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Microsoft releases its annual mobile phone market excuse

Low sales equals vast opportunity, apparently

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3GSM Once a year, whether it needs it or not (but oh boy, it does...) Microsoft shows up at 3GSM with the latest release of its explanation of why its mobile business is not totalled. No, not at all totalled, honest. It's nice (no, actually, really nice), because it's weirdly refreshing to find there is a part of the world, or the industry, where you can wonder in a curiously detached way what the point of Microsoft is.

Then go and ask them, and into the Explanation, This Year's Model we go. Explanation 2006 has cut to the chase - underneath all the verbiage Microsoft has always been about leveraging PC market share into dominance in other fields, and the Windows Mobile spiel pretty much dispenses with the verbiage, leaving us with blatant and unashamed leverage. It's all about big numbers - 205 million instant messenger users, 300 million downloads of Windows Media Player 10, 400 million Microsoft Office users and... um... not very many Windows Mobile devices. Which is not very good, and which is why journalists get that comfortable glow from wondering what the point of Microsoft is. But Microsoft itself accepts that it's not very good, whistles bravely and talks about those nice big numbers of desktop users and leverage.

These are, whistles senior VP mobile and embedded Pieter Knook, big opportunities. People are going to want and need to get to their Exchange Server on the move, and people are going to value the ability to take Microsoft Office on the road with them, gaining access to all of the richness of Office on their mobile device. 'They are?' you ask. Well yes, some people are. To you and to us, these might seem strange, perverted, deeply disturbed people, but it's at least arguable that they're more to be pitied than scorned - yes, some of do it because they think it's a good idea, but a lot of them do it because their company is an Exchange/MS Office shop, so on the mobile side they might as well stick with the programme.

Unit-wise the numbers don't look impressive, but if you think services rather than hardware numbers, Knook's "opportunities" gain a certain level of credibility. So, yesterday with Vodafone Microsoft announced a "Windows Mobile Direct Push" product which essentially offers smaller businesses an outsourced email system, while in among the 'goodies' the execs were unsportingly holding back for Steve Ballmer's keynote this afternoon was a mobile version of the MS Office Communicator 2005 client. And the acquisition of French mobile search technology outfit MotionBridge is intended to help Microsoft buddy up to the networks some more - MotionBridge technology is already used by Orange, Sprint and O2.

Leveraging the existing customer base and insinuating itself more deeply into the operators' service provisioning is not however going to be enough. Not all companies think it's a good idea to try to deliver the complete at-work experience to its employees while they're on the move (given that you generally don't have a desk, coffee mug etc in your pocket along with your mobile phone, it's at least arguable that the notion's a tad flawed), and it's even possible that in only hitting the confirmed addicts Microsoft could find itself trying to squeeze more money out of a total cake that's actually getting smaller.

So what else? Well, the big one from Steve's keynote was mobile TV, a deal with BT and Virgin to produce Movio, using a handset, the Trilogy, designed by UK outfit TTP and built by HTC. Sensibly, this is actually a digital broadcast system, so widescale uptake is not going to administer 'death by streaming' to the network. Whether or not mobile TV is going to be compelling enough to produce widescale uptake is however a moot point, the jury also being out on how much extra, if anything, the punters are going to want to pay for the service. And Microsoft also has the problem that, although it has plenty of Windows Mobile device manufacturers and plenty operators shipping products (but of course, not large numbers of them), it's currently ill-equipped to do cheap and cool to an extent that would allow it to mount a serious challenge in consumer markets.

Which is surely where mobile TV is, if it turns out to be anywhere. The single core design would be a help if it were here right now, but it isn't, and if we're talking a minimum of 12 months before it is, we're talking maybe two years before hardware using it could start to help make a Microsoft consumer push credible.

This problem also impedes the leveraging of WMP and Microsoft DRM, which of course has a large additional problem beginning with 'A'. Microsoft signed up Motorola to use Windows Media in a new range of music phones. Motorola says it will also carry on with its iTunes line, possibly meaning it'll have two kinds of music phone it doesn't sell very many of. WMP certainly has attractions for operators who want to run their own music store and//or don't want Apple to walk off with all the cream, but running your own music store doesn't look like a particularly viable route to stopping Apple walking off with all the cream anyway. Yes, in principle lots of people no doubt agree with Microsoft that a DRMed music system that they had control over and that was the market leader would be just the thing. But it's not the market leader, and no amount of wishing it was is going to change that.

And IM? Well, perhaps there's some hope here in the sense that Microsoft desktop IM users may well translate into Microsoft mobile IM users, but where's the revenue? A bunch of operators, Vodafone, T-Mobile and Orange included but Microsoft excluded, have agreed to love one another and produce interoperable IM services, but they seem to figure they can charge, and that's likely to impact on uptake. Which does maybe leave an opportunity for Microsoft, but possibly not an entirely profitable one. So tune in next year and see what Explanation 2007 brings? Most assuredly, and, flying pigs permitting, maybe via mobile TV... ®

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