Out with the old and in with the new, that’s what Nadella has done as he has uprooted Microsoft’s conventional ways of operating, and this is most apparent in the company’s mobile strategy. With Windows Phone’s shrinking market share, due to fewer phones being produced as the company was losing money on each device sold, the company has re-aligned how it will play in the mobile space.
With the rise of Android and iOS, Microsoft completely missed the boat when it comes to being a serious player in this space. By moving slowly, reacting late and frankly, delivering an OS that didn’t do enough to sway users from other platforms, it has found itself on the sidelines of the new generation of mobile phones.
So what does the company do in this situation? They pivoted from being a hardware and software player to doing what they do best, owning the best suite of productivity applications across all of the major platforms.
The company has already build out apps for its Office suite for iOS and Android and also brought its personal digital assistant, Cortana, to these competing platforms. Last year, the company bought arguably the best email mobile client from Accompli that they rebranded as Outlook, and last week they snatched up Swiftkey, a company that makes one of the best third-party keyboards for iOS and Android; Wunderlist, a task-list application, was recently acquired as well.
The only app that’s missing from the company’s portfolio is a web browser for other mobile platforms. The company’s browser, Edge, uses its own engine instead of the more widely-used WebKit platform that Apple and Google utilize. This presents a tough problem for the company with iOS, but Android has potential for a true Edge browser.
On Android, Microsoft can use any engine it wants because that operating system does not restrict how an app can operate (as long as it is not malicious, deceiving or breaks Google’s liberal guidelines). But on iOS, Apple restricts all web browsers to using WebKit, which means that Microsoft cannot leverage its engine used in Edge on this platform.
The company has previously signaled that they would not build a browser using WebKit, which means we will likely never see a browser on iOS from Microsoft unless they buy a company that makes a browser for Apple’s OS. Seeing as the company has all the other major features covered on both platforms, this does seem like a plausible option to complete the circle of owning everything other than the hardware and OS on a phone.
Microsoft’s new strategy is simple, be the productive engine for both iOS and Android even if that comes at the expense of devaluing Windows phone. We know this because Office apps, Cortana and Word Flow which are the best features of the company’s mobile OS, have made their way to the competing platforms.
By taking this approach, the company creates key touch points on the other platforms that keeps the Microsoft brand in the minds of its users even though they don’t own the hardware or OS. It’s a logical move for the company who prides itself on creating the most productive software on the planet, but there’s still a big hole in this strategy.
All of the apps offered are free. While the mobile Office apps, in some instances do require Office 365, Outlook, Wunderlist, Swiftkey, and OneDrive are free to use and offer few paths to monetization. With the Lumia and the Windows Phone OS, they had a possibility to increase the bottom line on the sale of hardware, but with all of the apps on other platforms, this possibility has declined exponentially.
Critics may argue that Office 365 is how they drive revenue, but I don’t buy that argument. Office 365 opens up access to the desktop applications, and the mobile apps are simply a benefit. I’d argue that few users pay for Office 365 to explicitly use the mobile apps and not the desktop applications.
The company’s new strategy is one that they were forced into because they moved too slowly in adapting to the smartphone era. While I compliment them for finding a way to remain relevant in this space without selling hardware at any volume, they still have yet to clearly define how they will use their footprint on other platforms to drive revenue.
It could be that the company looks at these apps as a marketing tool to help sell other SKUs, and while that may work for this generation, it’s not a sustainable strategy as it places too much risk on its other products to perform well to make sure the company remains profitable.