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Don’t Count Microsoft Out of the Ultra-Mobile Computing Wars Just Yet

Courtesy of Reggie Middleton

In anticipation of its renewed push into the ultra-mobile computing fray (what most other sites call the smarth phone market), Microsoft has decided to “prime the pump” to regenerate developer interest in its platform. I have started covering this in detail, see:

  1. There Is Another Paradigm Shift Coming in Technology and Media: Apple, Microsoft and Google Know its Winner Takes All
  2. The Mobile Computing and Content Wars: Part 2, the Google Response to the Paradigm Shift
  3. An Introduction to How Apple Apple Will Compete With the Google/Android Onslaught

I recommend that my readers NOT underestimate Microsoft’s ability to come from behind on this one.  Out of the three competitors that I feel have the most potential – Apple, Google/Android, and Microsoft – Microsoft is the only company to have:

  1. A fully established and pedigreed cloud ecosystem for the enterprise (Google’s Docs and Gmail apps are relatively new in comparison, and Apple has only burgeoning consumer offerings that have been recently launched).
  2. The most advanced audio/video client side interface with both streaming and subscription services, to be offered through the Zune interface of Windows Mobile 7. For those who haven’t used it, the new Zune software/hardware combo puts iTunes to shame. Google doesn’t have a comparable offering of note.
  3. The de facto standard Office productivity platform, which also happens to be very, very difficult to replicate and/or reverse engineer. It also happens to be, by far the most feature rich. One should expect enhanced compatibility between Windows Phone 7 devices and Office apps.
  4. A rich version of Office productivity apps that can run from the cloud (Office 2010, currently available for download).
  5. A steady stream of revenue derived from practically every smartphone sold. Just like MSFT makes money on every PC sold, it also gets a license fee for every smartphone that needs to interactive with Exchange server, which is practically every phone that needs to interact with a Fortune 500 mail server. This is a legacy benefit from being the de facto standard in the enterprise. Whose product do you thing works best with Exchange? Secret APIs?
  6. The only major mobile OS vendor who also owns one of the top top gaming platforms – the X-Box system. Expect rich, 3D/HD, cloud-based X-box gaming to come to a Windows Mobile 7 phone/table  near you. Imagine X-Box Live (a killer app in its own right) with comparable graphics on a Windows Phone with a 4 or 5 inch super AMOLED screen.

For these reasons and more, Microsoft will be a force to reckon with. I’m not saying they will win the ultra-mobile computing wars, but it will be most unwise to count them out due to their bumbling and stumbling – all to be expected from a big company that has been on top for so long, getting fat and losing touch with its true customers due to an unfettered monopoly revenue and profit stream from its cash cow products. If you look closely, Apple is starting to exhibit similar attributes already in its arrogant and unwise handling of the iPhone 4 issues, and the fact that they released it in such a fashion in the first place (Windows Vista reminiscent). Reference An iPhone 4 Recall Will Hurt Apple More By Opening Additional Opportunity for Android Devices Than Increased Expenses.

Share of 2010 Q1 smartphone sales to end users by operating system, according to Gartner.[1]

As you can see from the graphics above, Apple and Google are the minority but are rapidly taking market share from the established companies – Nokia/Symbian, RIM and Microsoft. Apple is growing quickly, but Android is growing quicker, albeit off of a smaller installed base.

From Bloomberg: Microsoft Pays Mobile App Developers to Help It Catch Rivals Apple, Google

July 14 (Bloomberg) — Microsoft Corp. is paying developers to build mobile applications for its Windows Phone 7 system to help it narrow a lead by rival products from Apple Inc. and Google Inc.

The company is providing financial incentives ranging from free tools and test handsets to funds for software development and marketing, said Todd Brix, a senior director at Microsoft who works with app developers. In some cases, Microsoft is providing revenue guarantees, and will make up the difference if apps don’t sell as well as expected, he said.

Microsoft revamped its flagship mobile operating system to recoup market share lost to Google and Apple. To win consumers, the world’s largest software maker needs an ample supply of games, music and navigation apps when handsets with Windows Phone 7 reach stores later this year. Some developers may be reluctant to sign up before they know Windows Phone will lure enough customers, said Kevin Burden, an analyst at ABI Research.

“In no way do they want to say, ‘Trust us, there will be apps at some point,’” said Burden, who is based in Hopkinton, Massachusetts. “If that means paying developers, so be it. It’s a good strategy for them.”

While Microsoft, based in Redmond, Washington, has used similar compensation programs for previous versions of its mobile operating system, it’s devoting a larger sum this time, Brix said. He declined to say how much Microsoft will spend.

“We are investing a lot to attract developers big and small to Windows Phone 7 to let them understand what the opportunity is and provide as many resources as we can to help them be successful on our platform,” Brix said. “We’re open for business and we want to work with them.”

At least four app makers have been approached by Microsoft and offered financial incentives in cash, assistance with development costs or revenue guarantees in exchange for having apps ready at or near the release of Windows Phone 7, said five people with knowledge of the matter. The people declined to be named because the incentive terms are confidential.

Other mobile software makers use different approaches to entice programmers. Apple shares a portion of the revenue generated when consumers buy apps from its online store. The company, based in Cupertino, California, has sold more than 51 million iPhones since its 2007 debut.

Fewer Apps Than Apple

Apple has about 225,000 apps available for the iPhone, while devices that run on Google’s Android operating system have access to some 65,000.

Microsoft is starting from scratch in amassing apps for Windows Phone 7. Its overhaul of the operating system was so complete that programs developed for older Windows-based phones won’t work on the new one. At the end of last year, Microsoft had only 246 apps, according to ABI.

Microsoft rose 30 cents to $25.13 yesterday on the Nasdaq Stock Market. The shares have declined 18 percent this year.

The company’s deep pockets and the likelihood it will keep investing in Windows Phone 7 mean Microsoft may have an easier time luring developers than a smaller company, Burden said.

Developers expect Windows Phone 7 to be successful, three of the people said. Yet it’s difficult to get companies to build software for an operating system that doesn’t exist yet.

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