So why? Microsoft is the biggest PC operating system maker by a massive margin, with Windows. It kind of inherited that being there at the beginning (although Apple was bigger at the very early age of the PC). So maybe Windows is kind of special. But what of the Office Suite? That is something Microsoft did not own from the start. The world's biggest spreadsheet before Micrsosoft Excel was Lotus 1-2-3. Before Word, the world's bestselling word processing software was WordPerfect. And so forth. Microsoft (under Bill Gates) fought and won those battles. Even Xbox, it was the smallest of the three gaming platforms but for a while was the biggest. I haven't looked recently but I think Wii took over as number 1, and if you add Playstation Portable, then probably Sony is still biggest. But Microsoft has roughly a third of the home gaming console market. Why does it have 3% of the smartphone market after ten years (And a peak of about 12%).

I think its executive focus. Compare to Google. Compare to Apple. When these guys say they go mobile, they are all out. They do everything in the whole company to get there. Eric Schmidt the Chairman of Google says 'Mobile mobile mobile' and he says 'Mobile first' and he says 'Put your best people on mobile' etc. He's dead serious. Or look at Apple. When they were the world's bestselling portable music player brand (iPad and iTunes) they went out to design the device that will cannibalize iPad sales - the iPhone. They admitted later that the iPhone is the direct result of Apple concluding that portable music will migrate from iPads to musicphones. This is bold, this is decisive. No wonder when Steve Jobs announced the original iPhone, they also announced Apple Computer, would change its name to Apple. And now Apple calls itself a 'mobile' company. And make the biggest profits of any tech company on the planet.

But look at Steve Ballmer. He says Nokia is their strategic partner and mobile is their top focus. Next day he says Windows is their top focus. Then he says Office is the top focus. Then he says Cloud computing is the top focus. Then they announce RIM as a strategic partner (oops? What happened to Nokia?) and so forth and so forth and so forth. If you want to win in mobile, this is the biggest contest, the biggest race, the biggest prize in human history. I've estimated conservatively that the 'floor' ie the minimum level of the value of this 'prize' of the digital convergence is in excess of 5 Trillion dollars annually. The real prize is likely double that. And to put it in context, the total PC industry of which Microsoft is a small part, is worth only half a Trillion dollars. It is no accident that Hewlett Packard says the future is mobile. That Dell says the future is mobile. That Intel says the future is mobile. That the BBC says the future is mobile. That Visa says the future is mobile. And so forth. But Microsoft has been in this game for a decade and have squandered every chance they ever got.

NOW NOKIA

So they have yet another chance. It is now clear, that without Nokia, Microsoft Windows Phone would have already died. It is a total market flop. Microsoft is wealthy, could have kept it alive for some quarters, but without the Nokia excitement, it would have died a quiet death like Kin phones and Zune music players etc.

With Nokia Microsoft had a unique opportunity, with ex-Microsoft guy, Stephen Elop (and good friend of Steve Ballmer) in charge. This could easily have been a happy partnership not unlike what Bill Gates had with Apple's Steve Jobs early on (Microsoft's first applications were written for the Macintosh, yes that is where Word and Excel come from, honest!) And Microsoft gave Apple a big corporate loan at one point when Apple was in the doldrums. They were once very close pals.

Now we'd have the world's biggest software operating system maker Microsoft working with the biggest handset maker. Both had tried to do each others' business - Nokia making operating systems with Symbian and Microsoft phones with Kin and could easily say, they should 'stick to their knitting'. This partnership has the potential to be very strong if both work together and use their strengths.

When Microsoft was negotiating with Nokia in late 2010, Nokia's global handset market share (all phones) was 26% and Nokia's smartphone market share was 28%. While earlier many were questioning it, by 2010 a consensus was forming that yes, all 'dumbphones' would migrate to become smartphones during this decade. So Microsoft was approaching this partnership just when Nokia's giant global lead in dumbphones would be ready to migrate to smartphones. Nokia sells over one million handsets per day. The PC industry sells about 300 million devices per year. If Microsoft could get Nokia to adopt Microsoft's OS - and most importantly - get Nokia to agree to pay for the licenses (where Symbian was free to Nokia and MeeGo was free to Nokia, and Google's Android would also have been free) - then Microsoft would have a massive profit engine into this decade.

