Microsoft Muted, Not Maimed, by Apple

While the tech industry was all atwitter over Apple Inc. (Nasdaq: AAPL)'s Worldwide Developer's Conference yesterday, Microsoft Corp. (Nasdaq: MSFT) has been quietly holding its own developers' TechEd event in New Orleans.

This won't be the last time that Apple messes with Microsoft's plans either. Its entire road ahead just got tougher, thanks to Apple's next iconic device. Microsoft is counting on its upcoming Windows Phone 7 (WP7) to help it stave off the competition, but it has yet to release any devices to prove it's capable of doing so. (See Apple Unveils the iPhone 4.)

"We're driving forward in the phone business, but this is a very dynamic business, the market leaders here have shifted over twice in the past few years... So we've got to have real ideas and we've got to execute consistently," Microsoft CEO Steve Ballmer admitted at the recent D8 Conference.

Yet while Ballmer's been busy talking about its complete mobile reboot, Google (Nasdaq: GOOG), Apple, and others have been unveiling actual handsets. In the first quarter of the year, Windows Mobile came in fifth in terms of operating-system market share, behind Symbian Ltd. , BlackBerry , iPhone, and Android. It is foreseeable that Microsoft's market share will continue to fall until the company introduces its first WP7 handsets, slated for the holiday season, and the new-and-improved iPhone won't help its case. (See Gartner: RIM, Android See Boosts in Q1.)

Luckily for Microsoft, it's a company that thrives under pressure, according to Michael Gartenberg, a partner at research firm Altimeter Group . There's room for Microsoft, Apple, and a host of other handset makers in the market, he says. There may be a lot riding on the launch of WP7, but Microsoft is well-equipped to compete.

"For anyone discounting Microsoft's mobile efforts or thinking they will get out of the space or not continue to play in it, you underestimate Microsoft and Microsoft's resources at your own peril," Gartenberg says.

Microsoft's best resource is its developer community, he adds, quoting Ballmer's mantra of "developers, developers, developers." The company has always put a lot of effort into developer evangelism, which will be even more important for WP7.

Microsoft has made several promises to developers this week at TechEd already, although most were lost in the Apple news cycle. This included that they are no longer limited to five paid app submissions per year under their $99 annual fee. Now they can submit unlimited apps -- if they are paid. Free apps will still be limited to 5 per year with a $19.99 charge for each additional app.

Microsoft also let developers know that development hardware, unlocked devices for developers to test their apps on, will be available "very soon."

Microsoft's other resources include that it has its own media and content store, Marketplace, to rival iTunes, tight integration with Exchange and its suite of Office products, and a strong enterprise appeal working in its favor. To bridge the gap to the large consumer audience, the vendor has suggested it will also meld its recently released Kin 1 and 2 handset features, including social network aggregation, with WP7 in the future. (See Has Microsoft Missed Its Mobile Moment? and Microsoft Has Two New Kin.)

Among Microsoft's planned WP7 devices is the Dell Technologies (Nasdaq: DELL) Lightning, which features a larger display, limited support for multitasking and potentially the ability to tap long-term evolution networks. Microsoft partners High Tech Computer Corp. (HTC) (Taiwan: 2498) and LG Electronics Inc. (London: LGLD; Korea: 6657.KS) have also both promised WP7 smartphones before the year's end. (See LTE Watch: Dell to Intro '4G' Phone?)

One of the most interesting announcement to come out of Apple CEO Steve Jobs keynote yesterday actually supports Microsoft's competitive positioning against Apple, but reinforces it has bigger fish to fry. Jobs said that Microsoft's Bing search engine would officially be part of the iPhone ecosystem. In Gartenberg's opinion, this means that Apple doesn't view Microsoft as the monster competitor in the space right now -- an opinion that Microsoft likely shares as Android encroaches on both.

"This will be a real hugely competitive space because you have such strong players involved," Gartenberg says. "HP Inc. (NYSE: HPQ), Google, Microsoft, Apple, Nokia Corp. (NYSE: NOK), RIM -- all competing with different business models, but for the same market space. Only a few can survive long term. In order to do that, they have to play the game."

— Sarah Reedy, Senior Reporter, Light Reading Mobile

joset01 12/5/2012 | 4:32:59 PM
re: Microsoft Muted, Not Maimed, by Apple

At least in NYC, I find the subway a useful barometer to understand what mobile devices people like. The iPhone was pretty evident on the train ride into work within a couple of weeks of the initial device going on sale. I haven't seen a single Kin yet.

