This week, Microsoft entered the health and fitness wearables business with the Band. The Microsoft Band is meant to crush the competition, take on Fitbit, Jawbone, Apple, and Android Wear. Therefore, it makes sense that Microsoft wants limited supplies so that they can garner 'sold out' headlines everywhere, creating the appearance of high demand.
The only problem with everything I just wrote is it is entirely wrong. Let me squelch some myths here about the Microsoft Band and what Microsoft is trying to do.
Myth 1 – Microsoft Band is built to compete with the fitness wearable industry
False. Microsoft Band is best thought of as a demonstration device for Microsoft's sensor and software technology. The bigger story this week is not the Microsoft Band but rather the Microsoft Health platform, but since Microsoft Health cannot be photographed or worn, it is less impressive.
Enter in the Microsoft Band to demo the capabilities of the Microsoft Health platform.
Did you know that everything in the Microsoft Band could be optionally licensed out to any manufacture? Microsoft said it:
"Microsoft Health is designed to benefit our partners in many ways. For new entrants and startups we have a complete offering that includes our app, and APIs as well as cloud storage for their data. Existing services can upload their data to Microsoft Health and take advantage of our advanced algorithms and the powerful machine learning from our Intelligence Engine to give their customers insights. New devices can license our 10 wrist-worn sensor modules to gather robust data including active heart rate, sleep and GPS ."
See that last sentence there? It is super important. If the Microsoft Band was meant to be the be-all, end-all of fitness wearables, why are they so eager to let every company license all of that 'exclusive' technology? This proclamation is a significant indication of Microsoft's real strategy here.
Microsoft does not want to put companies like Jawbone or Fitbit out of business, they want them to collaborate with Microsoft. Yes, this means Fitbit's next device could utilize the hardware/sensor setup found in the Band. At the very least it means those companies can tie into Microsoft's Health platform so that even if they do not use Microsoft's sensor technology, they can share the data.
Trying to convince those companies to join you while destroying them in their market is not a great strategy, and it is not what Microsoft is trying to do with the Band.
PCs, the Surface and history
Think of Microsoft's core business: the PC. Microsoft sells licenses to other companies to make awesome hardware. When those manufacturers are not doing a great job, Microsoft can do something like the Surface. Once again, the Surface was not meant to obliterate their partners, it was designed to light a fire under them to make better hardware. The Surface is intended to set the standard, which is why it is less important how well it does and more valuable to see of other OEMs can make some excellent two-in-one computers following it.
The Band kickstarts this process by setting the bar. Microsoft does not necessarily want the Band to take over the fitness industry; they want those companies to license out their hardware and software, just like PCs.
The Microsoft Band has to do well, but not so well it scares off potential partners.
Myth 2 – Short supply is meant to generate headlines
I always hear this reasoning: companies purposefully make fewer devices so that it creates the appearance of high demand. Therefore, people want those devices even more.
Sorry, but this theory is bollocks. Everyone knows the business is about getting the product into people's hands. If you do not, you risk that they may buy something else. Lines are good, but you can have lines and ample supply of something. If Microsoft wanted to do that with the Band they could.
No, the more rational reasoning for the Microsoft Band's limited supply is two-fold (1) Secrecy and (2) This is a demonstration device.
Did you notice how there were no leaks of the Microsoft Band? No photos, no sightings, nothing coming from some production line in China. Had Microsoft opted to go full blast on this release, we would have known about it weeks ago. Instead, out of nowhere, it was announced Thursday night, and it was ready to buy the next morning.
Think about that and the logistics involved! You need to keep the operation small and tight in order to pull that sort of launch off.
There is also the reason mentioned above: the Microsoft Band is only a demonstration device meant to show off the Microsoft Health platform. High sales are respectable, but Microsoft's primary goal here is not necessarily to sell millions of these things, but to catch the attention of the partner manufacturers while stirring up excitement for consumers.
Having said that, I am sure if the industry as a whole snubs Microsoft, they are more than happy to ramp up the Band's production and go all out with it. I am not sure that is a fight smaller companies want to have though.
Microsoft and Fitbit
According to our sources, early next week Microsoft and AT&T are going to announce the Lumia 830 for the US market. I have reported earlier that a limited-time promotion involves giving a Fitbit Flex ($99 value) to new or renewing customers who purchase a Lumia 830.
I can already hear people exclaiming how 'dumb' Microsoft is for promoting Fitbit when they just announced their fitness band. However, as noted above, Microsoft is not looking to push Fitbit out of the way. Instead, Microsoft wants to work with them and doing this promotion is one way you can accomplish such careful diplomacy.
Make friends, not enemies (but don't be afraid to make waves either)
In conclusion, Microsoft is not being stupid, obtuse, or shortsighted with the Band and its release. The device itself is intended to highlight their Health platform and to lure companies into the Microsoft ecosystem. Yes, it will likely go to other markets in the near future, but do not expect Microsoft to go full blast on this smart accessory.
Microsoft is playing a long-term game, and that involves trying to woo potential partners to side with them (and keep Google at bay). Although it may cause frustration for customers who want this exciting wearable right this moment, Microsoft has to tread lightly here if they want friends – and not enemies – in this business.
While many of you just want to own this very device, Microsoft is thinking where they will be in this market two or three years from now. If you switch positions with them, the strategy they are pursuing is a very interesting one. Why settle for just the Microsoft Band when there could be half a dozen products utilizing the same technology, all with unique qualities?
Competition is good, and Microsoft wants it badly for the Microsoft Health platform. Microsoft Band is the kickoff for that strategy.