Yet another 'expert' analyst predicts Microsoft's demise in the mobile market

No doubt the media seems to be riding Microsoft pretty hard these days, especially with the KIN situation which was a divide that should have stayed behind doors at the company. Throw in the supposedly influential, yet sketchy world, of "analysts" and you have a perfect storm of just bad media complete with regurgitation.

The latest comes from 'Gerson Lehrman Group' the "most valuable NYC company no one outside of Wall Street has ever heard of." which means of course you're suppose to take them seriously, even though like most things tied to Wall Street it has the academic research chops of a fourth grade show-n-tell project.

In an "article" (we use the term loosely here) called "Microsoft's Mobile Demise" who's main prediction is that "It is highly likely that after the KIN fiasco, Microsoft will exit the mobile OS space within the next year.", it is put forth that Microsoft blew their cred with KIN and that Windows Phone 7 just won't deliver. Full of assumptions, lack of context, splash of straw man and no data and you have yourself some headline making material that lacks any substance.

Here's a fact: even if WP7 doesn't sell well at first, Microsoft won't fold shop because they are stubborn as heck with tons of money to throw at the problem. The Xbox market is a perfect example, with them notoriously writing off $1B in repairs for the dreaded 'Red Ring of Death" hardware failures, or even just taking a loss on hardware sales for years just to gain market place strength. KIN was so unknown, distanced from WP7 and under the radar that no will be talking about it in 6-months, which is precisely why it was "killed" now.

Sure Microsoft has a huge hill to climb, but to predict their exit from the market in a year? That takes cajones. And to have such poor "analysis" passed off on such a supposed influential financial consulting site/expert network is sort of insulting.

Sound off in comments.

[Thanks, Anon tipper]

Daniel Rubino

Daniel Rubino is the Editor-in-chief of Windows Central, head reviewer, podcast co-host, and analyst. He has been covering Microsoft since 2007 when this site was called WMExperts (and later Windows Phone Central). His interests include Windows, laptops, next-gen computing, and for some reason, watches. Before all this tech stuff, he worked on a Ph.D. in linguistics, watched people sleep (for medical purposes!), and ran the projectors at movie theaters because it was fun.