I think its fair to say, that most who looked at Nokia in 2010, and projected deep into this decade, would say, that with Microsoft, its very fair to assume Nokia could keep most of its market share and should have more than 20% market share into this decade. That is also what we've heard from several analysts this Spring. I think that was a fair assuption from data from last year. If Microsoft then looked at its 2010 performance, saw it has some sales from HTC and SonyEricsson and LG and Samsung and could add some of that into the mix, Microsoft could easily expect the total footprint of Microsoft Windows Phone could be in the 25% to perhaps even 30% range, towards the second half of this decade when all Nokia phones would start to be smartphones.

SHORT REPLACEMENT CYCLE

So then the cold lessons. First, Microsoft would have known this if they bothered to think. The mobile smartphone market is not like the PC market (or the videogaming console market) in that the replacement cycles are the shortest of any industry. The average replacement cycle is under 18 months globally and far less for smarpthone users. So while in PCs there is time to wait for a couple of years and not lose lots of customers, not so in the smartphone space.

Then we have Apple. To borrow from the crude sex joke about 'when you go black, you never go back' haha (please don't be offended) its very fair to say that about Apple. Once any consumer starts to use some Apple device, the Mac or the iPod or the iPad or the iPhone - in that category, they will never go back. Very much of the evidence currently is that disgruntled Nokia Symbian buyers are going to Apple iPhones. And once you use an iPhone, there is almost no switch back to any other phone brands. Apple has by far the greatest loyalty of any phones.

So the top end of the smarpthones that Nokia was fighting for, quite successfully by Q4 of last year with the N8 - is now rushing to pick up iPhones. The early Microsoft Windows Phone based smartphones by Nokia will not be low-end mass market phones, they will be premium high-cost smartphones. And those customers are now leaving Nokia in droves, never to come back.

And now we have a global reseller boycott of Nokia Symbian phones. So while the Microsoft management hoped they'd 'land' Nokia with something like 20% or more in smartphone market share (like it was in 2010) they now have to watch how badly Nokia falls, and hope it is still big by the end of 2011 when the first Microsoft phones will come with Nokia branding.

Most consumers are not coming to the store to buy 'a Microsoft phone' or 'an Android phone' or 'a Symbian' phone - they come asking for an HTC or a Samsung or a Nokia. So its the Nokia smartphone market share which is critical here. And that is now in freefall because of the reseller boycott.

I cannot recalculate how bad it will be until we have hard data on Q2 sales from Nokia but before the boycott I counted that Nokia will end this year with 12% market share. So the old 'best case' scenario for Microsoft was not that Nokia can have 20% market share that can be migrated to Microsoft, it was down to 12%. That was before this boycott. Now, today, as the resellers refuse to sell Symbian phones, when the customer walks into the store and asks for Nokia, they will typically sell either an Android or iPhone (or in some cases Blackberry). These customers are gone. They now have a memory of their old 2009 model Nokia Symbian phone that didn't do touch screen or had a very cumbersome touch screen experience and they have the wonderful new Android or iPhone (or Blackerry) and are totally in love with the new phone. Their next phone is that brand, not Nokia. These customers lost during this boycott are lost forever. (and the sad thing for Nokia is, that the new version of Symbian is so good, that it would actually build Nokia loyalty if there was no boycott).

But the situation is that bad, that analysts are already saying Nokia in Q2 lost so much sales, that they have fallen behind perhaps Samsung smartphones, or perhaps Apple iPhones (or perhaps even both). Just in Q4 Nokia was bigger than iPhone and all Samsung smartphones added together.

THE WORST THING TO DO NOW

Note, as Microsoft's own Windows Phone OS is selling so badly they are under 2% market share now, anything from Nokia will be better. But the trend is very clear, that when Nokia smartphones are sold in mass market quantities in the Spring of 2012, the remaining market share for Microsoft Windows Phone is not 'the third ecosystem' in size. They will be smaller even with Nokia than Android (first), iPhone (second) and Blackberry (third ecosystem). Its quite possible, depending on how Samsung prioritizes its smartphones, that Samsung's bada will be bigger than Microsoft even with Nokia (as it already is now). So Windows Phone would be at best the 5th ecosystem. And thats before we see what Hewlett Packard does with Palm WebOS (they are seeking partners now) and when Intel's MeeGo based phones are released next year from ZTE, Huawei, Panasonic and LG.

