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The Windows Mobile era took a heavy toll on Microsoft's mobile efforts

In a new candid interview with CBS Corp.'s (CBS) titular station, Microsoft Corp. (MSFT) co-founder and famed philanthropist Bill Gates discusses his former company's struggles in the mobile era.  Microsoft today accounts for less than 5 percent of the smartphone market, according to most estimates.

For a time, Microsoft held nearly a quarter of the fledgling smartphone market (circa 2004).  But it failed to keep up with rivals like Google Inc. (GOOG) and Apple, Inc. (AAPL), sticking for years with the increasingly dated Windows Mobile platform.  In November 2010, Microsoft launched a new operating system, Windows Phone, which was ambitious but lacked strong third-party hardware support.  Today Microsoft is still struggling to sell the market on its latest mobile OS -- Windows Phone 8.

Bill Gates in the interview calls Microsoft's former cellphone strategy "clearly a mistake", remarking, "There's a lot of things like cellphones where we didn't get out in the lead early.  We didn't miss cellphones, but the way that we went about it didn't allow us to get the leadership."


The tech icon says that both he and current CEO (and close friend) Steve Ballmer are both incredibly "self-critical".  He comments, "He [Ballmer] and I are not satisfied that in terms of breakthrough things that we're doing everything possible."

Steve Ballmer
Steve Ballmer's company has struggled in the mobile era, since Mr. Gates' retirement.
[Image Source: SFGate]

Mr. Gates expressed confidence, though, that it's not too late for Microsoft to claw its way to a significant mobile market share.  He's a big fan of Windows 8 and Microsoft's Surface tablet.

Microsoft is reportedly aiming to unify the Windows and Windows Phone platforms under one consistent set of mostly overlapping APIs and user interface themes, to allow users to feel more comfortable with both form factors, and to help developers save time deploying cross-platform apps.  The first unified release, Windows Blue, may land late this summer.

The revisions are also accompanied with some big leadership change.  Windows President Steven Sinofsky was driven out and new rising stars are taking his place at the company.  Some investors have called on CEO Ballmer to step down, but for now Mr. Ballmer is hanging tight in the top spot, vocal as ever.


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RE: Windows 8 Phone is great
By BabelHuber on 2/19/2013 9:30:36 AM , Rating: 2
quote:
It depends what you mean by a problem. I can think of two ways a much bigger Android market share, especially one based on unit price, could be a problem for Apple.


Look, it is really simple:

Android has much higher sales and hence a higher market share. Also, the delta is still growing.

Historically, the OS with the biggest market share always attracted the most developers and hence had more software available.

Apple was able to escape this trend only because they only sell high-priced devices.

But as the delta regarding installed base of Android and iOS widens, Android catches up (= the delta in App sales shrinks).

So IMO Apple has to decide if they want to become a niche player again, or if they want to compete in the mass market.

If they do the former, it is only a matter of time until they get overtaken by Android regarding Apps downloads, App Store revenue etc.

quote:
Only Apple and Samsung are succeeding all other players are either stagnating or failing.


IIRC Samsung has ca. 40% of Android's market share. But Huawei is growing, Sony is growing, Lenovo is growing and ZTE is growing.

So while HTC and LG clearly have troubles, the Chinese Android manufacturs don't.

Samsung must be careful, the new players are nothing to laugh about.


RE: Windows 8 Phone is great
By Tony Swash on 2/19/2013 11:24:27 AM , Rating: 1
I think your response perfectly encapsulates the the wide spread but wrong view about what is going on in terms of platform performance in the mobile space. This statement in particular is noteworthy.

quote:
Android has much higher sales and hence a higher market share. Also, the delta is still growing.

Historically, the OS with the biggest market share always attracted the most developers and hence had more software available.


What you have done is take a proxy indicator for developer revenues (and thus developer interest), market share of units sold, that was useful in the PC markets and without really thinking it through transposed the same proxy indicator to the mobile markets where it turns out to be not at all useful.

The quickest way to illustrate how poor market share is as a proxy of revenue in the mobile space is to simply consider the figures. Android units are out selling iOS units and have been doing so for quite some time, the installed Android base is now larger than the iOS installed base. And yet Android developer revenues are only a quarter of iOS developer revenues. Why Android developer revenue is so poor compared to iOS is an interesting and intriguing question but for the sake of the issue under discussion here the important point is what are the consequences of those figures. From the developers point of view a user is only of interest if they are willing to pay for the developers product, and currently developers see several times the revenues coming from an average iOS user compared to an average Android. The consequence of this for software is that the majority platform is not hosting the best software, there are no Android only killer must-have apps and there are more high end and quality apps on iOS. The software gap is even more stark on the tablet front where iPad has 300,000 apps specifically designed for tablet use and Android has only a few hundred.

It is of course possible to claim that at some point in the future all this will change, but unless one can convincingly explain why the current disparity between the software strength of iOS and the relative software weakness of Android exists then to claim it is about to vanish is pure speculation.

