SourceCode: Microsoft, Partnerships and the Price of Progress

By Gadjo Cardenas Sevilla

This past week has been a transformative one for Microsoft.  The Redmond giant previewed their unified desktop and tablet future with the Microsoft Surface announcement at an event in Hollywood, which in itself was a loaded launch that ushered in Windows 8 on ARM as well as revealed Microsoft’s long term plans as a hardware maker.

They also held a Windows Phone 8 event in San Francisco, where they introduced fragmentation into their mobile OS by announcing a generation shift in their two-year old operating system that will make the upcoming version incompatible with present and past hardware.

A new Microsoft Surfaces

Tired of seeing uninspired hardware from its partners, Microsoft took control of the situation and designed and developed the sleek new Surface tablets in order to “pump prime,” their hardware partners into designing compelling device.

Some may see this move as a gentle nudge or a slap on the face.

How bad were things that Microsoft felt the imperative to step in and apply the "If you want something done right, do it yourself," tactic.

Microsoft Surface,  is a tablet which will be available late this year in ARM or Intel flavours. It aims to challenge the notebook as well as the tablet markets by being the first device that can work in mobile and desktop environments. Surface just looks cool. It is some of the most exciting innovation we’ve seen from Microsoft in a long time.

Microsoft's design team has cranked it up to eleven. Magnesium cases, uber thin magnetic covers that one can allegedly type on and a stunning touch-enabled display all look promising. The whole kit looks premium and exclusive and has all the qualities people love to show off.

If this product is everything Microsoft says it will be, it could be a game changer for them. That is, if the price is right, which I fear it won't be. The Intel version of the Surface tablet is said to cost as much as an ultrabook, which might limit market interest.

Microsoft has created mice and keyboards, the unfortunate Zune media player and vaporous Kin phone as well as the hugely successful Xbox console and its peripherals.

Microsoft has never created a product that competes directly with its partners, until now.

I don’t think they are going to stop with tablets. Microsoft announced "A new Family of PCs," at the Surface event. There's more to come.

Microsoft has been bitten by the bug, they are going to go design crazy and roll out sleek new notebooks, all-in-one Surface branded desktops with touch capabilities possibly even SmartTVs. I think they are also going to design their own smartphones. It just makes sense.

The existence of the Surface tablet signifies a new Microsoft. One that will not shy away from designing and developing its own hardware the way it believes it should be created.

This new Microsoft is one that sets up its own media events and can create its own buzz when it needs to. This Microsoft doesn't need or crave the main keynote spot at CES and can pull off major announcements a week after E3 just because it can.

Microsoft wants to control their ecosystem and wants to make money on the hardware, the peripherals, the keyboard covers, the docks, the cases, the styli and also the software. 

The obvious message to their partners is, “step up your game, or we will take your business.”

Smart consumers will likely buy the Microsoft branded hardware because, if anything goes awry, they only have to deal with one entity as the hardware and software provider. 

Partners like Asus, Acer, HP, Lenovo, Dell, Toshiba, Samsung and others will now have to struggle to compete in pricing, features and now after sales support.

I don’t expect any of these partners are thrilled that Microsoft’s just turned them all into “clone makers” by creating a premium segment above all their products - the pure Microsoft Windows 8 device.

Microsoft can now make Apple’s claim, that by creating both the hardware and the software they can fully control the user experience and fine tune the performance without any third party crapware or bloatware.

If the price is right, which one will customers choose? The integrated Microsoft solution or a clone made by a hardware partner running Microsoft’s OS? My money is on the Microsoft solution unless the competition offers more features for less money.

A few days ago, Microsoft showed its hand again, this time unveiling the roadmap of Windows Phone 8 (Codenamed Apollo) and while this new iteration of their fledgling mobile OS isn’t expected until Fall, the good news came with bad news.

Arrested Development: Windows Phone 8 wont work on Windows Phone 7 devices 

The new version of the Windows Phone OS will not be backwards compatible with any of the existing Windows Phone devices, even those that can run the latest OS 7.5 version (codenamed Mango) are limited by their hardware and will not be able to upgrade.

Microsoft's Windows Phone evangelist and Manager of the Windows Phone progream, Joe Belfiore said as much in the Windows Phone blog.

"Some of you have been wondering, 'Will we also get Windows Phone 8 as an update?' The answer, unfortunately, is no."

