Bill Gates tells a German reporter that the software giant won’t try its hand building an iPhone-killer smartphone anytime soon. Instead, he says, Microsoft will just continue to furnish its Windows Mobile operating system to other phone makers, like Palm, HTC, Motorola, and others.
We think this is a mistake. The smartphone market is exploding: Citigroup projects 50% – 60% annual sales growth for the next several years. Consumers, not businesses, will lead that growth. And besides Apple, few companies are as well-positioned to make a killer smartphone as Microsoft.
Why? Consider Microsoft’s presence in your home, office, and online. Despite Apple’s recent success, Windows still dominates the computer market. Microsoft’s Xbox 360 video game system is selling well — 4.3 million units last quarter, more than 17 million to date — and could soon double as your set-top box. The company’s Exchange email server still dominates corporate email, and should for a long time. Yet phones running Windows Mobile have done a lousy job connecting the dots. And companies building Windows Mobile phones today — HTC, Samsung, Palm — are only getting more new options for mobile operating systems, like Google’s Android.
How can Microsoft fix this? By taking the best parts of its existing products and putting them together in an attractive mobile device.
First steps: Scrap Windows Mobile — it’s a joke compared to the iPhone’s portable version of OS X. Figure out a way to sync your phone and PC media as well as — or preferably better than — Apple has done. Take the best features of the Zune 2 (better looking than pretty much every Windows Mobile phone) and Xbox and squeeze them into a phone. Design portable versions of Outlook, Word, and Internet Explorer that are a breeze to use. Give us awesome mobile maps with GPS and a portable Windows Media Player that plays anything, like Amazon Unbox downloads and TV shows we’ve DVRed with our Vista PCs. And give us a mobile version of Halo that looks better than any game on the PSP.
It will take at least a year for Microsoft to design the hardware and software. In the meantime, it needs to find carrier partners, figure out how to hook the phone into Xbox Live and the Zune store for over-the-air gaming and media downloads, integrate elegant (and money-making) mobile ads via MSFT’s ad network, and get the thing into stores. This won’t be easy, of course, but it’s not impossible. And if Microsoft does a good job, it could sell a ton of phones.
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