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As Microsoft always strives to be less sucky that the last thing that Microsoft did, Windows Mobile 6.5 is a movement in the right direction. Highlights include a friendly hardware start button, the honeycomb touch screen and app store:

Smartphones are the main growth area in the mobile industry, and Microsoft is in the beginning of a next-gen platform war with Apple, Nokia, Google, RIM, Palm, and others. If Microsoft gets left behind, it’s in trouble. And indeed, Microsoft’s market share has slipped: Windows Mobile had a 11.1% market share during Q3 ’08, down from 12.8% in Q3 ’07, according to Gartner’s most recent stats.

Microsoft is fast running out of time to deliver a world class mobile client….

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With release of Google Latitude and the birth of wide spread people tracking technology, we are onto the next stage of improved social tools at the expense of privacy. From the Google Blog:

Latitude is a new feature of Google Maps for mobile, as well as an iGoogle gadget, that allows you to share your location with your friends and to see their approximate locations, if they choose to share them with you. You can use your Google account to sign in and easily invite friends to Latitude from your existing list of contacts or by entering their email addresses. Google Talk is integrated with Latitude, so you and your friends can update your status messages and profile photos on the go and see what everyone is up to. You can also call, SMS, IM, or email each other within the app

http://www.youtube.com/watch?v=Q-Oq-9enE-k

With a few simple clicks of the mouse, a whole new world of detail can pervade one’s existence and create opportunities for the less scrupulous of us. With the addition of location information along with credit information, corporations can track to an even greater depth what you can and cannot do.

Recently it was reported in the New York Times that American Express was changing your credit limit based on where and whom you shop with:

In recent months, American Express has gone far beyond simply checking your credit score and making sure you pay on time. The company has been looking at home prices in your area, the type of mortgage lender you’re using and whether small-business card customers work in an industry under siege. It has also been looking at how you spend your money, searching for patterns or similarities to other customers who have trouble paying their bills.

Not only is it possible to see your transactions at the local Cash Converters or Value Village, simply being in the vicinity of a Dollar Store makes you a credit risk. This ability will soon be available to any developer:

In the meantime, with Latitude Google is moving to commoditize both the map information and the location beacon. Google is using triangulation data from cellular networks, and Wi-Fi positioning along with GPS data for its Latitude offering. It is only a matter of time before this location information is made available to other developers for free, especially Android app developers. After all, Google needs apps for its Android platform, and more importantly it needs developers to think differently.

The issues do not stop at intrusive corporations, according to Privacy International it can also extend to unwanted attention from unsavory types:

“The company has a long way to go before it can capture the trust of phone users. As it stands right now, Latitude could be a gift to stalkers, prying employers, jealous partners and obsessive friends. The dangers to a user’s privacy and security are as limitless as the imagination of those who would abuse this technology.”

Couple that with long time Google wannabe, Microsoft Live Maps and you have a potential problem waiting to happen.

Next up, pre-crime….

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Over at Gigaom, they are predicting a wide spread slow down of Wireless Data Services WDS:

Last week, UBS Research in a research note pointed out that AT&T had 1.25 million 3G laptop subscribers as of the end of the fourth quarter of 2008. Net card additions had fallen 121,000 from the 186,000 additions in the third quarter and 166,000 in the second. This was “likely due to weakening spending at both businesses and consumers,” said UBS. Going forward, severe job losses and overall belt-tightening (including less travel) on the part of companies will reduce the number of 3G laptop subscribers as well.

While we agree that the reduced increase in the number of wireless data subscribers per month is due to the slowing of the economy in general, the carrier’s future is in wireless data services, as voice minutes as percentage of revenue continue to decrease.

The strongest element for success for WDS is not the carriers themselves, if it was up to them we would still be charged 10c per Kbyte and no one would be using the service. The future of WDS is because very powerful constituents are about to fight tooth and nail to control the key applications on tomorrows Smartphone. Google, Nokia, Apple and Microsoft are spending billions to make sure that will happen.

Google believes that mobile advertising will be larger than the existing browser bound search as they are able to reach further into the consumers life. Microsoft, smarting from the serious ass-kicking from Google are determined to make sure Google is not number one in the mobile space. Apple, whilst having a head start in the new mobile world (heck, they created the new mobile world) will not be satisfied until iTunes is the only place you can buy digital music and control the multi billion dollar market. And Nokia, while they have a strong head start, are very conscious that if they do not react, they will be as relevant in 2012 as Motorola is today.

If the carriers become information highway roadkill, then that is just fine with the big four, they need the carriers only insofar as they deliver customer data to them when and where they need them, and most importantly not to be an impediment to the delivery of these services.

