Standing up to Microsoft

Sendo, the United Kingdom's only mobile phone manufacturer, announced that it was canceling its Z100 Windows-based Smartphone, 18 months after announcing it and just a fortnight after launch. Instead, we should expect a Symbian equivalent late next year.

What happened? Nobody's saying--and, unusually for this business, the clamp on leaks seems watertight. All we can hear is the heart-chilling swish of leathery wings as lawyers congregate on rocky outcrops: there are terse statements and wild rumors, but nothing that goes any way towards explaining this remarkable turn of events.

Most of the facts are clear: Microsoft bought a significant stake in Sendo, and Sendo agreed to produce a Windows Powered Smartphone mobile. This was announced in February 2001, with a launch date tentatively scheduled for the autumn of that year. The product got launched a year late and sank immediately, with Sendo saying, "if we could have done anything else, we would have."

Canning a product immediately after launch isn't unheard of, but it's very rare. It's certainly very un-Microsoft, which produces dogs but lets them quietly expire rather than do anything as corporately embarrassing as canceling them. And Sendo has consistently impressed by its lack of stupidity, showing instead a strong understanding of the worldwide market in low-cost mobile phones. It's not got much of a name at home, but it's a good company. The cancellation of the Z100 writes off huge investment, is a public admission of failure and has caused goodness what complications with clients and suppliers. And of course with Microsoft, which must be absolutely seething with corporate rage.

The Sendo engineers aren't among the weeping, oddly enough. To be sure, it's not nice having a project cancelled and they now have a lot of free time on their hands--apart from placing Amazon orders for Symbian programming books--but as sources close to the soldering irons said: "Nobody ever got dissed for falling out with Bill Gates." Whatever it's like making mobile phones the Microsoft way, it doesn't inspire much love from the hewers of code. They're not sorry to see it go. The hardware bods are similarly unconcerned: the Symbian Sendo isn't going to be that different to the Z100. Same chip set, some details changed. And nobody's worried for their jobs: whatever Sendo's up to, it's not bailing out of the game.

So whatever upset the apple cart, it wasn't the hardware. The market for picture-taking, games-playing, data-guzzling whizzy mobile phones is as hungry for new product as ever, so it's not that. And if the cancellation's not down to Sendo being as mad as a cow in a spacesuit, that leaves just one factor. Our question becomes not "what happened?" but "what on earth did Microsoft do to annoy Sendo so much?"

My best guess, guided by voices that dare not speak their name, is this. Sendo's business nous includes a determination to be behind the leading edge of technology: let others blaze the path, and come in with sensible products once the smoke's died down.

However, it also has to keep up with the big names, so can't afford not to play in any of the significant market niches. Complex phones cost lots to develop. Microsoft looked like a good bet--MS doing all the work in user interface design, a lot of software already out there on the Pocket PC platform, credibility with the business community. Sendo gets a cutting-edge product with minimal R&D exposure, and in return Microsoft gets a European phone company on board.

However, as the phone progressed, Sendo must have realized that it had made a mistake: it had been "Microsofted", to use one source's word. Its customers--the network operators who buy and bundle the phones, not the end users--may have looked at the Smartphone, looked at Symbian, and said, "We don't want the Microsoft product." No network deals, no sales. Moreover, if the quality of the software a year after the projected launch date was as flaky as my pre-production sample indicated, there must have been real worries on that front. In short, Microsoft failed to deliver something that Sendo could sell.

Did the contract between Microsoft and Sendo require Sendo to launch the product, while not committing Microsoft to delivering the software that Sendo needed? Did Sendo think it was being used as a decoy duck, floating merrily on the river to attract other companies down and into the range of Microsoft's big guns? You won't find anyone to answer these questions, but nobody's suggesting anything more plausible.

The clincher may be the mobile phone industry's enormous distrust of Microsoft. Pocket PC manufacturers have had to fight each other tooth and nail, slashing prices and bleeding real blood in the dog pit of a difficult market while Microsoft just sets the standard and soaks up the licence fees from the victor. Who'd voluntarily let that happen when a good alternative's available? There's a high water mark in the history of all empires: Thursday November 7, 2002, may be that day for Microsoft.