How Microsoft Blew It in Mobile

“The sad part for Microsoft is that in terms of operating systems, they have a great one, and they had it long before anyone else did,” Hoddie said in a phone interview. “Their first problem is the built-in apps are uninspiring, so that sets a very low bar for developers who are coming to the platform.”

Hoddie compared Windows Mobile to the iPhone, whose apps he described as “beautiful,” which encourages third-party developers to produce apps of similar quality.

He added that Microsoft’s second problem is segmentation in the hardware ecosystem. Windows Mobile ships with several different manufacturers’ hardware, including HTC, LG, and Samsung. The problem? From a developer perspective, that requires coding an app for several phones with different UI styles, buttons, and screen sizes. (The same problem, incidentally, has started to plague Android developers.)

That would give the iPhone another advantage: The iPhone operates on a closed system, which can only run on Apple hardware, meaning third-party developers can produce apps and games that work exclusively with the iPhone. Therefore, despite Apple’s questionable and controversial approval policy for iPhone apps, developers can code one app that works with 40 million iPhone and iPod Touch devices, which is less time consuming than developing several versions of one app for a variety of Windows Mobile smartphones. In turn, that spells out to a larger number of apps in the App Store, which enables Apple’s hardware to cater to a larger and broader audience.

The inability to recognize the new smartphone audience is another one of Microsoft’s flaws, Rubin said. Microsoft’s mobile OS history is rooted in personal digital assistants, which were marketed toward enterprise audiences. Today, the smartphone has shifted into the mainstream as a consumer device, and yet Windows Mobile is still largely focused on enterprise features.

And even in the enterprise market, Apple's iPhone is winning. In a recent customer satisfaction survey conducted by J.D. Power, Apple grabbed the No. 1 spot for smartphones in business. How? J.D. Power found that more than half of business smartphone owners reported downloading third-party games for entertainment, and 46 percent report downloading travel software such as maps and weather apps. That would suggest enterprise users are interested in mixing business with pleasure in their devices—and the iPhone’s wealth of choices in the App Store covers those needs.

“I would say Microsoft needs to err more on the side of going too far into the consumer segment versus trying to achieve a good balance between enterprise and consumer features at this point,” Rubin said.

Despite Microsoft’s recent shrinkage in the mobile OS market, it’s not over for Windows Mobile. Rubin said he expects Microsoft to redeem itself with its next OS—Windows Mobile 7—as it did with Windows 7 after negative reception of Windows Vista.

Microsoft declined to comment on details about Windows Mobile 7, but a spokeswoman said mobility is one of Microsoft’s top investment areas, and the company’s mobile strategy will not change.

“The company’s mobility strategy has not changed; it is and has always been to provide a software platform for the industry,” a Microsoft spokeswoman said in a statement. “The company works closely with many mobile operators and device makers around the world because people want different experiences on a variety of phones.”

Leaks indicate Microsoft plans to incorporate iPhone-like touch gestures. Windows Mobile 7 is scheduled for a 2010 release.

“Microsoft believes the Windows brand is very strong, and consumers associate the Windows brand with enabling them to do what they need to do in their digital lives, at least on the PC,” Rubin said. “In general, with this whole Windows phone terminology, Microsoft is trying to do more to leverage what it believes is the goodwill value of the Windows brand.”

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