Windows 6.5: Living in a Post iPhone World is a Bitch
In watching Microsoft deal with the world since the iPhone launched you have to wonder if the Robbie Bach and the other Microsoft executives leading the Windows Mobile Effort think they somehow dropped into an alternative reality. In the world they think they knew being hardware independent is the model and Microsoft is King. In the world they suddenly find themselves in Apple, who isn’t even the largest Smartphone maker, is king and Windows seems to get little in the way of respect.
In watching this you wonder if this is history playing out differently this time where instead of Steve Jobs leaving Apple to a world architected by Bill Gates, Bill Gates left Microsoft and the world is being architected by Steve Jobs.
Smart phones grew up differently than PCs did and the market they grew into is much more technology aware largely thanks to PCs. For instance with PCs there were basically three camps in the beginning Consumer represented by Atari and Commodore (interestingly enough initially the largest segment), Large Business represented by IBM the most powerful technology vendor of the time, and Small Business which Apple owned. Commodore and Atari effectively took each other out, Apple struggled with who their customer was and what they wanted to be, and IBM tried to take back control of the market and instead lost it to Compaq, Dell, and eventually HP.
IBM brought Microsoft to market, gave them credibility with large business and government, and as IBM lost power Microsoft picked it up supported by the PC companies that remained. The pattern is big dominant vendor brings in partner, gives them effective control, and then falls off as the market chooses a blend of vendors and there is no credible alternative software platform that is consistent across all of them.
Phones largely remain a consumer market and Smartphones are a small portion of that market. Here the camps are a bit different because they are not really based on market focus but on vendor capability. You have vertically integrated vendors like Apple, RIM, and Palm, and you have Software Platforms like Windows Mobile and Android. Then you have Nokia who is both the largest and least aligned vendor in the space, having bought an independent platform, Symbian, and tried to have it both ways. I think we can argue that, so far, Nokia’s model isn’t working that well.
The vast majority of phones are appliances, the customer doesn’t care what is in them or what OS runs them, and they just care about how the phones look, what they do, and whether they are good at it. There is no IBM King maker (even Nokia isn’t powerful enough) and business and government buyers don’t define a large enough portion of the market to drive a platform through it (yet).
Customer Ownership Defines the Battle
Chances are if you buy an iPhone you zeroed in on it and didn’t really look at any alternatives, the same if you bought a RIM Blackberry, and possibly a Palm. Once you are on the phone you then gravitate back to the vendor for replacements because you’ve learned all the phones unique qualities and uses. People don’t like to relearn things they think they already know.
With a regular phone, however, there is no real loyalty; people may buy a Motorola one year and a Samsung the next because of price, plan, and appearance. These people also don’t like to relearn things so if these same phones had a consistent user experience they would be more likely to pick one that is consistent, and met their hardware wants and needs, than one that is different while meeting those same needs.
This is the promise that a common platform potentially brings, we aren’t all built the same and our needs, what we think is attractive and useful, and the tasks we favor tend to be different. We aren’t a one size fits all world (look at what we drive and wear).
To win this market Microsoft and Google have to create a product that is consistent enough so that buyers ask for it by name and stay loyal to it while exorcising choice only in hardware. What makes this problematic is the hardware vendors want buyers unique to them and only ask for Motorola, HTC, or Samsung phones.
It is this fight for customer control that weakens the platform players and assures Apple and RIM (Palm has other issues) a healthy future because they don’t have this conflict. They know who owns their customers; they do.
Wrapping Up: Windows and Android vs. Apple and RIM
For Google and Microsoft to win customer loyalty must remain with them. Even if one of their partners grows to become the next Apple or RIM, if they don’t retain the loyalty, they lose because then they are just a parts supplier and parts suppliers can be replaced relatively easily. Ask IBM about their Apple PowerPC relationship.
This doesn’t mean Apple and RIM are without risk, on the contrary, we aren’t a one size fits all society and if these vendors don’t have the right product (and Apple’s weakness is one phone one carrier in the US) then new customers could increasingly become difficult to acquire.
Apple, in particular, needs the kind of product breadth they have in the iPod line to capture and better hold their increasingly diverse customer base. Here RIM is in better strategic shape though, if you have to have one product, the iPhone would be the one you’d want.
When you define the market by Android or Windows phones then Google or Microsoft has won, until then this market largely remains a battle between RIM and Apple (and to my eye, Apple is winning). One final thought, around 2013 LTE and WiMax should massively open up the market for Smartphones (by dropping wireless fees dramatically), scaling (covering a vastly larger market) will then be a huge problem for RIM and Apple and favor Google and Microsoft. This is far from over but it’s a long time till 2013.
Rob Enderle is one of the last Inquiry Analysts. Inquiry Analysts
are paid to stay up to date on current events and identify trends and
either explain the trends or make suggestions, tactical and strategic,
on how to best take advantage of them. Currently he provides his
services to most of the major technology and media companies.
The opinions expressed in this commentary are solely those of the writer.