Belfiore adds, "Windows Phone 8 is a generation shift in technology, which means that it will not run on existing hardware. BUT we care deeply about our existing customers and want to keep their phones fresh, so we’re providing the new Start screen in this  (7.8) new update."

This means that the latest Nokia Lumia smartphones will be practically obsolete once the new OS comes in as soon as three months from now.

Microsoft is offering one incremental upgrade, and tossing some crumbs to current Windows Phone users, by way of the upcoming Windows Phone 7.8 update.

More a fix than a major upgrade, it will offer some of the visual features (more Live Tile variations, new colours) but all current Windows Phone devices will be pretty much frozen in time once the new OS rolls around. That's what happens when you're caught in a 'generation shift" in the technology. It happens, but it just feels like 'too soon', at least for these recent Lumia smartphones whcih are otherwise excellent examples of really well integrated products.

Windows Phone 8 devices will offer bigger screens, support for multi-core processors, better storage options and NFC

What this means for handset partners like Nokia, who has all but scrapped its own Symbian smartphone development to bend over backwards for Microsoft, is that they are left in the lurch. 

The news for Nokia Lumia 800 and Lumia 900 smartphones (and the less exciting but nonetheless capable Lumia 710 and Lumia 610) is that this failure to upgrade seriously puts the squeeze on the desirability (and perceived longevity) of these products at least with certain users who will mind not being able to enjoy the latest features or the latest apps.

With the news that the new features of Windows Phone 8 will not support existing Windows Phones, Microsoft has diminished the value of all these devices by essentially stamping an expiration date on them just months after they were so heavily promoted. 

What this means for anyone who has bought a Windows Phone and invested in the upstart mobile OS is that they are now faced with the dreaded “F” word. 

Fragmentation. 

Do recent Windows Phone  buyers soldier on with their spanking new device knowing that in a few months all the newer features and apps of the OS will not be available even if their device has stellar hardware and features? Will this create a subculture of jailbroken or rooted Windows Phone ROMs that 'force' some of the new features and apps into older hardware just like what is going on with Android? It is very possible.

Sure, some users will be completely satisfied with what they have, and that is fine. But what sort of upgrade hellride for apps and features are they going to experience seven or eight months down the line?

We never had this problem with feature phones or dumb phones because they just worked and didn’t require regular OS or app upgrades. If they did, nobody cared.

With smartphones, OS updates are critical to being able to use the latest features, the newest apps and bug fixes and security issues which are unavoidable with each new build of the operating system. Just look at how much time we spend updating apps and how often we need to.

What this means for Windows Phone developers is that they will focus on the newer version of the OS coming in the Fall and cease supporting the older iterations of the OS and devices.

Nokia seems to have received the short end of the stick here. Microsoft’s Windows Phone strategy is the polar opposite of  the durable, reliable, long-standing Symbian ethos, where apps written for that pioneering mobile operating system lasted for years, not seasons.

Sure, this resulted in a lot of archaic applications  for Nokia. Still, Symbian users were not denied the dignity of an upgrade. They could change handsets and use their apps, they could upgrade the OS and still use their apps. The phone's performance and versatility was not hamstrung by someone else's OS.

There’s no telling how this awful news will affect Nokia’s bottom line. At a time when the Finnish juggernaut is facing unprecedented struggles, dramatic transitions and massive layoffs and office closures.

I fear that this once great pioneer of all things mobile may have bet on the wrong horse at the wrong time. The partnership with Microsoft may have further ruined Nokia's chances to rebound. Despite the great devices they've been releasing for Microsoft, the new mobile and smartphone economy is far more disposable in nature than what they are used to.

And now, Nokia can't recant or switch back to Symbian or Maemo or Meego or any of the 'next gen' mobile projects it shelved a year ago in favour of Windows Phone.

Finally, what is to stop Microsoft from unveiling its own Windows Phone hardware down the line? Doing to Nokia what it just did to its Windows 8 slate partners? Absolutely nothing. The writing is on the wall. It is going to happen.

While this can be exciting for new customers of upcoming versions of Microsoft’s products, it is a bit unsettling for their current customers and most of all for their partners who are now also their competitors.

Update on Tuesday, June 26, 2012 at 12:41AM by Gadjo Cardenas Sevilla

It appears that Microsoft made it clear that it will not get into the smartphone hardware market. An Information Week report stated that Microsoft will continue to rely on its hardware partners. Greg Sullivan, the senior marketing manager for Windows Phone said, “We have a strong ecosystem of partners that we are very satisfied with."