Saturday, 10 October 2009

Is Microsoft playing possum?

This week’s critical drubbing of Windows Mobile 6.5 may give Redmond something to smile about.

Back in the day, Microsoft used to get it in the neck from the Feds, from the developer community and from the industry at large. It seemed that whatever they did provoked ire. From their heavy handed negotiations with PC manufacturers, to their wilful bundling of useful new features into their market dominating operating system.

How times have changed. These days, it just doesn't seem sporting to bait Microsoft. They appear to have lost the search engine wars (with Bing proving to be more of a Blip); they've lost the digital music wars (with Apple enjoying Windows-like market domination for their ubiquitous iPod & iTunes ecosystem); and then there's the sorry tale of Windows Mobile - a product that is hard even for Steve Ballmer to love.

So what's eating Microsoft? They have some of the best and brightest minds in the world cooped up in their Redmond campus, and yet, time after time, they appear to fail to deliver, ceding one sector after another to an arch rival… Or do they?

Superficially, Microsoft may not seem much like a possum. After all, possums are cuddly-looking and cute, whilst Microsoft is testosterone-charged and sweaty. But perhaps they have more in common than meets the eye. North American possums (or technically "opossums") have developed the remarkable ability of feigning sickness and injury to evade a predator: they "play possum", exhibiting the unsavoury behaviour of looking and even smelling like a sick or dead animal, thus repelling their enemies.

Could Microsoft be employing a similar strategy? Certainly, their predators’ attentions are elsewhere. President Obama's new antitrust czar at the Department of Justice, Christine Varney, is famously quoted as saying "For me, Microsoft is so last century. They are not the problem." Instead, the U.S. economy will see problems "potentially with Google."

The truth is that Microsoft's high profile failures mask their rude health and notable success. It's a significant but oft-overlooked fact that Microsoft earns money on the sale of every iPhone, through its Exchange ActiveSync Licensing Program. As Apple, Palm and Blackberry battle it out for domination of the emerging mainstream smartphone sector, you can rest assured that Microsoft will win regardless the outcome, since interoperability with Exchange is a prerequisite for the success of any handset. And that means a healthy Microsoft tax on every handset and server sold. That poor old possum, Microsoft, must be weeping all the way to the bank with Apple's recent success.

Far from losing sleep over the poor reviews garnered for Windows Mobile 6.5 this week, perhaps the folks at Redmond were uncorking the champagne, as another brilliant, yet dastardly strategy reaches fruition.


  1. Actually, your "possum" analogy is mnre accurate than you realize, since possums are not cuddly and cute:

    I live in the heart of possum country in southern Georgia USA. To us, they are truly gross and ugly, as the picture well depicts.

  2. Hi Scott - thanks for the info - I see what you mean, no so cute after all :)

  3. No.

    No company with a huge maze as its HQ would ever willingly opt out of an industry as immediate to MS as mobile. The rest of their lines (Bing, Office, Exchange, etc.) would risk oblivion if MS were to skip on a 2-billion-unit market.

    It's now been 2 whole years after the iPhone, and MS still can't find the right mobile strategy. On one side, their beloved licensing model is under attack by the scheming Google. On the other hand, their alternative, Project Pink turns out to have been stupidly conceived and led by an incompetent lady. Not to mention Pink's horrifically ugly designs and fitting nomenclature that make WM7 look good.

    What worked 20 years ago in the desktop will not necessarily work now in mobile. There are a billion dumb phones worldwide left to be upgraded in the next decade, so the handset war is far from over.

  4. Hi ChuckGee

    Microsoft essentially has two profitable businesses - Windows Desktop (including Office) and Windows Server (including .Net and Exchange).

    Everything else breaks even at best. The key to shareholder value for Microsoft is to preserve their core profitable businesses, whilst offering some (meaningless) sizzle to excite whimsical investors (e.g. Bing, Live, etc), and keeping the anti-trust police distracted.

    If Microsoft didn't pretend to be competing and losing all over the place against more successful enemies (Apple in music and smart phones, Google in search and cloud services), their ongoing desktop and server monopolies would attract greater scrutiny and criticism.

    Having said all that, a company as larger and unwieldy as Microsoft is incapable of executing on a single-minded plan (unless it has someone remarkable like Steve Jobs at the helm), so things like the acquisition of Danger and Project Pink are just evidence of incompetence at the periphery.

  5. Hi Graham, I really like the thought you put into your posts along with the neat mockups. Bookmarked.

    I don't think Microsoft is reserving anything in the mobile space. As far as mindshare, Google is and will be the company that attracts the most attention from regulators for its vast data mining, so that is hardly an excuse for Microsoft's failings.

    I feel you're overstating Microsoft's , perhaps because of recent European sanctions imposed on web browsers.

    Recent Windows Mobile 6.5 ad campaigns show how hard Microsoft is trying to leverage all the dominance of their Office apps. The problem is they have been doing that for a long time before the iPhone. Yet, the experience has always been horrible with an interface that is mostly a lazy port of the desktop. Overall, a complete and utter disregard to the handheld form.

    Windows Mobile seems distant to fail now that Google is bailing out every handset manufacturer from either developing their own OS from scratch or paying up for each Windows Mobile copy. At this point in the game, Microsoft can't compete with a free, open platform that exploits Google's superiority in cloud apps or provide any advantageous differentiation making its licensing worthwhile.

    Microsoft's business model, much like that of the record labels, has been diminished not by lack of vision in creating the next generation technologies, but by clinging onto the status quo. Microsoft has devolved into IBM of the 1980s.

  6. Hi Sebastian,

    Thanks for the feedback - it really help to encourage me to keep posting.

    I am overstating the Microsoft argument here - partly for comic effect. I don't doubt that Microsoft would put out a better handheld OS if they had one, and given their vast resources, it is indicative of shockingly bad management that they don't have one.

    I guess in this piece, I wanted to highlight that the advantages of Microsoft's entrenched Windows/Office monopoly, continue to play out in this new space, even when they fail to deliver, meaning that Microsoft will continue to perform well, even as they execute badly.

    Equally, I think that a lot of analysts are overstating Google's strengths. IMO, Android is only popular with handheld manufacturers because it's free - not because it's good. It exploits the Google advantage only insofar as the superstition that the industry currently has for anything released by that particular company. It's actually just another consumer-unfriendly Linux distro, and we have plenty enough of those already.

    The Google advantages is more ephemeral that Microsofts. Google's popularity is a bit of an emperor's new clothes situation. At some point, it will surely dawn on people: hang on - Bing search results are similar to Googles; anyone can buy mapping data; GMail is not an adequate alternative to Exchange and two dodgy Linux distros isn't an adaquate alternative to one credible desktop/handheld OS.

    Google will continue to make great money on Adwords, but I have my doubts that their other "businesses" will amount to anything.