A Microsoft smartphone: No. A Microsoft phone chassis: Yes

By | February 6, 2009, 5:31am PST

Microsoft is not going to introduce a Microsoft-branded phone at the Mobile World Congress show in Barcelona later this month. Not a Microsoft-branded Zune phone. Not any kind of Microsoft-branded phone. Period.

So why — in spite of continued and repeated denials by Microsoft — do reports continue to surface that Microsoft is going to deliver a smartphone? According to people familiar with the company’s mobile plans with whom I’ve spoken, Microsoft is developing some smartphone reference implementations. These implementations are taking the form of multiple smartphone chassis (at least one of which is powered by Nvidia processors).

(A year ago I speculated that Microsoft officials were carefully choosing their words about the existence of Zune phones. Looks like I was right. There will be Zune phones. There will be other kinds of Zune-enabled mobile devices. But they won’t be crafted — beyond the reference chassis — by Microsoft.)

Think of what Microsoft is doing in phones as similar to what it has done in the PC market. Microsoft often develops reference implementations and encourages PC makers that they build PCs that adhere to a set of reference guidelines/specifications.

From one of my sources, who requested anonymity: “The (Zune phone) chassis 1 spec is challenging the manufacturers to come up with something that will please customers.” This source said Microsoft was pitting a handful of cell-phone makers against one another to come up with the best implemention of the spec.

From what I’ve heard, Microsoft is focusing most of its reference efforts around the Windows Mobile 7 platform. I wouldn’t be surprised to see Windows Mobile 7 as Microsoft’s showcase for Zune MobileSkyBox 2.0; its SkyMarket (or SkyMart) phone-application store; a Zune Video service that could work across phones, MP3 players and Xbox consoles (could this be what Microsoft execs Joe Belfiore and Charlie Kindel could be working on now?); and other “Pink” services.

Will Microsoft never do its own phone? Never say never. But for the next couple of years, don’t expect Microsoft to try to get into yet another low-margin, hardware-centric business…..

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Mary Jo has covered the tech industry for more than 25 years for a variety of publications and Web sites, and is a frequent guest on radio, TV and podcasts, speaking about all things Microsoft-related. She is the author of Microsoft 2.0: How Microsoft plans to stay relevant in the post-Gates era (John Wiley & Sons, 2008).

Disclosure

Mary-Jo Foley

Freelance journalist/blogger Mary Jo Foley has nothing to disclose. WYSIWYG (what you see is what you get). I do not own Microsoft stock or stock in any of its partners or competitors. I have no business ventures that are sponsored by/funded by Microsoft or any of its partners or competitors.

Biography

Mary-Jo Foley

Mary Jo Foley has covered the tech industry for 25 years for a variety of publications, including ZDNet, eWeek and Baseline. She has kept close tabs on Microsoft strategy, products and technologies for the past 10 years. In the late 1990s, she penned the award-winning "At The Evil Empire" column for ZDNet, and more recently the Microsoft Watch blog for Ziff Davis.

Got a tip? Send her an email with your rants, rumors, tips and tattles. Confidentiality guaranteed.

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RE: A Microsoft smartphone: No. A Microsoft phone chassis: Yes
jackson1984-24316069205748857739440257893812 10th Oct
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It's sounds rosy
dascha1 6th Feb 2009
A very positive outlook on their embedded front. A 'cool' factor is yet to
please in my view however. They would really benefit from going 'even-
smaller' to compete in the market, really. For instance, 'pimp-yo-
glasses' would be a great attention getter. i know as an athlete I would
enjoy listening to and/or speaking to the hardware, alas, if it only clipped
to my cheap pair of shades.
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This can't be wrong
jk_10 6th Feb 2009
MJ,

I am not sure if you are sayiny it for certain, but I think that's the only way it will turn out. I have thought about this for a long time, well, i am not working for msft. They can have a frame work that is guidelines, inlcuding not only winmobile, but also the all the package of the services ready. Each vendor has their freedom to customize it, different look and capacity.

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Contributr
certainty
Mary Jo Foley 6th Feb 2009
Well, I never can say I'm 100% certain (until the press release comes out and we see how MS positions something). Because of the sensitive nature of this info, I can't be more specific on who my sources are. But I'm feeling this info is as accurate as I could make it, given what I got from whom.... (if that makes any sense). MJ
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This isn't unexpected
Joe_Raby 6th Feb 2009
When they started designing Pocket PC devices, they were all to have a D-Pad control, a Windows hardware button, stylus, IR, a certain size screen, a voice-recorder button, etc.