Microsoft thought they were buying into a winner. Nokia looked very strong as a hardware manufacturer last year. Making still solid profits etc. Massive market share advantage over all rivals. Now they are limping in, and we just heard this week that Nokia is resorting to 15% price cuts - after they are making losses. This is desperation moves by Nokia.

Now. If Microsoft really believed in mobile. If they did their homework (ten years in the smartphone space etc) and abandoned the fantasies that Microsoft Office Suite will matter at all in this fight, they would understand that the biggest factor in mobile phone success is... not handset design, not operating system, not user interface, not app store, not ecosystem, not number of apps, not mobile web, not music, not TV, not camera... it is carrier relationships.

Nokia had the best carrier relationships on the planet. They were able to use those carrier relationships to build 130 carrier billing relationships to Ovi for example. This is what every app developers says, is the preferred way to pay for apps, you get the biggest conversion rate of interest to purchase, if there is carrier billing. Its the hardest thing to achieve. And Nokia is the grand master. Ovi has carrier billing for over 20% of all carriers on the planet including most of the big ones.

Now Nokia faces a carrier boycott not of the Nokia brand, but of Symbian. So Microsoft can safely hope that once that the carriers have a new OS to sell that is not Symbian, they will liff the boycott and sell Microsoft Windows Phone 7 based phones happily ever after.

Not so fast. Just one speedbump: Skype.

Microsoft bought Skype in May. And coincidentially at the start of June we hear from several sources that all of Microsoft operating system phones (Windows Mobile and Windows Phone) are under sales boycott. Why?

Because carriers/mobile operators hate Skype. About 70% of the total mobile operator/carrier revenues and about 40% of their profits come from voice calls. Skype is killing voice calls not in mobile, but on the fixed landline side, where if Skype was a telco, it now would have half of all fixed landline subscribers. Wow. And we all know, most Skype calls are free. So Skype has decimated fixed telco revenues and profits.

What is far worse for the carriers, is that Skype hits the most expensive calls - where most of the profit is. International calls and long distance calls. And for those who believe in videocalls - very relevant to many 3G mobile business cases - we do use videocalls but not the way 3G forecasters expected - 40% of Skype data traffic is videocalls. Note that is not number of calls or minutes, but because videocalls take much more data bandwidth, when measured by total data load, 40% of Skype is videocalls.

So Skype is killing the landline fixed telecoms operators/carriers by revenues, decimating their profits and destroying the future path to videocalls.

The carriers in mobile are having none of that. They can't stop us doing Skype via WiFi but most carriers will forbid us from using our phones to Skype, or have 'fair use' clauses in their data plans, and those unlimited data plans that used to be so popular, are all vanishing, latest to kill its was Verizon yesterday.

There are exceptions. Three the 3G operator group is offering Skype as part of their service bundle. That means, that Three has packaged Skype pricing into their monthly data price. But no carrier/operator in mobile is offering Skype for free. Not when voice is 70% of revenues and 40% of profits. (And Skype messaging - SMS is less than 20% of revenues and well over 50% of profits for most mobile operators/carriers).

When Microsoft bought Skype, I am sure it made a lot of sense for Redmond HQ in the overall big picture at Microsoft to have a bigger presense in the internet business, in telecoms and in social networking. But what they did not factor in, is that no carriers/operators (except those few who bundle it in like Three) will want Skype anywhere near their networks to overload their data and steal their profits.

Now Microsoft is seeing a conflict. It believes in Skype obviously. I also believe in Skype and I think it will finish off most of fixed landline telecoms and will be a nice telecoms 'new' carrier on the fixed side. They will also eventually do some deals on some networks in mobile. But all carriers/mobile operators will do Voice Over IP (VOIP) but (almost) all will do it without Skype. The carriers do VOIP in their way, with their billing and their pricing plans, making sure they get some revenues from their VOIP services. And they will not do that with Microsoft.

And the carriers are very cautious. They do not rush into silliness. So they have calculated the Skype effects in their networks for years. And they know Microsoft, the Evil Empire, very well. They will never accept any Microsoft smartphones even if those have Skype 'crippled' or blocked, knowing if they let Microsoft in, they will only postpone the eventual launch of Microsoft's Skype into their market.

