Microsoft is looking to learn from Apple, lock up some sweet revenues with upcoming "Skymarket"

Microsoft is preparing to unveil its next generation PC operating system, Windows 7, either next year or in early 2010.  With the release of the PC OS comes a frequently forgotten co-release -- Windows 7 Mobile.  This new OS is designed to work on cell phones, like Microsoft's previous Windows Mobile OS's.

Though it trails competitor Symbian greatly in phone OS market share, Microsoft is very serious about its cell phone business.  It also feels a surprising level of ownership of the business, despite this smaller market share, reflected in the comments of its CEO Steve Ballmer who once welcomed Google's upcoming Android OS to "Microsoft's world", referring to the phone OS market.

One strong point for Windows Mobile has always been strong third-party application support.  Microsoft claims it has 18,000 applications for its mobile OS.  However, with this strength comes a weakness.  While Microsoft has heavily encouraged mobile developers, it has failed to develop a distribution system for the software and thus misses out on key revenue.  Perhaps the best example of why this is so significant comes from competitor Apple who has much fewer applications and a much smaller market share, but is cashing in big with its "closed system" application store.

Such a concept is not foreign for Microsoft -- it runs the Zune Marketplace and Xbox Live Marketplace.  Now at last, it has unveiled plans to catch up to competitors, such as Apple, by announcing that Windows Mobile 7 will come with an applications store named "Skymarket", through which Microsoft will control the distribution of applications compatible with its OS according to CNET.  The move follows Google's announcement last week that it would have a similar store titled Android Market, for its own upcoming phone OS.

Microsoft also posted job ads with the description:

A unique opportunity and time of rapid change in the mobile industry for a senior product manager in the Mobile Communications Services team to drive the launch of a v1 marketplace service for Windows Mobile.

The advertisement goes on to state that key responsibilities include "preparation and driving the cross-group collaboration for the initial launch of the marketplace offering to the developer community this fall."  This bit is rather surprising because it indicates that Windows 7 Mobile may be launching before Windows 7, perhaps in an attempt to ward off Google's Android OS which is set to hit the market late this fall.  Windows Mobile 7 wasn't expected until Q3 or Q4 2009.

With Apple raking in $30M USD in revenue from its store in its first month of operation, and with Google preparing a similar store before its OS is even released, some critics say that Microsoft missed the boat.  Still, it is making moves to remedy any such errors and pounce on this lucrative income source.

Many are hopeful as well that the new applications store will be less closed than Apple's system.  Apple strictly regulates its software and regularly rejects software.  It also maintains a kill switch that can disable applications on users' cell phones.  Some in the analyst community have speculated that Microsoft's emulation of Apple's closed system will only go so far as its economics, not these strict policies.  They argue that to adopt such practices would place the electronics giant in danger of more accusations of monopoly (despite the fact that Windows Mobile is far from a monopoly in market share).

"Paying an extra $500 for a computer in this environment -- same piece of hardware -- paying $500 more to get a logo on it? I think that's a more challenging proposition for the average person than it used to be." -- Steve Ballmer

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