A couple of months ago, Microsoft consummated its second-biggest acquisition by buying Nokia for $US7.2 billion. Earlier this month it announced it was laying off half of Nokia’s employees, 12,500 people.
Internet pundits, as they are wont to do, have started questioning why Microsoft needs Windows Phone at all. And a couple of them are putting forward some fairly compelling arguments.
Former Microsoftie Robert Scoble (who worked for the company for three years starting in 2003) started this discussion with an interview in Seattle-based tech blog Geekwire.
He told Geekwire’s Taylor Soper,”Give up Windows Phone, go Android, and embrace and extend like you did with the internet. But they don’t listen to me.”
He argues that Microsoft only has 4% market share of smartphones because “they have no apps, and there’s no love for developers of apps. … Windows Phone? I don’t know how you get developers excited by that.”
However, the prevailing wisdom is that Microsoft can’t give up on Windows Phone, no matter its market share, because mobile is eating the world. If Microsoft doesn’t have a mobile operating system, the argument goes, it will be left out of that brave new world.
Poppycock, writes Matt Rosoff, editorial director of San Francisco blog CITEworld and a former analyst at Directions on Microsoft, one of the top market research firms that covers Microsoft. (Rosoff was also a former editor at Business Insider.)
Rosoff says there are three basic arguments for Microsoft having a smartphone operating system at all costs, and none holds up if the phone doesn’t become popular.
If Microsoft doesn’t have a phone it won’t (1) attract mobile developers into its Windows orbit; (2) have a platform that works great with Microsoft’s own software (it can’t trust competitors Apple and Google to play nicely); (3) create next-generation software for mobile.
But without enough market share, mobile developers won’t write apps for Windows Phone anyway, its users will still be using Microsoft software mostly on non-Windows phones, and as for training software engineers, Rosoff quips, “That’s an awfully expensive research project.”
On the other hand, Microsoft’s biggest business today is selling productivity software to enterprises and the Windows devices needed to run that software. There are plenty of companies out there that make loads of money selling software to enterprise and consumers, on both PCs and mobile devices, that don’t also own the operating system (Oracle, SAP, even Evernote and Box).
Rosoff writes: If Windows Phone “is doomed to be a perennial also-ran, what is the point of Windows Phone?”
That’s a good question and one that CEO Satya Nadella should be answering, not just to the pundits, but to his employees, investors and customers.
By the way, the whole article by Rosoff is worth a read.