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Hardware 2.0

Adrian Kingsley-Hughes

Should Microsoft build its own phones? Yes!

By | July 28, 2010, 7:12am PDT

Summary: Microsoft should dump the partners and build its own phone.

Ars Technica’s Peter Bright says that Microsoft should build its own phones. And I agree.

Here’s the money quote:

With the loss of the software customization and the lack of hardware variation, OEMs might find themselves with no effective means of establishing a branding or carving out a niche for themselves. Though they’re supporting Windows Phone 7 right now, there’s a good chance that they will lose interest once their hardware has been commoditized.

Microsoft has in the past been severely let down by its handset hardware partners. Microsoft would supply an OS along with a vague technical spec, and basically allow OEMs to mess about with the OS and shove it onto any old junk that would (barely) run it.  Basically the only way OEMs could differentiate themselves was on price, and that meant a race to the bottom. The end result was that the Microsoft mobile experience sucked for the end user, and Microsoft failed to get the traction it needed.

Poll

Are you worried about the security of your iPhone, iPad or iPod touch devices?

Now it seems that Microsoft has learned some lessons. There’s a very strict hardware spec, and there’s little or no room for OEMs to mess about with the user interface. So how do OEMs differentiate their product from the competition?

… any ideas? …

   … *crickets* *crickets* …

Color?

And that’s going to be the problem with Microsoft’s endeavors with Windows Phone 7. Once the initial hype has died down, it’s going to be hard for OEMs to push a particular handset because little (or nothing) will separate it from other handsets on sale. And why should they? These companies all have their own handset aspirations outside of Windows Phone 7.

Bright raises another point:

Microsoft might be hoping that smartphones go the same way as desktop PCs, and experience a race to the bottom. The margins in desktop PCs are negligible, with the only company making much money out of them being the one selling their operating system. They’re all so thoroughly interchangeable that price is the only way to differentiate, so OEMs slash their margins to make their products ever cheaper. If that happens, it won’t make phones any more profitable to Microsoft; it’ll just make them a whole hell of a lot less profitable to Apple and others.

I don’t see this happening for one reason - Android. While Linux isn’t really an option on the desktop for the Joe Average, Android on a handset is, and OEMs could cut Microsoft out of the game.

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Adrian Kingsley-Hughes is an internationally published technology author who has devoted over a decade to helping users get the most from technology.

Disclosure

Adrian Kingsley-Hughes

All opinions expressed on Hardware 2.0 are those of Adrian Kingsley-Hughes. Every effort is made to ensure that the information posted is accurate. If you have any comments, queries or corrections, please contact Adrian via the email link here. Any possible conflicts of interest will be posted below. [Updated: February 23, 2010] - Adrian Kingsley-Hughes has no business relationships, affiliations, investments, or other actual/potential conflicts of interest relating to the content posted so far on this blog.

Biography

Adrian Kingsley-Hughes

Adrian Kingsley-Hughes is an internationally published technology author who has devoted over a decade to helping users get the most from technology -- whether that be by learning to program, building a PC from a pile of parts, or helping them get the most from their new MP3 player or digital camera.

Adrian has authored/co-authored technical books on a variety of topics, ranging from programming to building and maintaining PCs. His most recent books include "Build the Ultimate Custom PC", "Beginning Programming" and "The PC Doctor's Fix It Yourself Guide". He has also written training manuals that have been used by a number of Fortune 500 companies.

Adrian also runs a popular blog under the name The PC Doctor, where he covers a range of computer-related topics -- from security to repairing and upgrading.

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I cant help but laugh
charlesdjones1 30th Jul 2010
Apple and its cult like mentality of all its users seem to think that Microsoft, who has been the leading technology company going on now for 20 years, doesn't seem to know how to put out anything productive or profitable. Windows 7 killed the notion that OSX was superior, now all they have is this "iOS is superior" to Winphone, while if you really look into it, Winphone 7 is going to be the preferred choice for real business professionals, why? Because it's really that good. You don't net almost 5 billion in one quarter because you don't know what you are doing.
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Microsoft should Give Up Already
itguy08 28th Jul 2010
I mean really, who is clamoring for Win Phone 7? I mean the market has moved on and MS has no future in this market.