No, this was the wrong move. Now Microsoft's Windows Phone (and Windows Mobile) are instantly the most hated smartphone OS by the carriers. So they go elsewhere. There is plenty of choice. But Microsoft just destroyed its last chance to come back in mobile. They better hope for a strong long life of the PC..

Comments

[hewbass]

I didn't know any Sendo people directly (I'm not actually a mobile comms guy, I just had the desk next to the ones in my company), but many of my closest friends did (some of the engineers that went to form Sendo were from Panasonic IIRC -- some went to Sendo, some came to the place where I worked).

I don't think hardly anyone seriously understands how badly and violently they were shafted up the anal passage by Microsoft. They took them for their IP, their operator relationships, and pretty well hollowed them out.

And because Sendo were already struggling (which I understand was the motivation for the relationship with MS in the first place), they did not have the finances to be able to defend their rights in court. I heard of people whose lives were ruined by this.

The above is all a bit of an aside really, although relevant to what I say below:

Sendo were violated unto death when Smartphones were just taking off. I believe MS just saw mobile as another market in which they should be big -- the potential to earn more money, but with no influence on their existing markets (but mark how they behaved towards Sendo, when this was just another market. It's relevant below). At this time MS wanted to make more money in a new market, but did not particularly feel threatened in their 'home' market the PC operating system.

Apple, however, demonstrated something new - the future (and ironically for Nokia, it was a future they had been promoting for the previous 4 years, they had just failed to execute it in a way that people would recognise). The future in this case was one in which the desktop computer was largely irrelevant to the majority of people.

Until the iPhone, people's choices about the purchase of their PC and their mobile had little influence over each other -- if any influence at all it was mostly towards purchasing a phone that would work with the PC and software one already had.

After the iPhone it became clear that the majority of what most people would previously have considered to be the job of a computer (email, web browsing, viewing Youtube, Facebook, online shopping, etc.) could be more conveniently carried out on your mobile phone. The only thing that can really be done more conveniently on a desktop PC are:

1. Document preperation. There's always a few people that will benefit from a big screen and a fullsize keyboard.

2. actual computing (you know, running millions of calculations a second on something like simulating a microprocessor, or airflow over a supersonic jet)

3. Backend internet things like serving up databases via web pages (most likely for someone to consume on a mobile phone).

Desktop PCs running windows are RIGHT NOW fairly secure on 1., but for 2 and 3 Linux is taking Windows lunch money and giving it wedgies, largely because:

a). for most people the underlying OS does not matter

b). for people where it does matter they care most about it working reliably under load and the fact they can cobble together the glue logic easily themselves (Aside- Windows: Not reliable under load. Fast scripting to glue different applications together is difficult).

If anything- going forwards people's choice of desk top is going to be secondary to their phone. People will be choosing their desktop PC on the basis of whether it works well with their phone, as opposed to the other way round. Right now one of Microsofts nightmares is one where iTunes won't run on a Windows Operating System. Or where one does not need iTunes at all ("Hello iCloud!").

If people choose to buy a desktop PC at all.

The inference from the above is that the platform one chooses for document preperation will be done on whatever is compatible with one's mobile phone (or possibly on one's mobile phone, docked to a big screen and a keyboard)

So suddenly MS have noticed they have an existential crisis.

The play for Nokia is all about gaining a market for Windows Phone, before MS become irrelevant, and Apple become the replacement monopolist.

Microsoft have partnered with Nokia for their their market share as a hardware partner-- but that is dribbling away. Soon MS are going to be more interested in Nokia for their IP and their operator relationships... um... does this sound familiar?

[Christian]

you write "(where Symbian was free to Nokia and MeeGo was free to Nokia, and Google's Android would also have been free)"

Unfortunately there is no free lunch.

