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Telstra, Ballmer Dizzy with the Spin

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Ever since Australia's biggest company cozied up to Sun, America's biggest company has been looking for a good damage control story.

After two weeks denying that Steve Ballmer's mid-October visit to Australia was an attempt to stop the telco defecting to StarOffice, Microsoft and Telstra shared the stage to launch the Pocket PC Phone Edition in Australia, running on O2's $A1700 snazzy do-it-all xda device and Telstra's GPRS network.

Ballmer had to make do with Telstra group managing director Ted Pretty deputising for holidaying boss Ziggy Switkowski (nobody noticed until Pretty spotlighted his CEO's absence with an apology).

From there on, the spin fractured. If this was a dog-and-pony show, then one got stepped on and the other got bit.

Ballmer's opening position was that with the xda, Telstra and Microsoft would "work together to address the enterprise customer base," describing information workers as the Pocket PC Phone Edition's "core franchise".

He then seamlessly changed tack, saying "I don't think about it as an enterprise device."

Next, Telstra's Pretty returned to the large enterprise sell for the xda, pitching productivity for mobile workers.

Demo time reversed the spin yet again. Looking for good TV after showing boring business features like inbox synchronisation, MS flicked the switch to vaudeville, showing off knowledge worker "must haves" like the music player, instant messaging, and video (using a presumably-legal broadcast copy of Ice Age).

Ballmer stuck with the consumer sex appeal theme in the Q&A, inadvertently revealing the real purpose of the xda by telling the media "anything that drives up usage and traffic is a good thing."

Perhaps realising that bandwidth hogs aren't necessarily productive, empowered and enabled knowledge workers, Ballmer disowned responsibility for how the xda is used, saying Microsoft's role is to generate consumer excitement about the devices.

Nor is a telco responsible if a bandwidth hog is used to hog bandwidth.

Pretty said enterprises would need to implement policies and tools to manage mobile comms costs and bandwidth consumption.

Telling the customer you're wasting your money on Box A unless you buy Box B, C and D might spoil the pitch - but Pretty doesn't seem to think many corporates are that sophisticated, saying Australian corporates "are struggling with basic corporate LAN/WAN policies".

By now, the spin clearly needed life support. Asked about prices, Pretty jettisoned both the consumer and the enterprise markets, telling the media that the xda is for SMEs.

There is, however, a class of consumer the Pocket PC Phone Edition seems to suit - the extremely rich Ballmer described it as "not cheap but affordable" and said he uses his own to play videos for his three-year-old.

Here, at last, is a clear and comprehensible market position for the O2/Microsoft/Telstra combo: to suck money out of a stagnating telecomms market by appealing to Steve Ballmer's toddler. Total available market: one. ®

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