I Still Believe in a Microsoft Phone
link: original article - section: microsoft
Michael Gartenberg says I'm wrong about the Microsoft phone. Not so fast, Michael.
Yesterday, I blogged, "I believe in a Microsoft phone." There has been lively Microsoft Watch commenter debate and even some outside commentary.
Early this evening, I got an IM from Michael, my former JupiterResearch boss turned MobileDevicesToday analyst/blogger/editor. He had posted that "Microsoft will NOT do their own phone anytime soon." Michael reasons:
[Windows Mobile] is a core platform and OS. No one has ever been successful licensing technology platforms to others and then competing with a device of their own. Apple failed (twice), Palm and Nokia all tried it and it just can't be done. Microsoft now has traction with more than 20 million licenses out there and a great stream of partners and new phones for consumer and business use. A Zune phone from MSFT would potentially hurt all that.
Michael is an undisputed expert with respect to Microsoft and mobile devices. So my goose—eh, turkey for the season—is cooked. Or is it? Gobble, gobble, gobble. Over at Silicon Alley Insider, Dan Frommer makes a case for "Why Microsoft should make its own phone":
Windows Mobile isn't Windows, lacking both its market share and price tag. Those 20 million licenses don't make much for Microsoft, which only charges $8 to $15 per phone, according to research firm Strategy Analytics. Even at the high end of that range, selling 20 million licenses in a year is just $300 million in revenue for Microsoft. That's couch lint for a company whose sales are expected to near $70 billion next year.
Dan observes that Apple earned $4.9 billion during calendar third quarter by selling 6.9 million iPhones. To get that kind of revenue, Microsoft would have to sell 300 million Windows Mobile licenses at 15 bucks a piece—or for nearly a third of the phones sold each year. A phone makes more sense and more revenue. Dan writes:
What's the payout? Even if Microsoft can sell just 1 million Microsoft-brand phones next year at a very low, $300 wholesale price—half of the iPhone's—it could equal that $300 million in hypothetical Windows Mobile revenue. Plus commissions on app sales, a few pennies of search revenue from built-in Live Search, potential Xbox tie-ins, etc. Not the dumbest idea we've ever heard.
My thinking on this isn't complicated: Microsoft's mobile operating system and browser strategies are a mess. Either that's because of mismanagement or some secret project (e.g., the Microsoft phone). I'd like to think Microsoft was doing something (the phone) rather than nothing. Michael may be right, but it would be wrong for Microsoft not to do something.