Likely this is just more of the same. They'll probably dictate that certain criteria be met for it to have their software on it.

Microsoft does this a lot though. For instance, OEM hardware companies that build for Windows Home Server have to meet certain criteria too. A couple of those requirements are that the device must be headless, and it must have status LED's for each drive for it to meet logo certification.
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Big mistake
oneppo 6th Feb 2009
This is a huge mistake on Microsoft's part: http://blog.oneppo.com/2009/02/06/microsoft-still-not-getting-it/
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Prejudiced much - already?
kvkalidindi 6th Feb 2009
Even without seeing what the guidelines are and what they mean to consistent real world user experience, you have started bitching already?

I think you're just spamming your blog in the Talkback section, and nothing is more easier a punching bag than Microsoft to make careers out of. Pathetic.
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Did you even read it?
oneppo 6th Feb 2009
How is this prejudice? Did you even read my blog post? I want Microsoft to succeed. I?m frustrated that they keep making the same mistakes over-and-over. I don?t like Apple products. In fact, I have a Zune and an HTC Touch Pro. But they?re doing something right. For years I?ve been making the claim that Microsoft needs own the value chain.
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Make your points here
coffeeshark 6th Feb 2009
I know linking your blog posts will get you more visits than normal and increase your linking scores, but the problem is that you don't even bother to make any of your points here.

Make your basic points here and most of us won't mind you linking to your blog as much as what is obviously a plea to go read your blog.

I did read your blog, it was decent, but I think you wish that MS use the Apple model in the phone ecosystem, when that is quite literally the last thing they should ever do.

While MS does maintain control some hardware pieces like Zune and Xbox, any similar venture into the phone business is more of a limitation than an advantage.
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Limitation, maybe, but...
oneppo 6th Feb 2009
Sure it's a limitation, but its better than the alternative. I'm not suggesting that they copy Apple, but they do need to control the value chain better. Consumers see a device that crashes and runs slowly. They blame it all on Microsoft but the problem its equal parts Mircosoft, the device manufacturers, and the complexity of having so many different platforms running your OS.

And my apologies for my original comment being so short. My first try got erased because I had to create an account. I got lazy but I should have taken time to rewrite it.
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Big mistake????
mrjoctave@... 6th Feb 2009
Obviously you dont get it, Microsoft could build a phone and sell millions just like iPhone but guess what? the iPhone is one product hence only selling millions. This strategy means more phones, more brands and a wider view of the market as a result, hence when all the brands are combined the potential is billions of phones using MS software/os's instead of millions.

Remember that MS doesn't profit from the pc's that are sold, the companies that build them do, they profit from the companies installing Windows on those PC's hence Microsofts dominance in the PC market this will be the same for smartphones.

The user is not locked in to one manufacturer and one product, they can buy a samsung smartphone or a sony smartphone and so on, each having its own characteristics and features hence more choice for the user.

As Mary said, win mobile doesn't function well on every device its installed on with so many manufacturers doing there own thing, by creating a guideline, what there actually doing is ensuring that win mobile functions flawlessy with all phones it is installed on that follow those guidelines and still enabling the manufacturers the freedom to be unique in there designs and incorporated technologies.

The units sold by all those manufacturers combined will go into the 100's of millions and possibly billions instead of millions hence MS gains a wider view of the smartphone market which it can then utilise to promote its mobile software whilst dominating the smartphone industry i.e. Apple may have (and i'm not using real figures just making a point) say 12% of the smartphone market with the iPhone and the other 88% is held by a range of other mobile manufacturers, if those other manufacturers decide to use win mobile guidelines for there smartphones MS will end up with 88% of the smartphone market, hence dominating the industry in much the same way it dominates the PC industry.

MS strategy is not about trying to sell one product to the whole world, that just isn't gonna happen, for Apple, MS or any other company because we all have our own likes and dislikes its called individualism. But by putting software on a range of devices produced by a range of manufacturers you have the potential to dominate because no matter what choice you make based on your likes and dislikes, the underlining software is still gonna be the same.

They kill to birds with one stone, a more stable smartphone os with a wider view of the total market.
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Hardly a mistake
GuidingLight 6th Feb 2009
the first mistake is assuming you know the inner workings at Microsoft and what it is they are after and what their capabilities are.

The second mistake is comparing two different revenue models (Microsoft and Apple).


