Directions

Microsoft and Mobile Apps

• By Paul DeGroot
• June 01, 2010

When a lot of innovative and hungry people gather in one place, the results can be explosive. That's true of the mobile market today, but it's no longer true of the PC market.

Sometimes sheer size and power are good substitutes for precision. A slugger must be able to get wood on the ball, but it can fly over the fence anywhere within a 90-degree arc, while the infield hitter needs to lay the ball down within degrees to get it past the defense.

Microsoft is the big slugger in consumer and business software, while competitors such as Apple win all the style points. In almost any product category, a competitor may have a superior product, but it's quite possible to win by coming in second in every event against a variety of competitors who may come first in one or two categories, but lack depth or any presence at all in others. It helps to have a couple of monopolies, of course, where your dominance is overwhelming and even No. 2 is almost invisible.

The challenge Microsoft faces is that in some cases, being No. 2 isn't much better than being third or fourth, given the lead gap a category frontrunner may have. Google's strength in Internet search and Adobe's in graphics are examples. Furthermore, some categories are more important than others. They may be growing much faster than others, or may influence the direction of other categories. Microsoft's slippage in the mobile phone market is concerning, because the category has become the locus of so much developer energy and innovation. Windows grew to dominance in the 1990s primarily because it offered a large and rapidly growing marketplace for applications, and it was relatively easy to write usable, good-looking applications.

Today's mobile market has similar characteristics. The 1 billion PCs in the world are dwarfed by the 4.5 billion mobile telephones, and phone developers have found ways to squeeze relatively powerful, often unique, applications on small devices. While some fall short of their PC counterparts, others, such as location-aware applications, work better on mobile phones than on PCs because the former often have GPS capabilities and the latter do not.

Application marketplaces make it easy to find applications, and social networking and viral media help promote them at low cost, while low prices reduce sales barriers. An app may entertain for only 10 minutes before it's discarded, but it might cost only $1. And even if only a tiny percentage of the world's mobile users purchase it over the course of a year, and the developer gets 70 percent of the retail price, it turns out to be a profitable few weeks of development time.

It would be a mistake to exaggerate this into a threat to Microsoft any time soon. What concerns me most is not the current reality, but the energy and focus. Today, the mobile software market is primarily a consumer market, and only a minority of phones can make effective use of downloadable applications. But don't forget that IT departments and computing heavyweights once sniffed at the PC as a toy, too -- while it slowly enveloped and insinuated itself into their business to eventually become hugely critical in a new era of human communication and utility.

When a lot of innovative and hungry people gather in one place, the results can be explosive. That's true of the mobile market today, but it's no longer true of the PC market. As the No. 1 harvester of profits from that market, Microsoft needs to reexamine its future. Sure, the PC is a core part of the digital world, but the real action is at that world's periphery, not its core.

Microsoft may be able to slug a home run with Windows Phone 7, but I'm only cautiously optimistic. The company has become a lumbering giant with only moderate success in innovation and execution. The Windows Phone 7 mockups looked good, but mockups mean little. Executives seem focused on making it work well with the PC, a feature clearly valuable to a company dependent on the PC, not so valuable to the large community of mobile developers who see the future elsewhere.