The war Microsoft should have won

Microsoft had many things in its favor to become the dominant mobile OS, but a number of issues, many home-grown, saw it lose its early start to Google and Apple.

In 2012, Vanity Fair published a long story on Microsoft under Ballmer and the “lost decade.” I’ve re-read it many times and a quote keeps jumping at me:

“You look at the Windows Phone and you can’t help but wonder, How did Microsoft squander the lead they had with the Windows CE devices? They had a great lead, they were years ahead. And they completely blew it. And they completely blew it because of the bureaucracy.” Ed McCahill

The quote speaks to me specifically because I joined Microsoft’s Windows Mobile team as an intern in 2002 and then full time in 2003 and at that time I really felt we had a chance to be one of the leaders in the upcoming evolution of mobile phones into internet-connected computing devices.

For those of you that might only remember the smartphone race as a Android vs iOS battle it is worth providing a brief summary of where we came from:

Our joint evolution towards smartphones started with Personal Digital Assistants (PDAs). Apple famously had the ill-fated Newton. Palm was the first mass-market mobile PDA. Microsoft soon launched PocketPC based on its WindowsCE code base. Symbian (made by European mobile OS company, Psion) in partnership with Nokia pushed the envelope and integrated PDA functionality with the launch of the 9210 Communicator in 2001 (important to note that Nokia had launched a mobile phone with an OS as early as 1996, the Communicator 9000, considered by many as the first “smartphone” and the 9110 in ’98 both running on GEOS).

Nokia 9110 Communicator

So in 1999, when Bill Gates announced the Smartphone initiative based on the WinCE kernel, the OS world was already messy. But one could argue Microsoft had a number of things going for it to win this fight:

So where did it go wrong and how did Microsoft lose the chance to become the leading mobile OS? [NB: In between 2002–2006, I was a measly post-MBA Level-60something member of the Windows Mobile team. These insights are simply my views from having been in the trenches from Microsoft, from having been in the mobile internet space since the early days of WAP and also from having been part of Google’s mobile efforts a few years later. I am sure much more strategic and thoughtful discussions happened in the Boardroom of Building 117]

Source: http://www.economist.com/node/1454300

Having seen the marginalization of the hardware makers in the PC world many of them were hesitant to partner with Microsoft which is why Microsoft was forced to launch its first generation of smartphones with unknown “ODM” HTC. [NB: my job at Microsoft in 2003 was to partner with Samsung and Motorola, the first Tier 1 phone manufacturers, on launching the first branded smartphones, the MPx200 and the i700 in partnership with Motorola and operators around the world. Neither would be a huge initial success]. SonyEricsson would not agree to do a Windows Mobile device until many years later and Nokia…well we know how the burning platform worked out a decade and a half later.

Motorola MPx200 launched with AT&T in September 15, 2003

So in hindsight, the prediction that Bill Gates made in 1999 on the disruptive force that mobile would have was correct. And the bet Microsoft made on a mobile OS had a high likelihood of succeeding. But at it’s height, Microsoft never got above 15% of the Mobile OS market, and as Benedict Evans has pointed out it is now clear that Google and Apple won the mobile war.

Having been in the front lines of the early day of the war many years ago, I have had time to reflect on the various mistakes that I saw inside of Microsoft and then of Microsoft from the outside, and have come to the conclusion that it wasn’t one single error but a number of them that took away a prize that, thinking about the lay of the land in 2000–2005, could have rightfully been Microsoft’s…

And it would be disingenuous to end this post without a link to the infamous video of Ballmer laughing at the iPhone when it launched… “It doesn’t appeal to business customers because it doesn’t have a keyboard…” “Right now we’re selling millions and millions phones a year and Apple is selling zero…” “I like our strategy…I like it a lot!” A few years and billions spent buying Nokia later not sure it was as funny. This reflective Charlie Rose interview in 2014 is also worth a watch.

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Christian Hernandez is the co-founder and Managing Partner of White Star Capital, an early-stage Venture Capital fund backing exceptional entrepreneurs with global ambitions. www.whitestarvc.com

Christian Hernandez

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Geeky tech-guy backing same. Previously co-founder of @whitestarvc exec roles @facebook @google @microsoft. Salvadoran-born Londoner. YGL of the @wef Father ^3