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Good approach
coffeeshark 6th Feb 2009
Microsoft needs to leave the manufacturing of the phone to knowledgeable partners, as it does the PC business.

While this doesn't allow for locked-down environments like the Mac or iPhone, it makes up for it in allowing multiple partners the chance to contribute and profit, which also allows for different design choices and more options for the consumer.

Also, if MS does limit the spec to only a handful of manufacturers, there is a subset of 'approved' products from the spec, which will (hopefully) reduce issues with hardware.

Putting the expenses of a hardware phone unit onto their backs would be detrimental.

A phone that combined zune mobile with skybox-type services would offer a real choice to the connected user. The unification of MS services seems so close, but yet so far away, and I'm hoping they get it right.
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strengths and that their strengths were also each companies greatest
vulnerability. MS is the Jack of all Trades type company and Apple
attempts to be the Master of some. Each track leads to success and
failure for you can't please everyone. I prefer Apple's way of doing
things but I know of many who do not.

I'm not sure either company could or would find greater success in
trying to do what the other does. Nor am I certain that there is a
solution in tying out a hybrid solution.

Still it would be interesting "IF" the market had room from a separate
company that did try to do things in the middle of the two extremes.

Pagan jim
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agreed for the most part
coffeeshark 6th Feb 2009
I'd say that you're right for the most part, except that I think MS is trying to become the "in-between" company by doing some hardware. Maybe that's why they flounder sometimes when they stray from the software-only model.

But MS can't do an Apple - they can't go into that sort of production and control. They support too many OEMs to start producing the MS Computer and the MS Phone. By more tightly controlling the reference design, they are doing as much as possible while not destroying the OEMs they support.

That's not counting legal issues, esp in the EU with anything remotely resembling a MS-branded PC.
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If Apple moved into OEM agreements with a limited number of companies, with strict control of approved designs, they could build out the market share for OS X without having to ditch the Macintosh hardware platform.

They could have the best of both worlds.
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'strict control'
coffeeshark 7th Feb 2009
Strict Control is the hard part. Unless you control manufacturing, you'll always be subjected to the quality of the manufacturer and distributor. Any OEM agreements of that sort would dilute the Apple brand reputation, and would also bring down costs (and therefore perceived 'value') of the systems.
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... the hardware platform, that is, as a premium brand. It's a win-win.

And it's not impossible to achieve strict control. OEMs like Dell and HP are really computer assemblers, not manufacturers. They receive parts made both others and slap 'em together and ship 'em out the door. Apple simply has to agree on an acceptable systems parts list with OEMs and set up some oversight to mandate compliance.
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Why? Well.... here's why.
TheWerewolf 6th Feb 2009
"So why ? in spite of continued and repeated denials by Microsoft ? do reports continue to surface that Microsoft is going to deliver a smartphone?"

Because somewhere along the road, journalism got mixed in with the original idea of blogging (ie: gossip mongering and opinion exposition) and the latter won.

Don't get me wrong Mary Jo, I think the world of your column and you're one of the better techblog writers out there so I'm not pointing fingers at you personally, but a lot of what I read in the techblog world isn't about what *is* - it's about what *might be* - and the more sensational the rumour the better. When it is about what is, it's often more about promotion of a preferred platform or technology and the tearing down of all others often without a lot of real understanding of the situation.

This entwining of the lurid with the confrontational is making every techblog entry sound a bit like the tech equivalent of a debate between Rush Limbaugh and Al Franken.

That's why.

Oh and it's "choosing" not "chosing" in para 3 sentence 1. happy
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Exactly
jk_10 6th Feb 2009
When last time TimeOnline posted an article saying msft and yahoo made a deal, and no one say a word afterwards, I start to understand what is going on in the journalist world. do we still call them journalists? When we say jourlism, first thing is TRUE, second is NEW. Right now the only thing they care is getting people's attention. what a world?
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Contributr
another factor
Mary Jo Foley 7th Feb 2009
Thanks for the vote of confidence (and the typo correction).

Another factor (or two) playing in here is:

1. When a vendor won't outright deny something, it fuels incorrect rumors. Apple is infamous for this. But Microsoft is taking a page from their book. Microsoft denied the latest smartphone rumors to the WSJ and CNET. The rest of us got "no comment." To many "no comment" incorrectly means "it's true and we don't want to confirm."