The Windows 7 phones are going to need to be AWESOME to help Microsoft recover some status in the mobile market. The Kins don't seem to be doing it yet even though they have advertised the hell out of them.

sarahthomas1011 12/5/2012 | 4:32:58 PM
re: Microsoft Muted, Not Maimed, by Apple

Yah, I've never seen a Kin...ever. It seems to me that announcing the new OS so far ahead of actual devices might not have been the best strategy. Apple only makes you wait two weeks to confirm its awesomeness. Microsoft can't keep the hype up.

ntflavio06 12/5/2012 | 4:32:57 PM
re: Microsoft Muted, Not Maimed, by Apple

Microsoft, or better known as Microslop does not have the DNA to make anything exciting.  Just look at their track record when it comes to consumer products: Zune, Xbox, Windows Phone, Bob (of all things Bob) and so on.  They understand the enterprise, but unfortunately, if they think they can conquer the Mobile Market with one release after one failed release after another starting with Windows Mobile 5.5 and on, they are dreaming.  Especially when it comes to companies like Apple, Google and RIM who are not only locking enterprise customers but also appeal to the consumer, Microsoft just does not have the creativity and ingenuity to create things that excite people.

Microsoft should stick to what they know, which is enterprise software and expand from there.  But please, Microsoft still needs to do a lot of growing up and learning from it's mistakes and realize it's strengths and weaknesses rather than chasing on other people's coat tails when it comes to technology.

FredStein 12/5/2012 | 4:32:57 PM
re: Microsoft Muted, Not Maimed, by Apple

MSFT did speak out, muffled, garbeled, out-done, but not muted.

And they were maimed. Basically they said - "But wait, wait for me I'll catch up. Hey look at me, I'll fix the restrictritions on developers. Hey guess what, it's all about developers."

What's tangible in the announcement? Release dates form MSFT are fiction, maybe they'll make it, maybe the release will be a product or maybe an buggy beta. What about units shipped? How about reaching Apple's $B in AppStore revenue.

I have to laugh. It seems 2 years ago, PALM tried the same trick to get journalists to compare them the the iPhone. Heck, it worked for Avis.

DCITDave 12/5/2012 | 4:32:55 PM
re: Microsoft Muted, Not Maimed, by Apple

My uninformed take on what MSFT should do:

* MSFT should buy RIM and beef up their enterprise offer. I've never seen a phone that had better MSFT integration than the Blackberry Curve (running on Verizon).

* MSFT should push the integration between Mediaroom and ALL phone OSes, even that crappy Windows offering. They have a real advantage there and it's now clear why so few of the excellent features that Mediaroom is capable of are making it to the market. Maybe the IPTV operators themselves are slowing things up.

Those two things would make MSFT a much more compelling mobile devices company.

FredStein 12/5/2012 | 4:32:54 PM
re: Microsoft Muted, Not Maimed, by Apple

Well said, ntflavio,

Sadly, Ballmer is the last person to help MSFT learn from their mistakes. His only skill is to be the cheerleader. He is NOT a leader. He WAS a great leader long ago when the industry was immature, and bold moves created first mover advantage.

paolo.franzoi 12/5/2012 | 4:32:54 PM
re: Microsoft Muted, Not Maimed, by Apple


I think Microsoft has to answer two questions:

1 - If they are not going to build handsets themselves, then who would build Windows based handsets today?

2 - Under what basis do they plan to compete in the market aka what are they planning to tout as their competitive advantage?




DCITDave 12/5/2012 | 4:32:53 PM
re: Microsoft Muted, Not Maimed, by Apple

I'll take a shot at your questions on MSFT's behalf (they don't read our Web site):

1. HTC. Or Samsung. Both have cutting-edge design potential with a willingness to compete with Apple.

2. Dunno. They're kind of becoming the new Yahoo. There are some great products and services out there, but there's so much mediocrity that it's hard to find out what the company's really good at.

Gabriel Brown 12/5/2012 | 4:32:53 PM
re: Microsoft Muted, Not Maimed, by Apple

It's quite a turn-around. I recall there used to be $10 a unit licence fee for Windows Mobile.

Android, Symbian, Maemo/Meego are now verging on open-source and free (sort of, with lots of caveats, etc, but still...).

joset01 12/5/2012 | 4:32:52 PM
re: Microsoft Muted, Not Maimed, by Apple

HTC -- and Samsung to a lesser extent -- are so in bed with Android and its those phones that are getting the buzz.

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