Richard Windsor
10 October 2017

Microsoft - Blue Squares of Death

Google is the big winner from Windows Phone’s demise

Microsoft has admitted that Windows 10 on mobile is no longer a focus finally putting to bed any hope (however tiny) that Android handset makers had to escape from Google’s clutches. Their only hope now is that the EU forces Google to make its app store (Google Play) available without having to also install the rest of Google’s ecosystem and set it by default. Microsoft has already wound down the activities that it acquired from Nokia which, combined with barely a mention at developer events like BUILD, has made this fact obvious to everyone but this is the first time that Microsoft has openly admitted this fact. There will continue to be fixes and security patches for a while but no more than that.  Microsoft has blamed the lack of availability of apps and services from third parties as the main reason for the platform’s failure, but we have long believed that there was more to it than that.

The issue with developers is simply that they won’t develop for a platform with very few users as there is no way to make money. Without third party apps and services, it is difficult to get users to adopt a new platform resulting in a typical chicken and egg problem. Consequently, to kick start a platform, the platform owner needs to prime the pump in order to generate interest that will quickly feed off of itself. Microsoft has tried very hard to incentivise app developers by paying them money and even writing the apps for them but this was not enough. We have long believed that to succeed Microsoft needed to encourage both developers and users and it was in the encouraging of users where Microsoft really failed. We can refer to this as the Blue Squares of Death problem.

iOS has always been able to sell itself and Android was also a simple sell as it looked just like iOS except that it was cheaper. By contrast, Windows Phone was very different and as a result, Microsoft needed to explain to users why it was great and how they could live their digital lives with Microsoft. Furthermore, devices in the stores needed to be populated with data such that users would be able to clearly see how the Microsoft ecosystem would make their digital lives easy and fun. Without this data, the demonstration devices were simply screens with blue squares on them preventing anyone not in the know to understand the proposition. This needed to be done in conjunction with the efforts to get developers on board in order to give the ecosystem a fighting chance.

Microsoft’s mobile ecosystem has always scored reasonably well against the 8 Laws of Robotics and users who did use it generally reported a positive experience. It was the failure to educate the users that was the primary reason for the ecosystem’s failure. Marketing has never been Microsoft’s strong point and as a result it simply told users that the ecosystem existed and never explained to them why they should buy it. The net result was that the ecosystem never got enough momentum in order to keep the developers interested resulting in the long decline that we have witnessed.

The real loser here is not Microsoft, which is going from strength to strength in the enterprise, but the Android handset makers. If Windows had become a thriving alternative to Android and iOS then they would have had far more leverage over Google which could have resulted in much better economic terms as well as greater freedom. Unfortunately, with its failure, they are completely stuck giving Google a free reign to continue draining the Android industry of its profits. The one exception is Samsung whose profitability we have long believed comes from its huge volume advantage rather than any differentiation it is able to create on Android smartphones. Despite Microsoft’s failure in mobile, its strategy in the enterprise is going from strength to strength leaving us still comfortable with owning the shares.

 

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