Archive for January, 2013

Why Microsoft Will Bounce Back in 2013

January 3, 2013

Tablet/Ultrabook Market

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The Surface Pro will be a game changer. It provides a strong counter to Apple and Google’s software commoditization strategy. It caters to those who are sick of cheap software on mobile, and quality higher price point software will gradually affect the general public’s ideas of what a tablet user experience should be. Apple and Google and the companies that apply downward pressure on software pricepoints will be at a disadvantage – partially because it goes counter to their business model and partially because their mobile OS’s are not equipped to deal with the tech challenges of running complex software suites that require keyboards and mouse pointers.

I also predict One Note will be the surprise killer app that shows how digital note taking should be done. None of this pretend your fat finger with zero precision is a pen nonsense. If you recall the Courier, it was laid out as a portfolio and note taking potential was probably the most intriguing thing about it.

Smartphone Market

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IMO Windows Phone 8 makes iOS, BB10, and stock Android look old and outdated. Ecosystem is just getting off the ground, but a strong set of building blocks is there. Live Tiles is the killer feature other OS’s will have to react to once WP8 gains more marketshare. An information-centric OS instead of silo’d apps is the other killer feature.

MS has also learned from past fragmentation mistakes. Rather than totally commoditize smartphone hardware and let a ton of OEM’s degrade the user experience, they’ve come up with strict tech specs and limited WP8 manufacturing to Nokia, HTC, and Samsung. Android is currently making all the mistakes MS did on Windows Mobile.

Ecosystem Building

A win in one of the above markets will strengthen the other and create forward momentum across all markets. Office is already industry standard, esp corporate. Those who are vested in Windows software or Office will be drawn to the Surface Pro and Windows 8. Those that have a Pro will want to use Skydrive to sync to Mobile. Similar to how someone who buys an iPhone then wants an iPad then wants a Mac. The forward momentum and might even strengthen the Windows brand enough to save the Surface RT.

XBox 720

Lip service to what might probably be the best engineered console in the 8th console generation (based on the 7th gen track record). They also have a chance to better integrate disruptive Kinect technology. Software sells hardware on consoles, and MS, like Sony and Nintendo, has strong first party IP.

Android Monetization Problems

Google’s Motorola Phone needs to be a hit in order for Android to keep going. They’re giving away too much for free otherwise. Knowing the only way they make money is when an Android user utilizes a Google service from their phone, here are some commonly known monetization problems they’re facing

  1. Letting Amazon hijack Android for the Kindle Fire, removing everything Google related and reskinning the UI to the point it lacked Android features.
  2. Commoditizing hardware to the point Android is the default OS for cheap smartphones. Android phones grow in volume in countries like India, where people don’t have internet access, so Google makes no money. Notice how cheap Android smartphones have become the replacement for stock limited function phones. Basically Android market penetration doesn’t correlate to Google increasing their revenue.
  3. Regardless of the ubiquity of Android, Google draws 2/3rds of mobile revenue from iOS. That’s ass backwards.
  4. They paid a shit load of money for Motorola so if their Google Phone goes nowhere, they will have pissed off third party manufacturers and shareholders while essentially giving Android away to HW mfg’s as a charity. They really need to enter the smartphone hw market strongly. Otherwise with its pitiful return on investment, Android becomes something they spend money to create only to give away for free

Apple’s Stagnancy Issues

While I’m personally waiting for Apple to enter the TV Market and revolutionize it, they’re becoming stagnant on mobile. The freshness of Live Tiles shows that iOS’s 5 year old app centric UI needs an update. Meanwhile they’ve fragmented their mobile devices to the point the release cycle is no longer predictable. Rumors suggest they’re going to be offering their phones in different colors and screen sizes, which is dumb for the simple fact it’s a step in the direction of commoditizing and driving down the value of their own hardware. There’s a reason Steve Jobs only wanted one color initially and it’s a smart money making business reason they’re starting to ignore.

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