2. Analyst reports often state things as facts that are speculation. What seemed to kick off the latest round of MS phone speculation was one Wall Street analyst's report. He said he heard from his sources MS was doing a phone. In the small print he noted it might be a reference design. Many journalists and bloggers assume the analysts have inside info from the vendors. I don't think many of them do anymore.

As I noted before, because this info. is very sensitive, I have to couch my sourcing on it -- which makes it look more speculative than I feel it is. But I'd rather protect my sources than make my post more definitive. That's a trade-off... MJ
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Two points: First - linking to someone else's opinion to back up your opinion is being lazy. At least take a moment to summarise it in a sentence so we can judge whether it's worth the effort to go look.

Second - that opinion piece is seriously flawed. Apple makes their own hardware. They are, first and foremost a hardware company; they make software to get people to buy their hardware.

Microsoft is a software company, which means they make their money by licensing their software to end users or to OEMs who use their software as the foundation of their products. Apple has NO presence in this market at all. So comparing them is at best, risky.

By creating a Zune Phone, they stand to alienate all the current WiMo phone makers. At the very best possible outcome, they'll either lose licensing customers, or be hamstrung into making a second rate device that doesn't compete too hard with the other players.

To make it work, Microsoft would have to transition over to an Apple... and here's the thing people keep missing - Microsoft makes a ton more money than Apple does. You're asking them to take a cut in market share and profitability in order to look cool.

That's just stupid in terms of business.

PS: Before you haul out stock prices and market cap figures - those are completely irrelevent. Microsoft doesn't make anything when the stock market goes up - the investors do. The only figure of importance here is profitability and even with the downturn and the problems with the Zune, Microsoft's overall profit went UP last quarter by 2%.

Face it, they know what they're doing.
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Zuner
GoodSource 6th Feb 2009
Very good said my dear Werewolf. Maybe you should ask Gates for referral to work as Marketing CEO.

Anyways I think Mary is somewhat on target. I think all she really had to say is.

BreakingNews NOT: Microsoft is making Zunephone. Period.
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Reference chassis...
RationalGuy Updated - 6th Feb 2009
"By creating a Zune Phone, they stand to alienate all the current WiMo phone makers."

According to the story, Microsoft will not create a Zune Phone. They will make reference hardware for their OEMs to say, "If you want to make a Zune Phone, here's how you make one." The existing Windows Mobile phone makers would be the ones making the phones.

Sorry, I'm not sure which position you're taking here.
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Uh, WRONG
matthew_maurice 8th Feb 2009
TheWerewolf clearly didn't go to business school, or at least he can't
read corporate quarterly results correctly. Microsoft's
revenue increased 2% last quarter to US$16.63 billion, which
means they took in 2% more money, BUT their net income
(i.e. profit) was down 11% for the quarter at US$4.163 billion. A BIG
difference. By contrast Apple had record revenue and profit
in the same quarter. In addition, APPL had earnings per share of $1.78
versus MSFT EPS of $0.47.

So by your own admission, Microsoft has problems considering that
their profit is down by double digits. Face it, a lot of industry analysts
think that the brains in Redmond don't know what they're
doing.
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Isn't it about making money?
Blad_Rnr 6th Feb 2009
I thought it was about making money? Not whether you sell
millions of phones. Look at how much money Apple is
making and how little MSFT is making in WinMoble licenses.

Which amount would you rather have?
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Talk about twist in your favour
mrjoctave@... 6th Feb 2009
eerrrm.. are you saying look at how much Apple are making on the iPhone and how little MS is making on winmob licenses???

Did you know win mob is a software that gets installed on a phone and the iPhone is actually a phone with software. hardware does tend to be more expensive then software don't you think.

If you ask me who would i prefer to own at this time, MS or Apple, well thats pretty easy, i'd go for MS everytime.

oh and by the way, how is iphone making money... isnt it selling millions of iPhones??
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Credit due
joozzt Updated - 6th Feb 2009
Gotta give them credit, since the eighties the story was the same: open hardware, open software, we make the OS and will let anyone make any software or hardware for it, yeah, the anarchy of the internet was for a great part caused by the widespread adoption of affordable computers. The love/hate relationship with Microsoft will expand to the mobile parts of your user-experience i fear/like.
Me like it.
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RE: A Microsoft smartphone: No. A Microsoft phone chassis: Yes
jackson1984-24316069205748857739440257893812 10th Oct
Okay! Many thanks! I generally wished to compose on my web-site a little something like that. Can I place into motion a component of one's respective buy jerseys publish to my websites?

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