Microsoft faces phone annihilation
5pc and falling?
Poland's cultural ambassador to the Internet, "jpzr" is a gift who keeps on giving.
Ever since Windows CE appeared in 1996, analysts have been predicting, and scribes have dutifully been transcribing, the inevitable encroachment of Microsoft into the phone business. Reporting that at times, has owed more to Marxist theleogy than common sense. Or some kind of historical determinism that we can't quite fathom.
We've explained in some depth over the past few years how the quite distinctive and subtle business relationships and integration burdens of the cellphone business represent a unique challenge to an intruder, especially one who's been weened up on a fairly simplistic, PC-business horizontal model.
Well, here we are and, citing Nomura*, "jpzr" reckons that in two years time, Microsoft faces utter annihilation in the handset terminal business.
"Wake Up Microsoft!" shouts "jpzr".
His text is that come 2005, Symbian-flavoured devices will hold over 95 per cent of the smartphone market, and that Microsoft OS-devices will struggle to reach 5 per cent.
Given the flood of Series 60 devices that are now appearing, and the buy-in to the pen-based offerings such as SonyEricsson's P800 and Motorola's Paragon, this is certainly in tune with where the market is heading, but the total annihilation scenario is a bold prediction for anyone to make.
"Please note: msmobiles.com is a very pro-Microsoft site" notes "jpzr", "and we are big fans of Microsoft's cell phones! We are simply worrying."
However, it's one we don't entirely buy into. But let "jpzr" ring the alarm:-
"Such huge mistakes as enforcing signing/certification limits and lack of .NET Compact Framework for MS Smartphone 2002 (it will be available but only in next version of Microsoft smartphone software: "Smartphone 2003" alias "Smartphone Ozone"), are really hindering development of Microsoft powered cell phones!!!"
So alarrumed is "jpzr" that he's pre-empting us by creating neologisms for next-generation Microsoft software. And we thought that was our business. The industry nickname "Stinker" for Microsoft's Smartphone 2002 platform "Stinger" owes its etymology to a Register reader and MS partner who was strugging with the code. Within a couple of months "Stinker" was how the industry referred to the code, and it eventually prompted a name change. (To "Canary"). If Smartphone 2003 is already being dissed, then things aren't looking good. And for once, don't blame us.
"Please note also that nowadays smartphones, in order to be popular, need to have good hardware, what means nothing less than: built-in (not just atttachable) camera and built-in Bluetooth," peeves the understandably annoyed "jpzr".
(We've noted here how there isn't a Bluetooth phone to be had in the US on a CDMA network, the prize goodies going to the GSM providers here).
Which means that the piece of crap that Microsoft and Intel dragged out at GSM World last month - for all its breakthroughs in integration and compact flash memory density - isn't going to appeal to anyone.
Indeed, "jpzr" has hit the nail on the head. Phones and Bluetooth are becoming as one in Europe, despite some ominous foot-dragging from Nokia, creating all kinds of new and unexpected markets. On my last but one visit to Europe, I'd say three out of four start-ups I met (and unlike Silicon Valley, the start-up business in Europe is healthy and entirely geared around a common platform, which the USA doesn't have: phones) was selling me some kind of Bluetooth-based proposition.
There's an "emerging technology" conference coming up here next month, sponsored by the Good Guys, O'Reilly. But so paltry and parochial is its menu of new stuff, so out of tune is it with both the freaky Euro/Japan emerging businesses and the hackerish underground, that I'm tempted to donate my expenses to charity instead.
I'm afraid the last place you're going to find "emerging technology", in the face of such subversive innovation as, for example, IXI signing up Siemens to do a PMG phone, is in the USA - specifically California. Sorry readers - you know I live here and I ought to promote it as the oracle of human ingenuity. Right now, there's nothing to see here except last year's WiFi bubble: so get a passport, bunk off, live abroad, read Mobitopia every day until your eyes are sore, and go and read everything you can about PMGs and Bluetooth, please. Then report back. And this advice applies to both VCs and bums. Follow it, and you won't fail to get a clue. Silicon Valley needs you.
In the USA, now, a noisy lobbying is trying to deregulate the spectrum, from scratch. Much of the spectrum is given to the military, and should be public.
But deregulation, this new frontier, can't compensate for all the missing knowledge (those social relationships we mentioned above) that gave Europe and Asia their edge. "No" regulation is an unknown, but can it work better than the enlightened regulation, which Europe and Asia enjoyed? Looking to these markets might give Microsoft some hope of avoiding annihilation, or it might not. But we digress.
It isn't just the imp of the perverse that suggests that a total wipeout for Microsoft is avertable. There's a huge degree of potential for Microsoft in this business, but it needs to redefine what its "platform" and what its "markets" really are. It may not win, but there is enough potential for mischief to score some medium term havoc, if only it dare. So Juha and Ed, are you so bold? Let us explain. ®
When we first published this article earlier this week we headed it "Microsoft faces phone annihilation - Nomura", and attributed a prediction of a 95-5 Symbian-Microsoft split by 2006 to Nomura.
Nomura however tells us that this does not accurately represent its current thinking. Our (and Nomura's) current best guess is that any such numbers may have originated from some 'what if?' scenario outlined as a part of a broader presentation.
Nomura's most recent research takes the view that if the total handset market reaches 450 million units then Microsoft and Symbian would each only need about 5 per cent of the total in order to break even. If each had this share, then together they would only account for a half of the total available smartphone market.
The point here is that Nomura is arguing that the smartphone market is big enough to keep both in business, and some; therefore the mobile phone OS wars are starting to cool off, and annihilation isn't on the menu for either party.
Which we accept doesn't seem to be in line with a 95-5 split prediction, and we've therefore removed the relevant attributions from this article. We think our reasoning still stands, particularly as it's a songsheet we've been singing from for a while now, so we've left that.
And actually, we think that the differences in approach we see in the two rivals will continue to have an effect on their respective abilities to clock up the magic 5 per cent, and will also influence their cost structures, and hence their respective break-even points. For this reason, and also because the mere ability to live happily together doesn't automatically mean they're going to stop trying to kill one another, we don't entirely agree with what Nomura's currently saying.
But we'll leave that for another day. Bottom line right now is, no Nomura 95-5 split, OK?