Sunday, November 22, 2009

MSFT: Phone Apps Unimportant

On the heels of the news that Microsoft's mobile platform share is collapsing (losing 28% of its share Q32008 and Q32009), Microsoft reverses its long position on platforms (that it's all about developers, developers, developers ...) to proclaim that mobile apps just aren't important as a differentiator because they're so trivial that anything worth having will be immediately ported to any competing platform.

Not that Microsoft has explained who will be porting to its mobile platform over a hundred thousand applications now available on Apple's platform or why Google has said it can't afford to make all the necessary applications available and has urged developers to build mobile-friendly browser experiences for delivering web-based services in lieu of native applications. (Microsoft admits that the app/net line will blur until no-one can tell the difference, which is an admission that (a) Google's approach can work, and (b) MSFT's client platform lock-in strategy is doomed unless it can maintain file format lock or some other mechanism of dependence.) Instead, Microsoft seems to have fallen for a classic analytical failure: since Microsoft's own employees are overwhelmingly employed in desk jobs, the fact has entirely escaped Microsoft that everyone who is not employed at a desk job is more able to access important data from a mobile device than from a desktop computer. Mobile apps aren't a triviality unlike important desktop applications, they are in many cases the successors to desktop applications for people who will not spend much of their lives near desktop computers but will have mobile devices constantly available. Porting from iPhone's development environment to Microsoft's is surely at least as challenging as porting in the other direction.

The fact that Microsoft thinks mobile apps are trivial and easily ported ignores that (a) mobile apps developed with an API not available on another platform won't be ported so much as completely rewritten, (b) the complexity of mobile applications will increase with mobile platforms' power and users' expectation of using the platform as a primary interface to their electronic data and the data maintained by their brokers, bankers, movie rental vendors, and local movie theaters, and (c) developers, as Microsoft ought to have learned while enjoying an operating system monopoly for the last twenty-five years, target the dominant platforms and the remaining platforms tend as a result to fight to stay in the game. Microsoft's management may have, under the influence of its own Kool-Aid, developed the impression that its success in the PC market resulted from the quality of its APIs and not the spurious error messages with which it frightened customers from competitors' platforms, or the insidious effects of vendor-lock.

Meanwhile, developers have apparently not properly understood Microsoft's memo on app porting; Gameloft and other developers are scaling back efforts on Android in favor of their existing customer base on iPhone, where the sales are. With Android's share of the mobile approaching the share of Microsoft's platform and growing, the fact that developers have cold feet about Android development seems a grim portent for the future of similar development on Microsoft's mobile platform.

After admitting that Apple's gaining market share in PC operating systems is a big deal (though he claims MSFT holds 83% of the high-end notebook market, a figure at odds with data showing Apple commanding 91% of that market), it's odd to see MSFT pretending that its small and failing share in the mobile market is anything but an unmitigated disaster. The fact that Microsoft "wants" a commanding share of the mobile market only underscores the severity of the blow it's suffered from a combined field of closed-source and open-source platforms running on both differentiated and commodity hardware. Three consecutive quarters of declining revenue are no fluke.

A look at Gartner's mobile phone market share is instructive: RIM, Apple, HTC, and Samsung all gained market share while the market itself increased 13%. These gains were at the expense of Nokia (42.3% to 39.3%) and "Other" (21.3% to 13.1%). Since RIM, Apple, and Samsung all have their own mobile operating systems, HTC has begun shipping Android (and has added interface elements to protect people from noticing the MSFT operating system on its phones that ship with it), and Palm is migrating from MSFT's OS to a new platform based on open-source plumbing like the Linux kernel and WebKit, it's no surprise that these gains -- and the loss of share among the "other" category -- come at the expense not only of Nokia (which lost 7% of its share) but also Microsoft (whose 28% y/y share loss has to smart). The trend isn't good for Microsoft in the mobile space. To the extent Windows Mobile might have a market segment not subject to attack by iPhones, it's worth noting that Android is being viewed as preparing to eat MSFT's mobile lunch.

Microsoft hasn't got file format lock to trap customers in the mobile space, because people don't depend on Microsoft file formats for many mobile applications. Microsoft's small-percentage position prevents it from leveraging code investments in a proprietary API to keep developers from making other platforms attractive. The poor performance of Microsoft's operating system (this HTC review tellingly damns is with faint praise: looks good hidden, is bad at driving capacitive displays, etc.) can't be very exciting to developers who want a slick and improving platform to make their products look best. What has Microsoft got going for it in the mobile space, exactly? Developers can't be particularly keen to invest resources in a platform whose size is dropping more than a quarter of its share in a year.

Meanwhile, Apple's share of online traffic dwarfs even its growing share of the smartphone market. If iPhone users' demands outstrip their numbers, support for their traffic and their demands should continue to dominate. A few years ago, The Jaded Consumer contacted his broker to complain about its website not behaving well for the iPhone's browser; the broker said mobile users should access the broker through a crippled mobile site formatted to look awful on the iPhone and to waste enormous time scrolling about looking for the page's content. Today, the broker's data can be accessed from users' choice of four different native iPhone applications. The one the Jaded Consumer picked makes access to multiple accounts a snap. The application has been repeatedly revised and supports every feature of the site I like to access – in some cases, even better than the regular web version. How times change.

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