It's ok Monkey Boi, you failed again. Admit is and move on. Make better products and people will buy them. Learn from Kin and stop the insanity.
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Failed again?
mdemuth 28th Jul 2010
@itguy08
Like Windows 7? Like Server 08? Like Q4 $4.52 billion net income?
Wow, I just wish I could have 'failures' like that.
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@mdemuth
jacarter3 28th Jul 2010
Did you even read the article? Actually MS has had its greedy sights on the phone market for over the past 5 years. They have failed to achieve even a part of critical mass. Why? They can't strong arm the hardware vendors into using their OS/platform and only their OS/platform in the cellco market. That approach worked just dandy for PCs in the early to mid 1990s but it ain't happening now. for the present, they have to compete against real and solid alternatives. Can they do it? I would not bet on it.
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RE: Should Microsoft build its own phones? Yes!
Loverock Davidson 28th Jul 2010
@mdemuth
Exactly! If all companies just gave up we wouldn't have any innovation or new products or competition. Some people just don't want Microsoft to continue to succeed.
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Read the Wall Street Journal article today
HollywoodDog 28th Jul 2010
@mdemuth ... Holman Jenkins calls Ballmer's tenure a corporate governance problem, suggesting they should up the dividend to starve out useless failures like Bing and Zune and all the other embarrassments (which WP7 will surely be).
Microsoft can't design its own phone because it can't do anything right except for Windows, Office, Servers and tools.
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Yes, failed again...
jasonp@... 28th Jul 2010
Microsoft Bob is considered a wild success when compared to the Kin.
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@mdemuth
Win 7? Yeah what, 75% of corporate PC's are still on XP with few plans to move to 7? MS extended XP downgrade to 2014. Sounds like a winner there.

Server 08? None of us like it but we have to use it; lock in to the MS platform.

MS is only a hair bigger than Apple right now and will most likely loose that title again shortly.

Yeah, the only thing MS does well is Office/Windows and that's because of the huge lock in, not because of technical merits.
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@jasonp@

"Microsoft Bob is considered a wild success when compared to the Kin. "

Way to bring up a 15+ year old product. Seems that is all some can do to slam microsoft is to either rely on things in the way past or come up with lies. While the KIN was not successful and WinPhone 7's future has yet to be seen you should see what happens. Maybe it will be and maybe it won't but that is why there are choices out there. Choose the platform that works for you.
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@mdemuth Actually he has a point - for exactly the reasons you pointed out. Does Microsoft really even NEED to be in this market? They have plenty of very dominant products, is it only vanity that means they want a successful phone OS?

If they are going to do this, I think they have to grasp the nettle and build the phone themselves. I see nothing in it for the OEMs - for them it seems like a sure "race to the bottom". Selling handsets isn't enough, you have to have a margin on them!

If Microsoft are really serious about this they need a "killer app", for me, that would be a game (like Halo was for the original Xbox).
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@itguy08

"Win 7? Yeah what, 75% of corporate PC's are still on XP with few plans to move to 7? MS extended XP downgrade to 2014. Sounds like a winner there.

Server 08? None of us like it but we have to use it; lock in to the MS platform.

MS is only a hair bigger than Apple right now and will most likely loose that title again shortly.

Yeah, the only thing MS does well is Office/Windows and that's because of the huge lock in, not because of technical merits."


Win7 is a huge success and yes while it is mainly in the consumer arena I think your "assumption" that few businesses or larger organizations have no plans to move to it is a false assumption.

Server 2008 is awesome and while YOU may not like it many people do. I think this is your lack of skills/knowledge/experience talking and maybe you should be called ITGuyNotSoMuch because your lack of IT skills show in every post you make.

You can continue to predict the demise of Microsoft like some have for the past 20 years but there is no sign of that happening other than lies and crap being spit out by people like you.

