Microsoft Should Get Out Of The Device Business

Microsoft must get over Apple envy and play in the real world of mobile. First step: Unchain Microsoft software from Windows.

Shane O'Neill, Managing Editor, InformationWeek

October 2, 2013

3 Min Read

Apple has been able to win -- at least with high-end consumers -- by designing all the hardware and software components of PCs, tablets and smartphones.

Google has dabbled with hardware-software unity with its Nexus tablets and by purchasing Motorola Mobility last year. Yet Nexus doesn't feel like a "Google hardware product" (it says "Asus" right on the back), and Google's Motorola purchase was mostly for patents. Google, like Amazon and unlike Microsoft, understands that you don't win by investing big in hardware; it's just a means to get eyeballs on your high-margin software and services.

Also unlike Microsoft, Google provides Android to mobile OEMs for free. Google can do this because it saw early on that Android could be a platform on which it could make money from Google mobile services, apps in the Google Play store and, most of all, mobile search ads. What it needed was scale -- lots of phones, lots of users -- and it got it. Android phones now own 52% of U.S. smartphone market share, according to comScore.

OEMs can mold Android as they see fit, and they like that -- even if this doesn't always work out for the user as complaints of fragmentation, where different versions of Android end up on different phones, are common.

Phone and tablet makers have no such flexibility with Windows, and they have to pay for it. No wonder they're turning their backs on Microsoft, with some PC makers even eyeing free-to-license Chromebooks over Windows 8 ultrabooks. Of course, Microsoft could follow Google and give Windows away to excite phone and tablet makers and motivate developers. But that's not going to happen as Windows is still too fat a cash cow.

Instead, Microsoft wants to emulate Apple, which explains its Nokia acquisition. Even before the purchase, Nokia was making 80% of all Windows Phones. Lumia Windows Phones are selling well worldwide, but they have stalled badly in North America, shipping only 500,000 units in the second quarter, a 16% decrease year-on-year. Low-end Windows Phone maker Nokia has yet to crack the U.S. market in any significant way. Will Americans be able to look at a "Microkia" Windows Phone as anything other than an iPhone copycat?

Microsoft Software Everywhere

Microsoft must accept its mobile reality and customize more of its world-class application software to run on non-Windows devices. The upside, beyond more revenue, is keeping Microsoft's products in front of the droves of young iOS and Android users.

The first step is to acknowledge the elephant in the room and create a full, native version of Office to run on iPads and Android tablets. Microsoft's revenue from putting Office on the iTunes App Store alone is estimated at $2.5 billion for the full 2014 year. The urgency has only increased now that Apple has made its iWorks productivity suite free on new iOS devices and Google has made Quickoffice, its tool that imports and edits Microsoft Office docs, free on all iOS and Android devices for those with a Google account.

Microsoft hinted at its recent meeting with financial analysts that it's working on an Office version for iOS and Android. It should extend that work to all Xbox services, Office 365 (and not just a watered-down mobile version) and Windows Intune. Giving away the Windows OS to hardware partners might not be in the cards, but as Microsoft has done with Skype, SkyDrive, Lync and OneNote, its new CEO should keep going where the people are and share full Microsoft software products on all mobile platforms.

At the very least, it's a good contingency plan for when Microsoft wakes up from its hardware dream.

About the Author(s)

Shane O'Neill

Managing Editor, InformationWeek

Shane O'Neill is Managing Editor for InformationWeek. Prior to joining InformationWeek, he served in various roles at, most notably as assistant managing editor and senior writer covering Microsoft. He has also been an editor and writer at eWeek and TechTarget. Shane's writing garnered an ASBPE Bronze Award in 2011 for his blog, "Eye on Microsoft", and he received an honorable mention at the 2010 min Editorial & Design Awards for "Online Single Article." Shane is a graduate of Providence College and he resides in Boston.

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