Although carriers have direct retail relationships with their customers, Apple has shown that it is possible, with the right circumstances to have a stronger relationship with that mobile customer than the carriers. When was the last time you heard an iPhone user gloat over ATT?.

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Microsoft entered 2009, midnight PST to be exact, with egg on their faces over failure of the Zune Media player to account for the Leap Second which ended 2008.

According to Zune owners from across the globe, thousands of Microsoft’s 30GB iPod imitators suddenly gave up the ghost at exactly midnight Pacific time last night.

“We’ve got two Zune 30GBs,” says one poster to the Zune.net forums. “One was docked in the Zune Docking Station, the other wasn’t. At exactly 2am CDT (12am PDT), the docked Zune made the ‘unplugged from USB port’ bong-noise and went to the boot-up screen with the 100% loading bar…and froze.

It certainly was not a great start to what is to be a difficult year for the software company. The biggest challenge will be to deliver a successful launch of Windows 7, especially since it was announced today that according to Gartner, Enterprise adoption, the bread and butter of the Windows Monopoly is firmly stuck in single digits:

Just over two years since Microsoft launched Windows Vista, fewer than 10 per cent of PCs in the enterprise are running the successor to the company’s eight-year-old Windows XP.

That compares to last July when Forrester reportedly said Windows Vista adoption was at 8.8 per cent and Windows XP was at 87.1 per cent. In that report, Forrester said Windows Vista was like “new Coke”, which was killed by its corporate parent because nobody like it.

Shareholders are quite rightly disappointed in not only how long it took to deliver Vista, but how badly the launch of the product into the market and finally the adoption rate as we discuss below. Couple that with the news that Firefox continues to make significant ground in the browser wars, a key component of Microsoft’s online strategy.

Internet Explorer now has 67.55 percent of global browser market share, a drop of over seven percentage points in a year, according to figures from Web metrics company Net Applications, released Monday. Mozilla’s Firefox browser, meanwhile, has gained market share in the same time frame, climbing over three percentage points to 21.53 percent.

This continues to make Microsoft very uncomfortable because the Internet Explorer is and will be designed to work well with Windows Live, the partner and successor to the Microsoft Office Strategy. This is important because while other browsers have insignificant marketshare, Microsoft can safely ignore support for those browsers. But now Firefox has moved past 20% in North American market share (it has always been larger in Europe), it will come under greater scrutiny should they attempt to tie IE to Office Live Online.

The Windows Desktop, Windows Live and Windows Mobile are three interdependent legs, which are designed to strengthen and extend Microsoft’s franchises. They rely on each other to block competitions ability to attack Windows Desktop with a single point product.

Which brings use to Windows Mobile, another device that was designed to tie the Microsoft Enterprise Strategy to portable devices. Without a significant market share in mobile devices, it cannot use their strength in Office to nail the Live strategy and strengthen the desktop defense. They all rely on each other to work.

To top off January, Motorola has made sharp cutbacks it’s Windows mobile investment:

Now there are signs Motorola is shifting away from Windows as well. Its recent job cuts included a team of more than 70 employees working on the Windows Mobile platform at its facility in Plantation, Fla. Telecom analyst Ittai Kidron of Oppenheimer & Co. said delays in releasing a new version of the Windows platform may have caused Motorola to alter its plans in the short term.

With key partners HTC and Motorola dancing with Google’s Android platform, the iPhone and Blackberry blowing away records, makes the Microsoft tri-platform strategy look like it is taking on a lot of water. This is because each component is designed to support the others and without this approach, it makes it very difficult to build the network effect (read profits) that they have enjoyed with Windows and Office.

It is troubling to think that Microsoft, being a company with huge resources have executed poorly on the Windows Mobile strategy, are playing off the backfoot on the Online strategy and have failed to convince their customers to stay on the upgrade strategy that worked so well 8 or so years ago. If walking and chewing gum at the same time is so difficult thus far, can we expect them to be able to pick up the pieces in 2009?.

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Mobile OS Market Share

Analyst firm Canalys has released the results of it’s Consumer Mobility Analysis Report and it is very good news for Apple, good news for RIM and Microsoft and bad news for Nokia:

The success of Apple and RIM, as well as fifth-placed HTC with its Windows Mobile devices, has eaten into Nokia’s share of the smart phone market – a market it has led consistently for several years. Nokia’s broad portfolio of models, and the wider audience it attracts, does leave it more exposed to the trends affecting the overall handset market. Year-on-year its smart phone shipments fell in Q3 for the first time. “Nokia is also transitioning from some very successful volume drivers, like the N95 and E65, to a number of successors, such as the flagship N96, and shipments of these new models have not yet ramped up,” noted Canalys analyst Tim Shepherd. “And Nokia has taken time to bring a touch screen product to market in the wake of the iPhone’s success, despite having had the experience of producing the Series 90-based 7710 four years ago. Conversely, vendors such as HTC with its Touch Diamond have capitalised on customer demand for this type of product.”

