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Next of Kin

When the Kin was launched, many, including myself, were skeptical. It was a product that contradicted much of what made sense in the industry. It was not a smartphone, it was not a platform and it was predicated on a niche use case. It was, in essence, a feature phone, and as such was not differentiable. However, most people, myself included, were willing to overlook some of these flaws on the basis that Microsoft *must* have done some rigorous product research to support this concept. We fell for the premise that the Emperor *must* have been wearing clothes.

It turns out he wasn’t. With this knowledge, we should ask the same question regarding clothing to the “next of kin”: Windows Phone 7. There is this same sense of deja vu, that there are a lot of things wrong with WP7, but Microsoft can’t be foolish enough to fail on this. The problems with WP7 are indeed potentially fatal:

– It is a new platform with no ecosystem facing entrenched incumbents
– It is expensive relative to Android for OEMs while being completely symmetric in its approach to the licensing market
– It is not leveraging the installed base of Windows Mobile, and is alienating to WM’s core business users/buyers.
– it faces a branding challenge, like its predecessor
– it is feature incomplete, barely on par with iPhone from 2008

In fact, it’s hard to come up with any key value upon which to anchor the platform. Beside the fact that it is new or, if one were charitable, “fresh” in the interface, it seems to be a solution looking for a problem. Reminiscent of the Zune in many ways, it’s tempting to dismiss it.

Yet there is always the benefit of doubt being from Microsoft. Or is there? After Kin, is it time to give up on the old adage that Microsoft persists until it wins and never gives up? The Microsoft that won was a low-end disruptor. Offering less-than-good-enough products at lower prices or bundling parts of software into compelling packages, Microsoft expanded markets and increased computing consumption. This is not in the cards for mobile computing.

Microsoft in Mobile is not playing to its core strengths. Indeed, mobility is a disruptive force for their core. Doing “the right thing” in mobile cannot but threaten the sustaining cash cow of Windows. Microsoft seems to be floundering precisely because it’s trapped in the innovator’s dilemma.

  • John

    Surely we need a different term than "innovator's dilemma" when describing any challenge Microsoft faces. Innovation and Microsoft don't precisely go hand in hand.

    • http://www.asymco.com asymco

      Perhaps not known for technical innovation, one has to give gredit to Microsoft for innovating on business models (it was, after all, the world's first pure software company–a fact acknowledged by Steve Jobs). It was innovative to bundle Office and to price Exchange and IE so that they disrupted Lotus, Novell and Netscape. Low end innovation is just as powerful as new market innovation. Each of these innovations occurred in the 90s. Since then Microsoft has been over-serving or trying to aim for the high end. Whether trying to be a high-end console maker or phone or iPod maker. Even the Kin was priced with a premium data plan. A Microsoft of old would have found a way to give the product away in exchange for some new form of revenue.

  • http://www.relentlessfocus.tumblr.com relentlessfocus

    Regarding your point that WinPhone7 is expensive for OEMs in comparison to Android, I've been wondering what's happened after Microsoft got HTC to sign a cross licenensing agreement because HTC had apparently agreed with Microsoft that Android was violating Microsoft IP. I had read at the time that the agreement included payment by HTC to Microsoft of almost the full value per phone of a WinPhone7 license. If these reports are true I keep wondering 1) why other OEMs marketing Android phones haven't had to pay a similar IP fee to Microsoft (or have they?) and 2) Whether in fact Android is almost as expensive for OEMs as WinPhone7 given the license fee.

    • http://www.asymco.com asymco

      Good question. In theory Microsoft should be asking for fees from all Android OEMs, and perhaps it is. I doubt that the fees are as high as the WinMo license which is estimated at $15 per unit. IP licenses should be an order of magnitude less, but we don't know. All the IP lawsuits are going to take years to sort out, NTP is at it again…

  • http://www.asymco.com asymco

    http://www.infoworld.com/d/mobilize/windows-phone

    "Windows Phone 7 is a waste of time and money. It's a platform that no carrier, device maker, developer, or user should bother with. Microsoft should kill it before it ships and admit that it's out of the mobile game for good. It is supposed to ship around Christmas 2010, but anyone who gets one will prefer a lump of coal."