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Microsoft's Promising New Mobile Store-y

Hoots of derision from some quarters aside, it looks like Microsoft has decided on a new course of action that doesn't rely on "but we're Microsoft" as the underlying basis for its strategy.

Microsoft made big news twice in the space of a week. First, it announced that it will open physical retail stores; then, it simultaneously introduced an upgraded mobile operating system featuring a new user interface, Windows Mobile 6.5, and unveiled a major deal with LG, the world's third-largest cell phone maker.

The technology blogosphere reacted to the store announcement with typical condescension, all too happy to remind Microsoft of its past failed attempt at retailing, and offering faint praise in the form of back-handed advice.

Forgive me for doubting the sincerity of Larry Dignan's admonition that, "maybe we should all be a little more constructive."

But this is a critical juncture for Microsoft. It's in deep trouble on a number of fronts -- from its loosening stranglehold on desktop productivity applications to shriveling server and browser market share.

It also is suffering from a bit of an identity crisis as it seeks to redefine itself from a software company to a cloud-friendly company, albeit with a lot of baggage.

But the mobile market is still there for the taking, and could well offer a lifeline to the rest of the company's products. Windows Mobile is still the best mobile platform for Microsoft productivity applications, it supports Flash (hello, Apple?), and it is comfortably installed inside the enterprise.

Microsoft's mobile operating system has been roundly criticized in the past, but the new OS is getting rave reviews from some surprising quarters.

Certain features, like its answer to Mobile Me, belong to the crustacean era (yeah, I know that's not a real geologic time period), but Microsoft can fix that before 6.5 actually ships.

And yes, the fact that Motorola dumped Microsoft for Android looks bad on the face of it (we can only afford to support one OS, and we're betting on the new kid rather than an established known quantity because that quantity is known to suck).

But Motorola is shrinking like the Wicked Witch of the West, while LG is making like Dorothy. So maybe we should take LG's move as a sign that Microsoft is onto something.

This is why the stores are important. In the past, Microsoft left the consumer side of things to its partners, whether they be PC manufacturers or car makers. And it relied on the media to get its message out, but as I pointed out above, the media hasn't been kind to Microsoft, to say the least, going so far in one case as to predict that the stores will become a "quagmire."

Ironically, that leaves retail as the best and surest way for Microsoft to literally put its mobile products front and center, ensuring that its products (not iPods and PlayStations) get preferential treatment.

It's critical for Microsoft to reach consumers -- all you have to do is look at how consumers forced enterprises to allow the iPhone to see why.

The cell phone is the home-office crossover product par excellence, and with it Microsoft's best chance at reaching customers in a truly meaningful way.

CEO Steve Ballmer is hip to this (Ballmer and hip in the same sentence?), telling the Financial Times that "the time has come for us to take the full Windows experience to mobile phones."

Actually, the time is well past for doing this, but few companies have the wherewithal to play catch-up like Microsoft. Ballmer has enormous resources, both human and capital, at his disposal if that's what he wants to do.

I'm not ready to bet that Microsoft's stores will be a blow-out success, but I do think Microsoft can find new momentum in mobile, and a retail presence could give Windows Mobile the shove it needs to not only become a dominant force in the market, but a new platform from which Microsoft can launch its cloud and services offerings.

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