Two big announcements, the first one is that Microsoft is going to produce its own tablet computers (MiPads although they are offically called Surface). A low end ARM-based one and a high end Intel-based one. Daniel Payne was ahead of me at DAC bringing just his iPad and a keyboard (the MiPads have keyboards too) and leaving his laptop at home. I guess he’s not that far away from not bothering to buy a new laptop. So Microsoft is going full-bore to compete with its licensees, at least in laptops/ultrabooks.
The second big announcement…actually not big, they tried to downplay it…is that any WP7 cell-phone will not be upgradeable to WP8. This means that carriers will simply not sell WP7 based cell-phones. Not that they were really doing anyway. Nokia (the only significant Microsoft licensee) is down to 2% market share, and the other licensees (Samsung, Huawai, LG) all have Android phones and, in the case of Samsung, two more of its own operating systems. Is this significant? Well, here’s one datapoint: T-Mobile in Germany immediately announced it is not going to sell the Lumia 900…despite the fact that they have already been advertising it. Remember, in cell-phones, it doesn’t matter if your operating system is any good, just whether the carriers will sell it. And T-Mobile may be an also-ran in the US but they are Germany's biggest carrier.
The official Nokia response from Elop himself:
We have a lot of exciting capabilities coming as part of a pattern of updates for the existing Lumia products. This includes some of the most significant visual elements of WP8 – for example, the new start screen. As we have always been, Nokia is committed to delivering a long term experience to any purchasers of our products.Count me underwhelmed.
My read: Microsoft has realized they are dead in cell-phones. The Nokia strategy has failed and all the other carriers are fed up of being screwed by non-upgradeable Micosoft operating systems: Windows Mobile to Windows Phone, not upgradeable. Windows Phone to WP7, not upgradeable. WP7 to WP8, not upgradeable. Fool me once, OK. Fool me three times, no way.
If Microsoft is not going to gradually decline into obsolescence (iPhone alone is already bigger than all of Microsoft) then they have to succeed in tablets. I guess they don’t feel that they can compete if they have to rely on their licensees (after all, how did that work for PCs…oh yes, incredibly well, they stole all the profit that Intel didn’t get) so they are going to do it themselves.
Microsoft has a mixed record in hardware. Some very successful products (early mice and keyboards, Xbox) and some total duds (Zune, Kin—the shortest lived cell-phone ever). But none of these (maybe Xbox a little bit) didn’t compete with their PC partners. Now they have launched what could turn out to be an all-out war. It may look minor, just like Anschluss in 1938, when Germany invaded Austria, but it will have huge repercussions. And if Microsoft gets into tablets, what about its own phones too, a smart-phone is just a small tablet with a chip added from Qualcomm, after all. Except for that carrier relationship thing...remember, the carriers hate Skype=Microsoft and with the lack of upgradability they hate them again. But won't the MiPads also need carrier access. Well, yes, but for now they are WiFi only without also having the blazingly fast LTE access of iPad3 (sorry, the "New iPad").
So what will happen? Prediction #1 the board will fire Elop as CEO of Nokia and the new guy will abandon Microsoft (after all Microsoft has already abandoned them). As Tomi points out, Nokia has three other operating systems:
- Symbian, which used to be the market leader and is still be aggressively sold by China Mobile, the worlds largest operator (bigger than all operators in the US put together...well, that's because it has more subscribers than the US population)
- Meego, Linux-based somewhat Android-like. Some phones running it are rated higher than iPhone
- Meltemi, for low end smartphones (not all smartphones can run everything, the lowest end Nokia Lumia for example can run neither Skype nor Angry Birds). Oh, and Elop just announced he is going to shut down this program and lay everyone off so if Elop doesn't go soon it will be too late
Prediction #2: WP8 will have trouble finding tablet licensees. Dell, Lenovo etc already all have Android offerings. Where people have a choice, they don't see Microsoft as a good one. And why wouldn't the manufacturers want Microsoft. Oh yes, they took all the profit last time and that's not going to happen again.