While Microsoft isn’t exactly hurting, the company has had very mixed success entering new markets for some time. In fact, without the OS and Office cash cows, it’s failures would have torpedoed most companies. One thing Ballmer and company do seem to have is tenacity. That tenacity can be seen in action with Windows Phone.
Windows Phone is a well executed smart handset platform that came to market a little to late. It’s also lacks any real advantage over the established Apple and Android platforms. Add to that the obstacle a its licensing fee and there’s not much to make Windows Phone compelling to potential manufacturing partners. That gives Android a price advantage while Apple holds the overpriced designer label space. Microsoft has tried to remove that disadvantage by patent trolling Android manufacturers, with mixed success. There are also rumors that the company could acquire the ailing Nokia, likely giving Windows Phone a stable hardware partner. None of this will open any shelf space for MS as long as devices are joined at the hip to service plans that are sold exclusively by carriers.
That brings us to Skype. The VoIP company that Ebay notoriously overpaid for, was acquired for far less by Microsoft last year.The company is currently testing an app that will add the mostly free to talk service to Windows Phone 8. Tight integration of Skype into the Windows Phone OS has the potential to accelerate the end of by the minute mobile voice plans forever. That is assuming the carriers cooperate. While the mobile hardware space continues to become more crowded, the carrier space is not with incumbents scrambling to consolidate. Despite what we keep being told, mobile data is enormously profitable. That profitability is eclipsed by the margins on voice by the minute and messaging. Without major changes in the wireless connection business, Skype will do nothing to improve Windows Phone’s fortunes.
Were it not for a handful of companies using government to close the public airwaves to competition, all mobile service offerings would be data based by now. As long as spectrum is auctioned to the highest bidder, the incumbent players will pay any price to control the public airwaves. That’s because the inflated cost of spectrum will be passed along to subscribers who have few competitive options for service.
Here’s a little sage advice to Steve Ballmer and his Windows Phone cohorts: If you really want a shot at opening the market for your product, open the airwaves. Instead of beating up on handset makers, try thumping the lawmakers who are doing the wireless cartel’s biding to keep the market closed. If wireless connectivity was a competitive business, we would be awash in an explosion of mobile devices from every imaginable source, including Microsoft. It’s time to end the exclusive licensing of spectrum blocks and move to a commons model where new carriers and new platforms will have a chance to innovate.