Microsoft's Mobile Strategy Is A Mess

Microsoft’s mobile gadget strategy is a mess.

This is a serious problem that will prevent the company from becoming a leader in the current mobile platform era.

Let’s start with Microsoft’s newest gadget, the Zune HD. Early reviews are positive: The big screen looks nice, and the software is snappy. But just like its predecessors, it will flop.


Because Microsoft has blocked the development of a critical feature to protect another element of its mobile strategy: Windows Mobile.

While Microsoft has done a decent job aping Apple’s 2007 iPod touch with the new Zune, it’s missing a very important feature from the 2009 iPod touch: The App Store, which is now approaching 80,000 titles and 2 billion downloads since it launched last summer.  Games and other apps are now a huge draw for iPod touch users.  So much so that “playing music and videos” is just one of many reasons to own the device.

So, where is the Zune HD’s app store? It’s stuck in development in another part of Microsoft’s mobile gadget business, where no Zune HD buyer can use it.

Microsoft Zune executive Brian Seitz explained this week that Microsoft’s Windows Mobile division “is tackling the challenge of a mobile apps marketplace right now,” and Microsoft is “trying to get out of the business of building similar things in the company that don’t work together.”

Translation: We didn’t build an app store for the Zune because Windows Mobile is working on an app store, and we can’t compete with Windows Mobile. This is frustrating, because our new gadget (Zune HD) is better than theirs (Windows Mobile), but you know how it is with Windows around here.

No wonder Seitz is frustrated.  What’s good for Windows is bad for Zune buyers.  Zune HD buyers hoping to use their gadget to play games or use apps are now screwed. And likewise, any hope that this Zune will take meaningful market share away from Apple is gone, too.

This is emblematic of Microsoft’s history in the mobile gadget business: Struggling to solve old problems that competitors have already figured out; always following, never leading; and, above all, working so hard to protect the Windows monopoly that it just can’t get out of its own way.  The result is now a big, convoluted mess.

Microsoft is certainly right that it doesn’t need two app stores, especially with different developer platforms. If the iPhone and iPod touch had different app stores, Apple’s mobile strategy would also be a mess.

But Microsoft’s failure to resolve this issue means that the Zune HD will be another dud, because it will probably not be compatible with whatever app platform Microsoft builds for the next few versions of Windows Mobile. (For now, Microsoft is shepherding in a small number of self-selected apps for the new Zune, such as Facebook and Twitter apps, and a few games — complete with pre-roll ads. But that’s not going to cut it.)

In the meantime, most people will continue to just buy iPods.

So what about the next element of Microsoft’s mobile strategy, Windows Mobile?

Well, version 6.5 is rolling out, and it’s as uninspiring as the last few versions. It has nothing on Apple’s iPhone, which continues to improve, and it will likely remain behind RIM’s BlackBerry, Google’s Android, and Palm’s WebOS in developer mindshare. So that will be no help to the Zune guys, either.

Yes, Microsoft is already working on yet another Windows Mobile, version 7. This version “actually looks quite good,” says a plugged-in source in the mobile industry. But it’s “apparently not shipping until late 2010,” our source says, adding: “Maybe too late for it to matter.”

The source is right: By the end of 2010, Apple and RIM will be another generation ahead.  Windows Mobile will once again be running behind the train.

And there’s more. Microsoft bought yet another mobile platform recently–Danger, the makers of the Sidekick platform –Mark Cuban’s favourite device. But so far, that hasn’t helped, either.

In a fantasy world, Microsoft might be able to take all of these resources (and all of its money) and make a platform that has the best of the Zune, Windows Mobile, Sidekick, and Xbox, and roll out a compelling series of gadgets for consumers and businesses that could steal share from Apple, RIM, and the others.

But given what we’ve seen from Redmond over the years, this seems extremely unlikely.  Microsoft has grown so big, so un-focused, and so protective of its legacy monopolies that it just can’t get out of its own way.

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