Lock In? Really? IMO Apple is the king of locking you in. Microsoft's products work well with other products made by Microsoft so many organizations CHOOSE to use more of their products because of the seamless integration of their solutions. Many 3rd Party products also integrate with Microsoft very smoothly so there is less issues of trying to mix and match solutions and rigging them to work.

I am not sure what kind of ITGuy you think you are but obviously if these things are not working for you then you are not a very good one.
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Totally Agree!
GoodThings2Life 28th Jul 2010
@bobiroc ... I agree completely with you. I've been doing IT work for 20 years now, and every one of my major systems runs Windows. Rock solid in every aspect too, and I take the time to properly research vendors and applications that run properly without issue, and if a particular issue does come up, I deal with it before it expands into bigger issues. If a vendor's product fails to meet stability requirements, I find a new vendor, plain and simple. No investment is ever worth more than an entire business's productivity using the wrong product.

As for being locked in, are you freaking kidding me?! The whole reason I run Windows is because I can literally run any application under the sun! I choose to run Microsoft software, because I actually like the standardization offered, but I'm not mandated to do so, and when MS products are too expensive or not functional enough, I look at alternatives. Again, plain and simple.
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@bobiroc
Amen brother!

Server 2008 is awesome. Having not setup a server in over 5 years I had a streaming media server running serving a live webcam broadcast from my desktop, using Windows Media Encoder which is free from MS, which streamed to the media server I setup and broadcast for anyone to see via a web page. With that said, I spent all of 5 hours getting it running starting from an unformatted harddrive to a functional Server 2008 streaming media server. I even learned how to insert advertisements into the video stream on a schedule.

Aside from that seamless integration, I expect the same or similar integration of the Windows Phone 7 with my desktop/email/sms and other tools. One thing is for sure of this potnential Windows Phone 7 purchaser, the more it costs the coler it better be. After all it is still a phone, so anything over about $150 really needs to justify that cost, and it better have WiFi.
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@itguy08
"I mean really, who is clamoring for Win Phone 7? I mean the market has moved on and MS has no future in this market. "
Based in you comment, Apple should quit from the PC market, peolple should stop developing Linux desktop environments, OpenOffice and iWorks should be discontinued, and the list goes on (every product I mention have 10% or less of market share in the desktop market). Is that your point?
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They should have, but it's too late now.
matthew_maurice 28th Jul 2010
For all their talk about starting from a clean slate, they couldn't break away from their tried (read: tired) and true model of selling an OS to the hardware guys and leaving it at that. The truly ironic thing is that they seem to have taken so many pages from Apple's iPhone play-book, but missed Page 1, where it said OWN THE PLATFORM. Instead it looks like they took the worst parts and ignored the best, or at least most lucrative, idea.
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@matthew_maurice
And they think this will compete with the iPhone or Android? To me, it sounds like a total cluster f#%k. Reminds me of when users were updating their computers to Vista only to discover their machines were slowed to a near screeching halt. Remember those systems that were labeled Vista ready, and weren't. I personally think Microsoft is way to late to this party. Their product will be mediocre at best, and I seriously doubt we'll see people lining up to buy one ala iPhone. How sad to see Microsoft scrambling to make themselves look significant.
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@gtdworak

