Windows Phone OS has failed pretty abysmally, with global usage hovering around 3% compared to behemoths, Android (79%) and iOS (15%), Windows phone OS is a far third and tittering somewhere between laughing stock of the mobile world and irrelevance. This is a pity because of the tremendous amount of funding that Microsoft has already invested in this arena and also because there is nothing at all inherently wrong with the system. Microsoft has made quite a beautiful and functional OS and it’s truly a pity that such a system is going to waste and not reaching the number of end-consumers that it should be.
One of the primary reasons for this failure is Microsoft’s licensing scheme. Following in the footsteps of Windows OS, Microsoft was hoping to license its operating system for a fee. Unfortunately, the companies desperate enough to pay for the system were ones that were also struggling from becoming obsolete, namely Nokia and similar pre-touch era phone manufacturers. Also, unlike the case with Windows OS in the 70s when the only other real player in the OS sphere was Apple, who had and still has a strict anti-outsider policy (aka, no licensing), there is a third player. Google Android ruined the licensing model in the mobile sphere by making Android free to license. The reason it was able to do so is because Google is fundamentally in the data space; it could care less who uses Android, the more the merrier as far as they are concerned, as long as these users’ data are funneled into Google’s database of everything about everyone ever on the planet. This is terrifying for end users because Google literally knows us better than our parents do but also for Microsoft because of the network effects that come with greater market share.
The first and most important issue is the third-party app ecosystem:
What developers want: developers strive for 1) impact and 2) money, in that order (for people who disagree, money is a close second and often closely coupled with reach of a product).
What developers do not want: developers do not want to work tirelessly on an app for a maximum possible audience of 3% of the world when they could build one for 80% of the world or 20% of the wealthiest and most engaged phone users of the world (if people want my thoughts about the Android volume/market share versus iOS wealth/user engagement debate, I would be happy to oblige some other time but it is not relevant here for Microsoft).
Sorry, Microsoft, but no amount of bribery is going to change that. Recent tactics to pay developers to develop on Windows Phone OS just aren’t going to work in the long-run because developers value the reach of the apps they build. They want to know that people are using their app and feel the importance and prestige of knowing people use it. Short-term payoff tactics will fail to get the long-term diversity of apps that people are looking for. People develop for Windows Phone now as an after-thought. Thus, all the new, “cool” apps are always going to be released on iOS or Android first. This circles in turn back to users: users in the developing world are going to hate this because no one wants to feel second-class or forgotten; they have been and will continue to switch eagerly to easily available alternatives, iOS and Android. This then feeds into a vicious cycle, which threatens to push Windows Phone OS toward obsolescence.
That all sounds really terrible; what can Microsoft do about it?
- License for free and target developing countries: the money Microsoft has spent on building Windows Phone OS is a sunk cost, in economic terms. By continuing on the licensing path Microsoft currently has, Microsoft will drive Windows Phone OS to extinction. If Microsoft wants to save it, it will have to just forget about trying to break even on its investment. It must quickly build up its market share, by offering its OS dirt cheap or free to phone manufacturers in developing countries. China’s XiaoMi, for example, is an excellent target, given the ongoing tension between China’s government and Google. Similarly, Microsoft’s move to make the OS free to license to two Indian companies should be applauded and continued. Penetration into developing countries that are still several years behind in smartphone usage compared to the US is the only way for Microsoft to gain any sort of foothold in the mobile industry.
- Bundle on the enterprise side: Windows Phone OS should increasingly leverage the superior compatibility it could achieve when used in conjunction with Microsoft productivity tools like Office Suite and Outlook. Microsoft, in many ways, has a leg up on the enterprise side as the industry standard for professional collaboration and work. Microsoft should make superior compatibility between enterprise desktop and work phones their differentiation point. Microsoft could bundle enterprise software contracts with Windows Phone contracts in order to boost usership among enterprise customers. With Blackberry hobbling on one leg, Microsoft could step in as the long-term replacement in the work setting. Microsoft must act quickly though, if this is to be their strategy since the increasing trend in Bring-Your-Own-Device to work threatens this advantage as consumers are increasingly looking for that one device that will satisfy both personal and professional uses. In order to do this, Microsoft should emphasis the security of their products. There is definitely a market need for this level of security since even unlikely entrants like Boeing are getting into the ultra-secure phone business. It would be a pity if Microsoft lost, in a market it has always been dominant in no less, to such an unlikely and unspecialized entrant.
- Integrate with the living room: Microsoft’s XBox keeps the company relevant among younger Millennial users. Microsoft should do what Apple seems to be looking toward as well, connecting mobile devices to the living room. I envision Windows Phones with controller sheaths similar to recent game controller add-ons released by Logitech for iPhones. These would allow friends to connect to their XBoxes and game in the living room and on-the-go with their phones functioning as second screens and cordless controllers.
- License Google Play Store: if Microsoft becomes extremely desperate, it should attempt to license the Google Play Store or somehow get Android apps on Windows Phones. If it got to this point though, executives would have to consider very carefully whether or not Windows Phone OS was a sinking boat worth saving. This strategy may or may not make sense depending on the fee that Google charges, the technical difficulty or practicality of incorporating Google Play, and the importance Microsoft endows to keeping their Phone OS alive. If they do deem it important, using Google’s ecosystem of apps as a crutch to keep the OS relevant may not be a poor choice. I could also see Microsoft banding with Amazon’s AppStore. One of the biggest issues with Amazon’s AppStore is its inability to come pre-installed on devices; Microsoft could help on this front and gain increased accessibility to a wider app and content-purchasing ecosystem.
In conclusion, Microsoft can still save Windows Phone OS. It actually experienced the fastest growth of any mobile OS in recent years, which is a great start. It will definitely be an uphill battle though—the good thing is that there is nothing inherently wrong with the product itself but rather with the ecosystem it exists in and the tactics Microsoft has used so far to promote it. Market share will be THE most important thing to its continued relevance or obsolescence and the only way I see Microsoft achieving the market share it needs is by capturing large partnerships and user bases in the developing markets. Otherwise, Microsoft’s complementary ecosystem of third-party apps will continue to falter compared to that of its larger competitors, even if they continue their bribing tactics. Lastly, Microsoft should leverage what it has to build competitive advantages, namely its dominance in the living room (Xbox) and vibrant enterprise ecosystem. Microsoft should try to take advantage of Blackberry’s demise to capitalize on the immense leg-up that it has on the professional side and focus on security to capture corporate contracts.