It is worth noting that software strength os only one metric for measuring platform performance and that iOS out performs Android in many other measures of platform strength.


RE: Windows 8 Phone is great
By BabelHuber on 2/19/2013 12:17:30 PM , Rating: 2
I don't know why you selectively quotet my post:

You quoted:
quote:
Android has much higher sales and hence a higher market share. Also, the delta is still growing. Historically, the OS with the biggest market share always attracted the most developers and hence had more software available.


But you 'forgot' the second part:
quote:
Apple was able to escape this trend only because they only sell high-priced devices. But as the delta regarding installed base of Android and iOS widens, Android catches up (= the delta in App sales shrinks). So IMO Apple has to decide if they want to become a niche player again, or if they want to compete in the mass market. If they do the former, it is only a matter of time until they get overtaken by Android regarding Apps downloads, App Store revenue etc.


Got it now?

Or, to put it differently: Percentage-wise, more Apple Users seem to download paid Apps than Android-users.

The reasons for this are unimportant here (e.g. pirating, lots of third-world Android user with low-end phones etc.)

But the delta between the Android installed base and the iOS installed base gets bigger (452 Million Android phones vs. 136 Million iPhones sold in 2012).

So, as this delta gets bigger, obviously the delta regarding App Store revenue gets smaller.

So as long as Andoid outgrows iOS, it gets more and more interesting for developers.

OTOH you forget that most developers aren't trying to create the next Angry Bird.

Instead, most of them are doing work like creating Apps for other companies (e.g. banks, insurances, TV channels and whatnot).

In this area having an Android- and an iOS-App is a must anyways.


RE: Windows 8 Phone is great
By Cheesew1z69 on 2/19/2013 12:26:59 PM , Rating: 1
quote:
I don't know why you selectively quotet my post:
Two words, Tony and Swash...


RE: Windows 8 Phone is great
By Tony Swash on 2/19/13, Rating: 0
RE: Windows 8 Phone is great
By karlostomy on 2/20/2013 4:07:44 AM , Rating: 3


So, all I did was point out that ios is getting pummelled by Android in marketshare growth and installed userbase.

1 day later, Tony has provided us with 1100 words carefully concocting a story about how and why this is a bad thing for the Android ecosystem.

rofl.


RE: Windows 8 Phone is great
By robinthakur on 2/20/2013 7:51:43 AM , Rating: 3
quote:
third-world Android users


You summed it up perfectly. With phones available across all price ranges, inevitably, not everybody is buying or able to buy a Samsung Galaxy 3 or a Note 2 (the nearest thing to an iPhone equivalent in terms of processing power, and standardisation of platform for Android) and has a correspondingly lower expectation of what app and games can do. When I bought an S3 and moved from iOS I was shocked at how few decent games there were that could use the device properly and show it off, considering how much it cost. Needless to say, I bought an iPhone 5 when it got released and am still using it happily as my main phone.

The fact that games are able to be downloaded by users with less capable phones then run really badly or crash constantly probably doesn't endear the platform to them based on their experience. If you read any reviews for even something like Temple Run 2 on the Google Play Store, there are loads of people that appear not to even be able to run it. I knew there had to be a reason that whenever I see somebody with an Android phone on the underground, they are playing something incredibly basic like match the colours or something.

This could still impact iOS badly though, as developers might target low end Android devices as their preferred lead platform based on their volume, then iOS and high end Android devices would all suffer the same crappy experience.

Since the poorer users cannot be so easily monetised, they hold little appeal for developers at present, but Tony you shouldn't assume this status quo will always be in place as country's economies rise and fall. Whilst I do not disagree with your analysis of Apple's financial performance right now, how will this be impacted when every Android device looks like an iPhone in all but name (BB Z10 and HTC One for example already steal the look and feel of iPhone5's chamfered edges and segmented back) but has higher functionality. At this point, power users, aka early adopters and innovators start to migrate to the Android Platform, some of which will be developers. Apple's financial model then starts to unravel as there are no longer the users to buy the phones and the content, because their device is no longer as desirable. Apple needs to do something to make iOS desirable once again, and I'm not talking releasing a retooled Podcast player or an app to order gift cards...I'm holding out for Jonny Ives revamp of iOS's look and feel personally, but won't hold my breath based on their recent missteps.


RE: Windows 8 Phone is great
By Jeffk464 on 2/20/2013 9:48:49 AM , Rating: 2
Great I'm happy you prefer your iphone 5, please send me your galaxy s3


RE: Windows 8 Phone is great
By Mitch101 on 2/19/2013 11:33:52 AM , Rating: 3
Also consider Microsoft makes money on Android sales so Android Winning 23% more market share is 23% more royalties to Microsoft.

The only way Microsoft loses is when Apple wins and the iPhone 5 is not winning people over its turning them away.


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