Nokia R&D spending, in 2010 was almost 3 times its peers.
See Engadget:
http://www.engadget.com/2011/02/03/visualized-nokia-randd-spending-almost-3-times-its-peers/

BusinessWeek:
"Apple's R&D was 2.7 percent of sales for the year ended September, while Nokia's 2010 devices R&D was 10 percent of the division's sales."
http://www.businessweek.com/technology/content/feb2011/tc20110214_758033.htm

Android is not free, HTC pays Microsoft $5 for each Android device they make and others are following.
http://www.businessinsider.com/htc-pays-microsoft-5-per-android-phone-2011-5

and now Oracle wants handset makers to pay for each Android device they make:
http://www.cio.com.au/article/392822/oracle_win_would_strain_android_growth/

[Kalle]

Christian, Nokias R&D didn't go to developing Symbian. If it had world would have been different as we know it.

[Matthew Artero]

A replacement rate of 18 months means that 66% of phones in use are being replaced every year. The 1.38 billion phones sold last year is only 32% of the 4.3 billion phones in use at the time. A replacement rate of 18 months means almost 3 billion phones will be sold this year after the growth rate is added to the replacement rate.

I think it can be argued that Microsoft did not make a mistake with Skype because they haven't lost market share because of it. Perhaps MS saw the writing on the wall and realized someone is going to do it, and in the long run it may as well be them.

@Christian - Thanks for the links

@hewbass - Thanks for the reminder that MS knows how to structure a deal to make sure it always gets something out of it.

@Tomi - You sure put a lot of time and effort into this blog that we benefit from; Thanks

[Harry in Singapore]

Now that FaceBook has introduced Skype videocalls and FB is very much in smartphones (where I can see users accessing it on their mobiles everyday in Singapore); Carriers would find it impossible to deny Skype to their FB users.

What are the implications for Microsoft? Just wait it out?

[cycnus]

Tomi,

Great artile.... as always...

@Christian
nokia R&D spending is enormous because they were the LEADER and they need to keep it that way.
Look @ how apple finnally bow to nokia IP.

about Android,
Yes, google is a lame for letting their customer being sued by microsoft

about microsoft, wp7 and so on...
I think microsoft asking for $$$ for android from HTC, sammy and others is really ridicules. and this make them hate MS more, and also user would hate MS more. way to go microsoft....
This is really american way... FUD ... FEAR UNCERTAINTY DOUBT.

And at the end...
I would think that if google could not stand up to defend the manufacture, Meego would win the OS battle in the long run. Because Meego has Nokia backing up the IP. and it's not microsoft the greedy.

[symbianlover]

@cycnus:
Are you working at Nokia? Do you know, those old fellows who develop and contributed the IP assets are those who have been fired or transferred to Accenture?
To be honest, Apple doesn't really care so much about paying some royalties to Nokia. Their business share and profit are much much higher. With their current cash and liquid assets they are even rich enough to buy Nokia! In fact Nokia spending too much and one of the reason is because they hiring too much sub-contractors and externals to do their (software) RnD projects in last years. Elop should know about this issue and I can see that some actions are progressing now.

Meego, c'mon guys, Do/did you have something to do with Meego (technically or in business)? Or did you just talk about Meego based on some fancy youtube video demonstrating the coolness of Meego? I've been working on Meego and you know what? For every new device, you will need more extra time to adapt the OS and your appl. to work on the new device properly. Since they (Meego developers) are mostly externals, it's hard to find someone who takes the responsible or ownership and finally you who takes over it, you are in big trouble and you will start thinking whether you need to start everything from the scratch.

[Patrick]

While I think you hit the nail in most cases, there are two subjects I think you are wrong :

1. I never understood your focus on marketshare over profit for the mobile phone market. I always found your comparison with the video (VHS) and DVD (Blu-ray) branch nonsense.
That is a completely different market and not comparable with the mobile phone market. I think the nowadays market-trends prove me right.

2. I don't understand your adversity against Windows Phone 7. Windows Mobile was rubbish : I have had 2 Windows Mobile phones, ... never again.
The only wise thing MS could do, was to completely shift gears.
They did and yes, it's painful, yes, they will lose momentum for some years, but yes, it's the only wise way to go.
Did you ever use a Windows Phone 7 ?
Seriously, it really works and it is fun to use.
The fact that they have now a very small marketshare is quite normal : they are still deploying the guns on the battlefield (Mango update, internationalised marketplace, integration with the XBox world, Nokia ...).
I never believe that telecom operators will boycot WP7 in the future. On this moment, there is not much incentive for them to promote WP7, but that will change with the upcoming updates.