The only Vista upgraded machines that were slowed to a screeching halt were the people that went with lower than the recommended specs. And the Vista ready thing was the OEMs choice and was not as huge as you want to make it out to be. I can honestly say EVERY machine that came with Vista pre-installed that had performance issues either had a low end celeron with 512MB ram and/or was loaded to the max with 3rd party crapplications. It was amazing how a restore without those crapplications or a clean out of those crapplications made the computer run so much better. Vista initially was not as efficient as it is now and that I will admit but to continue and spread things you have read by stupid bloggers and commentators that are just not true is just plain stupid.
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Clues suggest M$ is already on this path
jjworleyeoe 28th Jul 2010
The ARM licensing agreement suggests that M$ may well plan to develop its own mobile processor. HP defection to webOS suggests, like Intel not supporting WP7 with their latest ultra low-power ATOM SoC, that M$' most informed partners already realize this is the path M$ will take in he mobile arena. Over the very near-term, M$ has to get WP7's missing features (copy/paste, MT, & IE8/9, etc.) plugged, so that a potentially Menlo derived WP8 will have enough time to bake and incorporate M$ future goal of owning an iPhone and Blackberry like vertical mobile stack.
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The race to the bottom is already on with android
Johnny Vegas Updated - 28th Jul 2010
with 3.0 it will be even more so. WP7 adding to a race to the bottom is a good thing. the iphone costs less than $200 to make. AT&T pays apple $600 per device and $200 to the consumer up front. In a typical consumer electronics markup those would be sold to the carrier for around $220, meaning the carrier could give them away free with the contract plan and still make the same money. And consumers could get an unlocked phone for the smae price they get a locked phone now. This would be good for everyone (except apple) and is the right path to get on.
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RE: Should Microsoft build its own phones? Yes!
Loverock Davidson 28th Jul 2010
It might be a good idea for Microsoft to built its own phone. If its anything like WP7 then the hardware itself will be excellent. WP7 is going to surprise a lot of people. I can't wait to get my hands on one, it just may be the phone for me.
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Hmm, don't you think you guys should give them a chance? The thing is if it is a success I would imagine all those skeptics will change their tune.
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@hassia

No it is much more fun for some to predict failure of a company they hate and make up stories on how their products do not work based off a few reported issues blown way out of proportion and ignoring the facts that Microsoft's products work very well for many people and organizations day in and day out and that is why they continue to choose them.
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That would be fighting the wrong war
bjrosen@... 28th Jul 2010
The OS war in the phone space is over, Android has won. It will take a few more years, but the writing is on the wall. Five years from now the market will be 90% Android, 10% iPhone. Microsoft has to figure out how it can make money in an Android universe. The money isn't in OSes, Android is free, it's in services and applications. MS needs to aggressively embrace Android and Chrome. The thing that could kill MS in the long run is if the world dumps it's applications as well as it's OS. Android is the camel's nose in the door. It will get consumers to push all of their personal data into Google's space. As smartphones and wireless networks get better and they are joined by Android/Chrome tablets the next step will be for people to start using them for more traditional desktop tasks. The next step is that the home desktop is just a big Chrome system with a keyboard added. If MS doesn't get there early people will move to Google Docs or to Open Office which being a Linux native suite already can move onto Chrome trivially. If MS is there with MS Office in the next 12 months or so they can prevent that, but it they wait it will be to late.
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@bjrosen@...

Thank You Nostradamus. How is that crystal ball working out for you?
@bjrosen@...
to OEMs if that's what it took to get the kind of adoption they want, right? Microsoft is not stupid enough to keep a car if they can't afford the gas.

The smartphone race is a LONG way from over. Google doesn't have a shred of the experience that Microsoft does in working with consumers, enterprise, and developers to make wheels go 'round.

If you're counting Microsoft out-- or even think Android is a shoo-in -- you're nuts. Every company in the smartphone OS war knows the stakes. Nobody has enough momentum at this point to even claim prevalence, much less victory.
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@bjrosen@...

Actually the OS war in phones is yet to begin. Andriod is yet to settle down, Nokia and MS are yet to launch their new phone OSs, remember, Nokia sales most phones in the world. There is no reason why some other company can't come up with a different OS.

Linux was always free, but still more people bought Windows. Open Office was always free, still expensive MS Office suit was always the bestseller. After launch of new Live services, Google docs will face some serious competition. Plus, many people will still prefer to keep their data in their PCs then handing over to Google.
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Been saying the same thing...
dave95. Updated - 28th Jul 2010
Why would OEMs want so much restrictions/rules on how to sell their hardware when they can just use the freely open and rapidly growing Android instead? I just don't see a space for this approach today of licensing out the OS but also putting strict rules on how OEMs sell it. It's like they know Apple's "control" approach is working but yet can't fully break from that old business model of licensing the OS. This may have worked if there were no Android but it's too late. At this point they have to chose one; licensing out WP7 and let the OEMs do as they please to differentiate themselves in a very competitive space (with an unproven new OS), or go it alone (ala Apple/iPhone). I would choose the latter.

