Danger to be Microsoft's entry into consumer-focused phones
How does Microsoft intend to take on Apple's iPhone?
The Redmond software maker's plan to gain traction in the consumer-focused mobile-phone market hinges heavily on Danger Inc. -- the company that invented the Sidekick and is soon to become part of Microsoft, according to Robbie Bach, president of Microsoft's entertainment and devices division.
Bach addressed financial analysts at the Mobile World Congress 2008 on February 11 to provide the back story on several mobile-market announcements Microsoft made to kick off the Barcelona-based show.
Bach said there are four, distinct mobile markets and Microsoft intends to work with operators and phone makers to address all of them. To date, with Windows Mobile, Microsoft has focused almost exclusively on business customers, Bach acknowledged. But that's just one of four segments where Redmond intends to compete. Bach's segmented the market like this:
Business productivity: Microsoft's -- and its handset partners' primary target market to date for Windows Mobile.
Personal productivity: Phones that offer Hotmail, Windows Live Messenger and other consumer services. These may be the same devices as those targeted at "business productivity," but the positioning is different.
Mobile Internet: Devices that are first and foremost gateways to the Internet, rather than voice-centric models. Microsoft will be talking more at its upcoming Mix '08 conference about how to bring Internet services from the PC to mobile devices, said Bach.
Entertainment: A platform for delivering music, gaming and other entertainment services. The Danger platform will be the focal point here.
Microsoft is not interested in working with companies who are offering voice-only mobile devices in the $40 to $60 range. Nor is it interested in "fashion" mobile phones. Microsoft, through its handset and carrier partners, is looking to play in the more premium arenas, Bach emphasized.
Bach also told financial analysts that Microsoft's mobile unit's business model is changing. It's not a pure royalty-per-device model these days. Microsoft also is making money through its Windows Live Mobile services (typically via a revenue-sharing model with operators); through its server/client-access-license (CAL) model through the soon-to-be shipped System Center Mobile Device Manager 2008 product; and, slowly but surely, through mobile advertising.
Bach said no one model will triumph; different models (and combinations of models) will address the four aforementioned target markets.
In response to analysts' questions, Bach defended Microsoft's Windows Mobile growth. he said that Microsoft's target for fiscal 2008 (which ends on June 30) was to sell through partners 20 million Windows Mobile phones. As of the end of December 2007, Microsoft had sold more than 14 million Windows mobile devices he said, meaning Microsoft had outshipped, in terms of units, Apple's iPhone.
Analysts also asked Bach about Microsoft's plans for Danger. Bach said Microsoft had no plans to rip out "any time soon" the proprietary Danger operating system at the heart of Sidekicks and other Danger mobile devices. He said the same was true about Danger's services back-end hosting infrastructure and applications platform (which is based on Java); Microsoft has no immediate plans to rip and replace either, Bach told analysts.
Bach told analysts that what will separate Microsoft from Apple or Google and its Android mobile-OS partners will be Microsoft's breadth of coverage. Instead of offering a platform that appeals to only one subsegment of the mobile market, Microsoft will work through partners to tailor phones across the entire business/personal productivity/mobile Internet/entertainment spectrum.
"We want to offer choice," Bach said. And "that means collaborating (with our partners) in a different way than before. We are not just handing an OS to OEMs and operators."