On December 2012, we talk again, and then I will point you to this comment with the words : "I told you so ..."

[hewbass]

@Matthew Artero MS do not currently have any market share to lose. It will be interesting to see if they actually manage to gain any. Irrespective of how good WP is to end users, MS/Nokia have to sell it to their customers: the networks.

Phones that come preinstalled to make Skype calls over WiFi do not generate revenue for the networks, and those that do Skype over 3G cause massive problems for those networks with unlimited/large data allowances on their plans (ie the sort of plans that it actually make a smartphone useful) - they cost the network bandwidth without earning extra income.

You might find the networks will make exceptions to this rule for "Halo" devices like the iPhone with Facetime, where they are sure they will still generate revenue in other ways, or they are well known "must have" devices that not having would give them a disadvantage (again, like the iPhone), but no one really cares about or is even conscious of WP7 (and that is with the large advertising campaigns currently running).

Do you honestly think the networks are going to look at WP7 and think "I can make more money with this"?

[MIP]

@ Patrick

WP7 really works? Fun to use?
I beg to differ:

http://www.mobileinfoplanet.com/2011/07/06/a-reason-alone-not-to-buy-wp7-even-with-mango/

[symbianlover]

@MIP it's fun to use, did you try it by your self?

[Matthew Artero]

@Christian

I just read those articles you mentioned regarding Android’s patent infringement. Previously I had mentioned how the Ocean Tomo Patent index outperforms the S&P 500. Therefore we should be able to determine the winner in this fight by the value of their Intellectual Property portfolio and their ability to grow it.

If we are going to talk about carriers hating Skype and boycotting and being upset with Nokia pulling the plug on Symbian and boycotting, and companies burning other companies; well then it seems we certainly can’t leave out how Google has just burned all these manufacturers.

Once bitten twice shy. They will never grab another freebee again. This is a golden opportunity for Nokia. Nokia can give access to an OS it owns to any and all manufacturers which will boost Nokia’s ecosystem.

HP should also do this with their Palm OS. They will never sell a single license without an ecosystem to help attract sales. But if they give it out for free, it will help build their own app store.

It seems you need a well stocked app store in order to sell an OS license.

@Tomi and everyone

The article on Oracle suing Google also reveals the two faced nature of Elop. The problem with Android is the many different versions of it which make it difficult to manage and know if an Android app will work on your version of Android.

Elop said he wouldn’t go with Android because it didn’t allow him to differentiate; further fragment the Android app market. But yet he had Symbian with a migration path to Meego that was allowing him to differentiate. If differentiation was the issue he already had that but threw it out anyway.

[Patrick]

@MIP : I used it, I like it.
A few collegues of mine own a WP7 phone and all are very enthousiastic, even after months of use, while all of them were Windows Mobile haters before that (meaning, they are not Microsoft fanboys).
I find the hub-centered design really refreshing and fun to use.

The only reason I did not yet buy a WP7 phone myself, is because I don't like the hardware that is offered on this moment, like the absence of scratch-resistant screens, to name one thing.

I'm waiting for Nokia to fill that gap and I'm confident they will.

[MIP]

@symbianlover

http://www.mobileinfoplanet.com/2011/06/12/windows-phone-7-metro-ui-an-unappealing-propostion/.

Seriously, a platform as limited as WP7 currently is can never be "fun" to use, beyond the first 2 minutes of novelty (unless you use your phone simply as a feature phone, that is). The more appropriate term would be "frustrating" given the lack of crucial features (again, if you want to use your phone as a true smartphone/mobile computer). And unfortunately Mango, with its woeful "multitasking" is not proving to be much better (if that article is in fact correct - I still have some doubts...); I struggle with the limitations of the iPhone's implementation of multitasking already, which is still less restricted than WP7.

[Poifan]

I don't see how one can say that MS was a failure with Windows Mobile and then state that rebooting their platform with no backwards compatibility was a mistake. If you have no marketshare, why bother to try to support difficult legacy applications?

[Patrick]

@MIP

If you see what most people use smartphones for : reading their email, using the calendar, looking for information on the internet, texting, listening to music, doing facebook-stuff, playing games, ... all of this is already in the WP7 phone and done quite nicely, thank you very much indeed.

