Microsoft's mobile dreams aren't dead yet

I read "Windows Phone 7 Series is a lost cause" with great interest. In it, my Betanews colleague Joe Wilcox lays out the reasoning behind his apocalyptic conclusion that Microsoft has used up its ninth life in trying to extend its desktop OS dominance into the mobile OS space.

He makes a number of rational, indeed valid, points about why Microsoft won't be a top-tier mobile OS vendor now, anytime soon, or ever. Microsoft's Windows Mobile franchise has been in freefall for years, thanks largely to a legacy OS that was completely out of tune with today's market, and a product development roadmap marked by countless delays and occasional lipstick-on-a-pig refreshes of the increasingly creaky product. So since it's hard to argue with the facts, with the numbers, and with history, it's also hard to take exception to his thesis.

But I'll disagree with him anyway. Because for all the headlines that Apple and Google have generated with their respective iPhone and Android universes, Microsoft remains the company whose software we touch when we get off the road, get into our homes and offices, and get down to work. And as much as some of us like to malign Microsoft for clinging to yesterday's business model long after the rest of the world has moved on, Apple and Google have hardly been poster children in playing nice with our data or playing nice with developers. Microsoft may be down, but it's more than a little unfair to say that it's completely out.

Mobile: The platform Microsoft can't refuse

First, the why: Microsoft cannot afford to abandon the mobile market any more than General Motors can afford to walk away from next-generation propulsion technologies. Like GM, Microsoft is faced with making huge investments to catch up in areas where others have leapfrogged it. When GM finally does bring such products to market, starting with the Volt next year, it'll lose money on every one sold. The cars themselves will likely underwhelm, as they'll be first-generation examples of radically new technology selling for significantly more than existing offerings from competitors. Toyota's recent troubles notwithstanding, the strength of its Prius branding should hold.

But here's the kicker: If GM continues on its same old path, it'll be dead in five years. Not bankrupt-and-bailed-out-by-the-taxpayer dead. Dead-dead, because the world will have long since moved on from the traditional solutions on which its original business was based.

On reflection, this looks a lot like the Microsoft of today. Its legacy revenue streams -- namely Windows and Office -- won't exist in any recognizable form in five years. Windows, in particular, will decline largely due to the shift from desktop to mobile. Despite the fact that big operating systems just don't fit into our world view anymore (does anyone even care about what OS the iPhone runs?) Microsoft needs to find a new revenue source to replace it.

So Microsoft abandoning its mobile efforts would be akin to GM deciding it doesn't want to be in the transportation business anymore. It's unheard of, and it won't happen for either company anytime soon.

Who needs hardware?

What will have to change, however, is Microsoft's view that it has to own the OS in order to own the revenues that ultimately stream through it. I don't buy that for a second. Google's done just fine making money off of services that run on countless hardware and software platforms, all of which are owned and controlled by companies other than Google. While Google's Android, Chrome, and Chrome OS initiatives are all designed to return some gatekeeper-like powers to Google by giving it greater control over the mobile OS, browser and desktop browser experience, the company will survive quite nicely in the unlikely event that all three initiatives simultaneously implode and fail to gain further market traction.

(That said, I've got issues with the decision to pursue both Android and Chrome OS, but we'll discuss that another time.)

Apple's model, of course, has always been hardware-based. And a good-enough OS with a good-enough developer community that allows it to sell zillions of high-margin devices is good enough for the company and its shareholders. In this respect, it's somewhat unfair to compare it directly to Microsoft, which never bundled desktop or mobile versions of Windows into self-branded hardware.

However similar or dissimilar they may be, they still compete against each other when we head down to the wireless store and ogle the shiny new devices. And for all their success to-date, Apple and Google have both made critical errors along the way that leave room for others to carve out enough market share to, if not dominate, at least survive. Apple continues to tick off developers with an opaque app approval process that discourages long-term partnership and threatens to sink lesser-capitalized small developers. Google's push to become a player in social media -- latest salvo, Buzz -- has opened it up to the kind of privacy firestorm that threatens to derail Facebook's quest for global social media domination.

Is the OS the only avenue?

Into this breach steps Microsoft, which wisely -- and finally -- dumped its old Windows Mobile architecture in favor of a clean-sheet design...or at the very least, dumped it off the roof onto the top-floor balcony, where it may be called "Windows Mobile Classic" (a new euphemism for "dumped").

As sweet as Windows Phone 7 Series seems to look and work, it won't threaten the iPhone or Android. Not soon and not ever. But Microsoft's mobile end game isn't limited to the mobile OS itself. Its upcoming Office 2010 suite will be more Web- and mobile-friendly than any previous version of its venerable productivity offering. Its search partnership with Yahoo positions its Bing search engine favourably as a distant #2 to Google. Its Xbox Live and also-ran Zune marketplaces are finally being pulled in a consistent direction.

Even if Microsoft's new mobile OS dies on the operating table, that won't stop the company from throwing everything it has into ensuring it remains more than relevant as consumer attention shifts away from its traditional desktop strengths and toward the mobile Web. It's almost too easy to write the company's efforts off solely based on its well-regarded but late-to-the-party new mobile OS. There's so much more to this story.

Carmi Levy is a Canadian-based independent technology analyst and journalist still trying to live down his past life leading help desks and managing projects for large financial services organizations. He comments extensively in a wide range of media, and works closely with clients to help them leverage technology and social media tools and processes to drive their business.