As every one expected in the Apple earnings conference, the Apple iPhone 3G has leaped past RIM to take number two position for smartphone shipments. Blackberry still grew at a healthy clip but expect their margins to be squeezed as they sell more “down market” phones such as the curve.

Nokia has nowhere to go but down currently as the buzz is elsewhere with the Apple RIM battle and the coming rationalization of the Linux market with the Andriod Operating System.

The odd man out is Windows Mobile. After 8 years on the market, it has failed to grab more than 13% of the market (much like SQL Server) and is coming under heavy criticism for it’s interface and jumbled approach to the mobile market. HTC is the number one shipper of Windows Mobile, but they have put a tremendous amount of effort behind the new T Mobile G1 device. If Andriod does big things for HTC (and Samsung) then life gets very uncomfortable for Windows Mobile.

Windows Mobile currently costs vendors between $8  – $15 per handset which translates into $40 – $65 million in license fees per quarter. If Android can show an increased ARPU (average revenue per user) for the carriers in the same way as Apple iphone has done for ATT Wireless, then it is going to put Microsoft in a difficult spot. Smartphones for consumers are all about functionality, but smartphones for carriers are all about more data packages and more revenue.

However Microsoft understands that the future of mobile is tying data-sucking services to the device and not just mobile Outlook but a host of services including location, search and social stuff. Microsoft has a long way to go to convince carriers that they are in the game.

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Uploaded flickr by gholzer

Windows Mobile was originally launched as Pocket PC in April 2000. It was born in an age when Microsoft was busy trying to tie everything to the Windows Desktop and cast a long shadow over every part of the IT industry. It was not long after that that the Windows wheels fell off when the US DOJ and the EU put paid to that. However Windows Mobile is a product of that past where the motive was to tie customers (mostly enterprise) to the Windows platform and windows groupware products. It is this motive that will be the destruction of Windows mobile.

Microsoft has up till recently insisted that the Windows folder experience is what is necessary and that Windows desktop users would be comfortable with using it on a mobile device. This was however a circular argument because the number one mandate was to proliferate the Windows brand, so that justification was made, however RIM had made that argument dead in the water. What RIM did find was that push email/calendar and contacts the number one issue.

Microsoft also made the mistake that they made in the portable music market, the Plays for Sure approach was an unmitigated disaster. They believe that OS distribution model (eg Windows) would win over an OS integrated approach (iPod). This idea was firmly beaten into the ground with the introduction of Zune player which is an integrated music player. What they forgot and continue to ignore is that with mobile devices, the number one issue is the experience on the devices, and the iPod ushered that era in bringing about a renassiance of the Mac Operating System.

It is ironic that RIM and Blackberry ended up doing a much better job of delivering functionality to the mobile enterprise and now dominates the push email market for corporate. It is the one device that held held back the Windows Mobile from dominating.

With the spectacular success of the iPhone, having in the last quarter moved past RIM in smartphone revenues, RIM is now having to respond, and have a raft of new devices coming out in the next few months. Google and their launch partner T-Mobile have released the new Andriod platform and App Store. They have effectively rationalized the linux mobile market and set Linux on the path to significant market share. Motorola is putting their “Good” people behind Andriod and you will see a raft of new capabilities including their messaging platform move to Andriod.

All this will mean Microsoft will have to respond with their own hybrid experience. They will need to develop an App Store to compete with the others. But this too has challenges because apps will need to be tested over a wide number of devices, whereas Apple only has to test on a single platform. Google intends to have one App Store that will allow distribution to all Andriod phones. The problem with all this activity is that for Microsoft, they have to follow what others are upto. And all this activity is without the benefit of the Windows monopoly. Microsoft has never succeeded where they have not been able to force users to adopt through the Windows operating system, and Windows Mobile is no different.

According to Bob Cringely, Windows Mobile is doomed because of simple market dynamics, that is there will be no room for a Windows mobile device. He states that it will be dominated by iPhone, Android, RIM and everyone else. He believes that handset manufacturers will abandon Windows mobile because they need to go where the action is (read critical mass). They can’t go to iPhone or RIM, which means they will migrate to Android with it’s open architecture, App store and enormous Google presence. What this means for Windows Mobile is over the next year it will continue to be marginized and more handset manufacturers will quietly drop the OS over the much cheaper (read free) Andriod OS and features.

Only time will tell, but it is hard to see how Microsoft can compete with the iPhone freight train and the Android sexyness. They could release a Zune phone but as everyone knows that ship has sailed….

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