Did Microsoft Mobile give up too soon?

Posted by Rob Enderle, principal analyst, Enderle Group

So many companies simply don’t get the power of marketing done well.   Apple initially brought out a phone that not only was bigger and more expensive than most were buying at the time, it wasn’t even initially 3G which made is largely obsolete at launch and they still spun the mobile phone market on its head.    I’m reminded of the story of John Paul Johns who, when his ship was sinking and all appeared lost, supposedly said the words “I have not yet begun to fight”, and then beat the crap out of Captain Richard Pearson.   It would seem, with Windows Mobile, Microsoft’s memorable words would be “you win, but you wait, I’ll kick your butt a year or so from now” as they rowed furiously away in what was left of the life boats.

Windows Mobile 6.5:  Underappreciated
I’ve been watching the coverage of the Droid and one review  from industry legend and Smartphone pioneer Stewart Alsop stood out showcasing the thing kind of sucks.  Yet it’s second only to the iPhone in popularity at the moment. 

In Consumer Reports, a publication that takes no money from vendors, the iPhone is the top rated in its class, but a Microsoft Mobile 6.5 phone is only 3 points (out of a possible 100) behind the iPhone 3GS (it tied the iPhone 3G) in total score and outscores the iPhone for business use.   Windows Mobile 6.5 was on the highest scoring Verizon phone (the Droid released too late to be included in this study). 

The phone that got this second to iPhone highest score is the HTC Touch Pro  and it isn’t even the best Windows Mobile 6.5 phone.  The HTC HD2  is considered the best and the reason it isn’t in the study is that it isn’t available in the US yet.   It has the very powerful 1GHz Snapdragon CPU and a set of specifications that make some wonder if it got a jump on the next generation iPhone. 

In a few short weeks LG will launch the first phone with a built in Pico projector, the eXpo  and it isn’t based on either the Android or Apple platforms, it is based on Windows Mobile 6.5 and for those that want cutting edge, there isn’t anything more cutting edge than the eXpo this year. 

For some people these Windows Mobile 6.5 phones could actually be better than a Droid or iPhone.  Why did Microsoft toss in the towel?

Why Tech Companies Don’t Get Marketing
I’m often faced with the comment, “gee we don’t want to go out and market something we know is inferior” which would be like a sports team saying, “gee I’ve seen the stats, let’s not play because the other guys are going to win anyway”.  

When Apple first launched the iPhone in January, six months before it was available in stores, it was a largely non-functional brick.   When it did show up it was overpriced, it underperformed other Smartphones which were 3G (and initially it wasn’t) and it didn’t even have an application store yet.  On paper it wasn’t very competitive but it was different and Steve Jobs and his team were able to showcase the device in its best light and their launch numbers have yet to be matched by anyone in this segment.  

The iPhone is now top rated and this top rating comes as a result of both improving the phone and changing dramatically how folks view phones.   Before the iPhone small flip phones were the most popular and successful Smartphones came with keyboards.   Apple invested in changing both the device and the way Smartphones were compared so they could win shoot outs and now largely dominate the mindshare (and most of the profit) of the Smartphone market.
 
The Droid is far from perfect but Verizon (not Google which also has a marketing deficiency) took the lead and drove into the market with its “I don’t” campaign  (funny spoof on that here) borrowing a page from Apple’s Mac vs. PC playbook.  It doesn’t hurt that Verizon (also according to Consumer Reports) is the highest rated carrier in the US followed by T-Mobile (which lacks Verizon’s 3G coverage).  As a result it sold twice what the Palm Pre did on its opening weekend and while it  underperformed the iPhone it still was seen as having a successful launch. 

Verizon spent money on challenging the iPhone and got a nice early Christmas present for what remains an imperfect phone.  What folks don’t seem to realize is there is no perfect phone, people have different needs otherwise we’d all drive the same car, live in identical houses, and wear identical clothes.
 
Wrapping Up:  You Sell What You’ve Got
So many technology companies just don’t seem to grasp that perceptions are what sell products.   Is a Hyundai really better than a Lexus?  No but it is competitive and it is cheaper, a lot cheaper, and so it sells well.   When Steve Jobs first came back to Apple (from the book Inside Steve’s Brain) he had crap for products, he still sold them as if they were great and the company survived to fight another day.  

The lesson here is you sell what you’ve got and Windows Mobile 6.5 is competitive.   For business use it is top ranked according to Consumer Reports and the iPhone and Android phones didn’t even make that list.   What you should learn from this is that perceptions are 100% of reality, something that Apple lives, and if you can control perceptions you can steer a market.   If you can build a product that exceeds the perceptions you control then you can own that market, this is Apple’s lesson.   I can think of a few folks who need to learn it. 

One final thought, Apple owns the iPhone but Microsoft doesn’t own any of its phones and Verizon, not Google, is who drove the Droid sales efforts.   This still leaves me wondering if marketing isn’t just the symptom of the problem and the real problem is that to win in this market you need to own the entire phone and can focus on the customer.   Something to watch as we see these battles play out.   

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.