Is Android Microsoft’s Plan B for Mobile?

Posted on March 25, 2015 by Paul Thurrott in Mobile with 0 Comments

With Windows falling behind Android and iOS in mobile, Microsoft has found itself in the awkward position of supporting these rival platform with mobile apps and services. Sure, it will do what it can to make Windows 10 a success in mobile. But if that doesn’t work—if Windows simply retains a dominant position with PCs only—what is Microsoft’s Plan B for mobile?

It could very well be Android.

Microsoft has been pushing its “mobile first, cloud first” agenda since Satya Nadella became CEO in early 2014, and the firm has been steadily releasing and improving its mobile app lineup on not just Android, but on Apple’s iOS (iPhone, iPad) and Amazon’s Fire OS as well. Each platform brings with it some challenges, not the least of which is that the companies that control those platforms are all competitors with a vested interest in keeping Microsoft down. But of the three, only Android holds out any hope of a Microsoft resurgence in mobile.

Here’s why: where Apple and Amazon both control their own platforms by being the sole device provider for those systems, Android—like Windows—is licensed to a broad range of device makers, each of which can customize the system in order to differentiate from their competitors. And Microsoft has interesting relationships with many of those devices makers.

You may recall that most Android device makers are also cross-licensing Microsoft’s mobile patent portfolio. That’s because the software giant has threatened to sue any Android device makers who don’t license its patents, a costly and time-consuming process that could undermine their businesses. As a result, these patents haven’t been challenged very often in court. But since so many firms have opted to simply pay the licensing fees, Microsoft earns billions of dollars in revenues from this business each year.

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But this week, Microsoft expanded these relationships with some Android device makers. And the result will be more Microsoft mobile apps preinstalled on Android devices.

Starting next month, the Samsung Galaxy S6 and S6 Edge will ship with OneDrive, OneNote and Skype preinstalled. And the phones will come with 100 GB of additional OneDrive cloud storage for two years. At the time of this announcement, it was positioned as a one-off deal that maybe had something to do with a recent settlement of a—wait for it—patent licensing lawsuit.

But this week, Microsoft announced a new deal with Samsung: starting later this year, Samsung will also pre-install Microsoft Word, Excel, PowerPoint, OneNote, OneDrive and Skype on select Samsung Android tablets.

And as I noted in Microsoft Apps Will Be Preinstalled on Many New Android Devices, it’s not just Samsung. Microsoft also signed similar deals with Dell, and regional hardware makers like “TrekStor of Germany, JP Sa Couto of Portugal, Datamatic of Italy, DEXP of Russia, Hipstreet of Canada, QMobile of Pakistan, Tecno of Africa, and Casper of Turkey, as well as top original device manufacturer Pegatron.” Suddenly, Microsoft apps are going to be preinstalled on all kinds of Android devices.

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Obviously, being in the box is important, and it can help keep Microsoft’s apps—and the online services they represent—more viable in a world in which Microsoft’s own platforms are no longer the majority. Equally obviously, being in the box isn’t as good as being the defaults, as these apps would be on Windows. And since most of these Android device makers are also dealing with Google—which specifies its own mobile app requirements—that will never be the case, unless device makers opt for a Google-free AOSP design. Which few will.

Still, it’s better than nothing. And if Windows 10 simply stabilizes Microsoft’s position in PCs but does nothing to advance its mobile market share, this kind of deal will become even more important. Indeed, Microsoft would be forced to pursue more Android bundling deals, and it’s not hard to imagine these device makers asking for reduced or “zero cost” patent licensing in return, further eroding Microsoft’s revenues.

So is Android Microsoft’s Plan B in mobile? Sounds about right.

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