For most people, multitasking is not the most important feature on a phone.
If it was, then explain me why the iPhone became such a succes, thoough having no multitasking to speak of, the first years of its existence.

But again, let's wait and see.
I'm quite confident the story will be rather different on December 2012.
For me, Windows Phone 7 + Nokia = bliss.

[MIP]

@ Patrick

The iPhone was successful because most users came from feature phones:

http://www.mobileinfoplanet.com/blog/blog1.php/dumb-smartphone-or-smart-dumbphone (from 2009)
http://www.mobileinfoplanet.com/2011/07/05/features-vs-eye-candy/

But WP7's success or no success is not what we are discussing here. Rather it is WP7's features (or its lack of features, to be precise); if you can't listen to Spotify or Pandora in the background then that is not "done quite nicely", you're welcome. That is poor, period. And multitasking is just ONE missing/poor feature out of various (though enough for me and many others not to want WP7), so don't get too hung up on multitasking if you don't care about it.

But at the end of the day the question is: would YOU want an iPhone1 only because that is what a large number of users are happy enough with, and it sells well? I.e. your criteria for your own needs/wishes is what others are content with or it sells well?
Since you stated that you haven't bought a WP7 phone only because of the hardware then you obviously would be (but then again you'd also be happy with a S40 phone then...). But let's not act surprised about why WP7 has sold poorly so far - this is not 2007 anymore and the many features missing from WP7 surely has put off more than one potential buyer so far.

[symbianlover]

@MIP you can copy and paste all of URLs from Google (or maybe you use Bing? Haha) and I bet you I can find similar anti-iphone blogs or similar simply by typing the sentence "reason not to buy iphone". And similar stuff also for Android, Symbian or Blackberry. But at the end, the market share will count.
What I want to say is: Just give Nokia (or I would say us) a chance to do something nice on WP7. I guess as software engineer, you shouldn't love the os that you're working with but you should love your job, right?

[Nimetön Pelkuri]

@symbianlover

"But at the end, the market share will count."

And WP7's share is 1% in the USA (in the rest of the world it's even worse). Even Symbian is bigger there with 2% share. So when you say that market share will count, we can see that WP7 is a monumental failure. It can't even in it's home and strongest place (USA), surpass the OS it's supposed to replace. Twice as many people prefer Symbian over WP7 in a country that practically don't sell Symbian.

"What I want to say is: Just give Nokia (or I would say us) a chance to do something nice on WP7."

No. I won't give WP7 anything. I prefer MeeGo/Harmattan (or in fact any other OS) over it. WP7 shouldn't even be called a smartphone OS, it's a feature phone OS. Poor in functionality. And it's ugly and very annoying.

If Nokia continues only with WP7, I'm going elsewhere. I've been a loyal customer for years, but Elop has it made sure with his idiotic WP7/MS cr*p that I've had enough. N9 will be the last Nokia for me, unless they continue making MeeGo phones. Making just one powerful nicely featured MeeGo phone per year would even be enough for me. Much like what Apple does with iPhone.

[gzost]

The WinMo/WP 7 compatibility break was the only thing that Microsoft could do. WinMo was designed to be a Windows for small screens, and to be navigated using a stylus on a resistive screen. WP 7 is for finger operation on a capacitive screen. This was a necessary change. The old software would, in the vast majority of cases, have been completely unusable on the new devices. Just try hitting a 10px x 10 px target on a modern smartphone. Migration paths are nice, but to stay in your DOS/Windows metaphor: this here would have meant a device that dual-boots into WinMO and WP 7, and has both a resistive and a capacitive screen. THis makes neither sense to the user, nor is the latter point even technically feasible.
Once they realized this necessity, it gave them the possibility to start with industry-leading development tools on the new OS, and to radically rethink what a UI on a phone should be.
I personally don't like the result of this rethink, and I disagree with the decision not to allow native code. But the developer reaction shows that the decision made sense to a lot of people. There are now 25,000 applications in the Marketplace, and this for an OS that has sold as close to nothing as is possible with a launch this wide. Should WP 7 sales ever pick up, then I think the apps situation would improve even more dramatically.

And
@kalle:
Nokia had over 6000 software engineers working on Symbian. So yes, a huge chunk of that R&D money went towards Symbian