Microsoft has launched its smartphone operating system initiative — Windows Phone 7 — and from what’s been revealed so far and how operators have reacted in conversations with us, the new mobile strategy is fatally flawed. In fact, unless Microsoft makes truly radical changes or has some literally unprecedented success, it’s probably the end of Microsoft in the mobile space.
With Phone 7, operators have only limited ability to create their own services or their own “brand” with the handsets they have to subsidize. Microsoft justifies this with the notion that the user experience is seamless everywhere, but that’s not what operators want—they want an experience that differentiates them. Even Apple was smart enough to realize that they couldn’t tell operators that they were “partnering” without providing some sort of unique service-to-phone tie. Alcatel-Lucent recognized that a seamless experience had to start with a mobile operator ecosystem largely because without it, there would be great resistance to any kind of roaming data plan or any cross-operator feature set. So it established its Open API program as a federation.
Federation is what Microsoft needs to be looking at. The operators want to build a global ecosystem of national or even regional players. Microsoft had a chance to bring something tangible to the table in that space, something broader and more powerful than even Alcatel-Lucent proposed. Instead it has extended its past CSF strategies into its present mobile offering, and compromised it fatally.