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Dance Some More, Monkey Boy

Steve Ballmer, already famous for his dancing skills, has pulled off a spectacular 180º pirouette in his position on Apple. In an email earlier this summer, Ballmer addressed Apple’s rising threat to Microsoft’s operating system dominance, telling staffers Apple’s success was:

Because they [Apple] are good at providing an experience that is narrow but complete, while our commitment to choice often comes with some compromises to the end-to-end experience. Today, we’re changing the way we work with hardware vendors to ensure that we can provide complete experiences with absolutely no compromises. We’ll do the same with phones—providing choice as we work to create great end-to-end experiences.

In the interview with Ann Winblad, a partner at Hummer Winblad Venture Partners, Ballmer neatly about-faced this position. Discussing current market-leader Nokia’s 30% position, Ballmer stated,  “If you want to reach more than that, you have to separate the hardware and software in the platform.” This, obviously, is the same model that propelled Microsoft to dominance in desktop computing with the Windows OS, and it is exactly what Ballmer vowed to Think Different about in his memo!

Numbers Don’t Lie

Unfortunately, consumers seem to be proving Ballmer dead wrong. RIM has been very successful transitioning its products from clunky boardroom gadgets to hip cellphone chic. Blackberries are completely proprietary, with RIM controlling both the user interface and all back-end technology. This has created some problems, especially when a RIM server goes down and email doesn’t reach its destination. Apple, arguably the fastest rising star in the pack, has built a system that is more open, but still has just the right amount of proprietary “secret sauce.”  Although the iPhone OS and iTunes are largely Apple controlled, the iPhone plays just as nicely with Microsoft Exchange as it does with Apple’s MobileMe service.

As the market for smart phones has grown, Windows Mobile phones have seen their market share percentage fall 11 points. In that same period, Apple has managed to grab almost 10% market share, despite having only one model and a little over one year on the market. In a market expanding so rapidly, Ballmer’s position on decoupling hardware and software seem neither tenable nor wise if he really intends to leverage the Windows monopoly off the desktop and onto the next generation of devices.

Why 1984 won’t be like 1984…

If market share numbers aren’t sufficient for Steve Ballmer, perhaps a history lesson would give better instruction. Microsoft won the OS wars due to a few key applications and largely inept competition. After ousting Steve Jobs, Apple spiraled into self-destructive oblivion for several years. Microsoft managed to partner with and then hamstring IBM, which left no real OS competition. Coupled with key bits of proprietary turf, such as Office and Exchange, Microsoft won largely by default. 

Unfortunately, Microsoft has no track record of success when faced with real competition. Nowhere is this more painfully obvious than in the revitalized browser wars: IE7 lags behind Firefox in adoption, despite being bundled with Vista PCs. Those with a choice largely choose the Microsoft competitor, and for good reason: nobody can be good at everything. Microsoft’s approach to phone development may be less hardware proprietary than the iPhone, but there is still a walled garden in which users are (optionally required) to play. What Ballmer fails completely to understand is that consumers will choose a proprietary, “end-to-end” product if the experience is better. Microsoft frequently demonstrates fantastic software, but when it hits the cheap hardware their partners make, it fails to impress (Vista Capable, anyone?). Unless the hardware for Windows Mobile smartphones is carefully controlled, Microsoft risks delivering underwhelming phones, and will be marginalized in the face of superior products from the likes of Apple and RIM.

Via [AppleInsider]