  • I'm with you on this one, people forget that MS works best when it's got it's back agenst a wall. Xbox isn't even the first example of MS coming from behind to match or pass the market leader (in that case Sony with the Playstation), there's others as well. IE vs Netscape, Office vs Lotus notes/wordperfect, Windows vs MacOS. Also, lets not forget, WM did beat PalmOS, though after that they got lazy with the platform. Zune could also have done big if they were in it to sell hardware (but they're not, they want the service brand not the hardware market) so they didn't advertise it as much as they could or go international with it. In the end only time will tell, but I have a feeling MS will come back strong and things could be pretty different in the smartphone market by this time next year.
  • I got the same tip and just ignored it. As you said the article is very poorly written, and I already responded to these so-called anal ysts here. The main point really is that, if Microsoft does not do mobile, what are they going to do? Just add software to the 200 billion apps on the iPhone? Windows Phone is basically do or die for them, be it Windows Phone 7, 8 , or 20.
  • I find that analysis ridiculous as well. MS rarely backs out of anything which makes me wonder why they killed the Kin. I honestly thought it was a good idea and still do. The data plan was the real problem. Between MS and Verizon, could they not figure this out? Going forward with WP7, I think Microsoft needs to open a lot more stores quickly and start selling there own products directly. They are constantly getting hammered by the media and they need to fix it pronto. The Kin demise could very well hamper there efforts selling WP7 and I do think it was a big mistake to cancel it. The Kin should actually sell more than WP7, android, or iPhone with the right data plan.
  • I agree with you on this one. MS doesn't back out of a project once they dig their heels in and start pushing in a certain direction. I think the problem with the KIN was that it probably seemed more like someone's pet project to the higher ups. To be honest I'm not totally sure we've seen the last of the KIN phones. They said they were rolling the group in the WP7 group but they never really said they were discontinuing the entire project. I wouldn't be surprised if you see a renewed effort at some point once WP7 is out the door.
  • Can we say if a company don't make a bad product then its successful? no. palm made the Pre. it was good for 1st gen device but they failed. apple didn't make anything in 90 era,nor good nor bad and they were bankrupt. in order to make a successful product you may make an unsuccessful product in the way too. its called trying!
  • So, should we predict the demise of the Gerson Lehrman Group? Sadly, in a year, no one will remember this report, but its effect can be quite real, right now.
  • Anyone who thinks that Microsoft will exit the mobile space after the Kin, or even if Windows Phone 7 is mediocre at best, not only doesn't doesn't realize the goldmine of the mobile market, but also doesn't know Microsoft. They realize that succeeding in the mobile market for them will be a marathon, not a sprint. They'll continue to throw resources (read:money) at Windows Phone 7 until it succeeds. It's not an elegant strategy, but it can certainly work. That said, obviously MS has an uphill battle. As i've said before, they don't need to reach feature parity with their competitors. Windows Mobile debateably boasts the richest featureset of all mobile platforms, but look at it now. They need to reach value parity -- making Windows Phone 7 something that ticks most of the necessary boxes for consumers while adding some things that it doesn't have. This means adding features to get it comparable, and really pushing things like Xbox Live and Zune.
  • To predict that (one of) the world's largest consumer software company is going to abandon the most important new consumer software platforms in a generation is narrow-minded, if not outright dumb. But there's no doubt that MSFT is very seriously behind in the mobile game. In many ways the success of WinPho7 depends on how seemless, simple and non-disruptive the process of receiving updates becomes. The hope and expectation for many expectant WinPho7 fans is that through updates many cool and desirable features will be added (hello copy/paste!).
  • MS isn't going away because of the Kin. And the lack of features, if WP7 is done right won't hurt either -- look at the first several versions of the iPhone. What may hurt MS in the phone OS market is how they handle WM 6.5 and earlier when WP7 comes out. MS, in other arenas, has had a a way of rapidly ignoring previous versions of things if they're strongly pushing the latest iteration as the next greatest thing since sliced bread. Since the other OSes have more features than WP7, that same kind of commitment to WP7 over previous MS OSes could alienate their previous customer base, while not doing much to create a new one. And MS doesn't have all the manufacturers shipping most of their phones with a MS OS like they do with PCs -- there's no contractual manufacturer commitment to push WM or WP7.
  • WP7 will definitely come out late. It's stupid to think MS will give up a market that will only get bigger an bigger until every human older than 10 owns a smartphone (let's call it mobile computer). MS will need to put every resource in promoting this new version like they never have before. First they'll have to make it good. It has to be as good as the best product they have designed otherwise, no one will pay attention.
  • Not to take anything away from the iPod, or iPhone, but excellent marketing played a big role in their rise to dominance. During the golden era of the stand alone iPod, there were at least a dozen TV network ads a week in prime time supported by dozens of other advertisements on the subway, stand-alone kiosks, bus stops etc. vs. basically zero for the competition. Apple repeated this successful formula for the iPhone, and now the iPad. Now we are starting to see TV ads for specific competing smartphones, but until recently, most non-Apple cell network ads were for the network rather than a specific device. When the non-tech consumer decided it was time to move up from their dumbphone, the Apple brand was embedded in their mind due to all the ads they had seen, and the halo effect of their experience with the iPod. During the rise of the iPhone, and the massive mainstream ad campaign, I do not recall seeing one mainstream ad for Window Mobile. If there were any, they were few, and far between. It is amazing WM sold as well as it did considering the lack of mainstream advertising. MS has to launch WP7 with a massive ad campaign, and not something like the Pre, or Zune commercials which many disliked.
  • That's part of my point, jimtravis. Apple marketed what did work well & showed how easy the iPod & iPhone are to use. That's the one part MS can probably compete on But there are some other factors. 1) Each time there was a new iPhone, Apple made it easy for present owners to update/upgrade. There were either software or OS upgrades or ways to get the next version phone at a sizeable discount. At least in the computer market, MS has a history of just abandoning older OSes & hardware, even if they're perfectly usable. And often no upgrade path. 2) The iPod & iPhone organize things in a way that's easy for the user. I often get comments that someone has an iPod because it organizes the files in a better way & is easier to use. Not something you hear very often about MS products. And there's a huge userbase. So, if there's something you don't understand, it's likely you know someone (probably not very techie) who can easily explain it to you. Also, not something MS can say, except in the computer market, where MS bought their way into being on almost every PC in existence. But still not necessarily easy to use & few who can easily newbies, except those of us on the forums & paid techs, which most PC users don't access. 3) Blackberry has been behind for awhile. But they do the whole business thing extremely well. Because of that, they keep growing. Apple does graphics, simplicity & ease of use well, along with strong marketing & continual improvements (except for the latest iPhone hardware). That's pulled them way up in the phone market. Nokia keeps building on a stable OS, which gives them a strong presence around the world, except in the US. MS has none of that & is going to market a new phone OS that seems to have less functionality than the present competition (including previous WM versions) in order to gain usability. That's one heck of a marketing job -- convincing people that they want to switch to an untried phone OS that does the same or less than previous versions & the competition, all of which are already out there, selling. The phone geeks, semi-geeks & initial adaptors will buy into that. But it'll be interesting to see who else does.