This also brings us into Tablets. Microsoft seem to think once again that licensing out multiple variation of WinCE and Windows 7 to OEMs will be enough to compete with Apple's iPad. That's the same OEMs that couldn't muster a compelling Tablet PC/UMPC device over the years mind you (aside for maybe Sony & OQO).

Also most consumers don't care about ideology (Android open vs closed), they just want an all around solution that works as advertised. And the iPad/iPhone right now is working for them.
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Microsoft will be in a similar boat as Android in that one OS can be used by many phone manufacturers and many carriers. This has not hurt Android and I don't think you can say that the quality of the hardware is in a "race to the bottom". On the contrary, the quality and performance of the hardware is rapidly increasing. On Verizon we went from the original Droid to the Incredible then the Droid X and soon the Droid 2. Some say its improving too fast i.e. you buy a phone and in a month or two you already feel like you have to have the new and improved model.
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@cornpie

I agree completely. I find that whether you choose Android, iPhone, WinPhone7 or even some other phones they are all "app" driven these days and while some may have apps others do not have the most popular seem to be on every platform so they all work pretty much the same. Some like Android because you can customize it more but overall I think people just want a phone that will let them get to their facebook, the internet, watch media clips, listen to music, play games, and make calls/texts. They all do that even though some may be a bit different than their competitors.

I also agree with this new phone every couple months is ridiculous. I have a co-worker that has had 3 new phones since Christmas already because he has to have the latest version of phone-x. To some people a phone is a status symbol and to others (like me) it is a phone and a tool for communication and entertainment. Not every phone will work for everybody. That is why there are choices.
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Well lets see..
MovingOn.Pmb 28th Jul 2010
To be honest, I think that innovation and leading edge thinking has taken a back seat at Micro$oft. Their portfolio is immense, and they cannot focus on key products as they used to.

Before Microsoft gets into the hardware business, I think they need to define what they really want to do in the mobile market. To compete with Apple and Google, they need cutting edge ideas, something that is simple to use, affordable, and very cool. When I think of Microsoft I think dull. Who has listened to one of Stevie B?s keynote addresses and not scratched his head.

Maybe they could redefine their mobile division, and allow it to form into a separate company, without legacy restraints. They could focus on a killer mobile o/s, develop hardware, app store and out Apple, Apple (sounds like the 90?s).

I can?t see Microsoft as it stands; becoming a trend setter in this new landscape. Slim down, focus and lead. We can already see that the mobile platform will rule our technological world for the foreseeable future. Do I want to see Apple and Google own this space? Hell no. We need as much competition as possible.
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Perception is not Reality
IamTiger 28th Jul 2010
How much does it cost Apple to mass produce, ship, store, and fix faulty Iphones? How much does it cost Microsoft to sell software licenses. Nothing is over, in fact the market is just ripe for the next big thing....
As far as cell phones go Nokia is in first place with a 35% market share, followed by Samsung, LG, Research In Motion, Sony Ericsson and then Apple with 2.7% market share.
As far smartphones go Nokia's Symbian led the pack with a 44.3% followed by RIM 19.4%, Apple15.4%, Android 9.6%, Windows Mobile 6.8%
What does these numbers tell you?
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I cant help but laugh
charlesdjones1 30th Jul 2010
Apple and its cult like mentality of all its users seem to think that Microsoft, who has been the leading technology company going on now for 20 years, doesn't seem to know how to put out anything productive or profitable. Windows 7 killed the notion that OSX was superior, now all they have is this "iOS is superior" to Winphone, while if you really look into it, Winphone 7 is going to be the preferred choice for real business professionals, why? Because it's really that good. You don't net almost 5 billion in one quarter because you don't know what you are doing.

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