Spurred on by Apple's pursuit of the wireless mass market, Microsoft is redoubling efforts to court mobile-phone consumers. Despite long-standing attempts to widen the appeal of Microsoft's Windows Mobile, the operating system for cell phones is popular mainly with business users looking for a way to view documents, spreadsheets, and corporate e-mail on a handheld device.
Luring the less-business-minded has taken on added urgency in light of Apple's success with the iPhone, introduced in June, 2007. "We've always been going in this direction, but we feel it's time to move in more aggressively now," says Scott Horn, general manager of Microsoft's mobile communications business, though he denies the push has to do with Apple (AAPL). In 2007, the Windows Mobile share of the U.S. smartphone market slipped to 28%, from 30%, reflecting inroads by the iPhone, which uses Apple's OS X operating system, according to researchers at IDC.
While Windows Mobile has gained global share and almost doubled shipments, to 11 million units, in 2007, Apple has made remarkable gains too, selling 4 million iPhones in less than half a year on the market. "Apple has gotten more attention in the first six months than Microsoft has gotten in the first five years," says Richard Doherty, director at consultancy Envisioneering Group.
Focus on Mobile Browsing
To make Windows Mobile more appealing to the masses, Microsoft (MSFT) is trying to improve its Web browsing capabilities. On Mar. 17, Microsoft announced it has licensed Adobe (ADBE) Flash Lite, which will let Windows Mobile users view certain Web sites, such as e-commerce and video game pages with animations. Microsoft has also licensed another piece of Adobe software that makes it easier to view e-mail attachments, and it's working on a mobile version of its own Silverlight code, designed to enhance the appearance of mobile Web sites.
The company is also likely at work on a full mobile browser that would put phones running Windows Mobile on par with the iPhone, say analysts. In February, Microsoft acquired a startup called Danger, which already makes a mobile HTML Web browser and applications geared toward social networking and instant messaging. "We absolutely intend to provide a great mobile browsing experience," says Horn.
Microsoft's endeavors don't stop at the browser's edge. It's trying to make the system's whole look and feel more user-friendly. "Microsoft just isn't delivering a product that's appealing to consumers," Greg DeMichillie, an analyst at consultancy Directions on Microsoft, says of the current operating system. "Windows Mobile is too much Windows and not enough mobile. The device's interface is clunky. The software makes you take too many steps to get a task done. The pressure is on Microsoft to try and make Windows Mobile a better end-user experience." Some newer, hipper Windows Mobile designs and features are already working their way into phones, including T-Mobile's Shadow device for consumers and Palm's (PALM) new Treo 500v smartphone from Vodafone (VOD), aimed at business users. "This offers a good taste for where we think [user menus] should be heading," Horn says. "Stay tuned."
The "Delight Factor"
The effort to consumerize the wireless business may get an even bigger push forward if Microsoft's play for Yahoo! (YHOO) is successful. Microsoft would undoubtedly find ways to weave Yahoo's search, e-mail, and other Web features into the Windows Mobile platform. Yahoo's OneSearch, a search application tailored to mobile phones, is available to some 600 million people worldwide, up from only 6 million mobile subscribers in early 2007. Management changes may also reinvigorate Windows Mobile; the division is now headed by Andy Lees, who in February succeeded Pieter Knook, who departed for Vodafone.
Microsoft shouldn't tarry. This year, Apple will make the iPhone available in more countries and drastically increase the number of applications, both for businesses and consumers, available for the device. On Mar. 6, Apple unveiled a developer's kit, letting programmers easily create applications for the phone. With Kleiner Perkins Caufield & Byers offering $100 million in venture funds to startups developing applications for the iPhone and iPod, it may only be a matter of time before the iPhone catches up to Windows Mobile, which currently offers more than 18,000 applications. Microsoft may react by buying stakes in more mobile developers, Doherty says. Microsoft already owns interests in developers such as Zumobi, a former Microsoft spin-off.
Apple is also taking aim at Microsoft's bread-and-butter corporate customers (BusinessWeek, 3/4/08). Apple will soon release software that enables calendar features and so-called push e-mail, which diverts messages from a corporate account to a handheld device—capabilities that are of crucial importance to corporate users. "Windows Mobile and the iPhone's [OS X] are going to compete more," says Ken Dulaney, an analyst at consultancy Gartner (IT). "People in the store are going to see one vs. the other, and see that the iPhone is easier to use. With the iPhone, there's a great delight factor every time you hit a key."
Users of Windows Mobile will share some of that delight before long, if Microsoft has anything to say about it.