Kill Windows Phone or risk dying, analyst tells Microsoft

That won't happen after Nokia acquisition, but Ben Thompson argues a focus on devices will weaken Redmond where it's strongest, in services

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"It's incredibly telling," said Thompson, "that [Steven] Sinofsky was not allowed to go to Apple or Google, but was allowed to go to Box, which could threaten [Microsoft] five years down the road.

As part of an agreement he struck with his former employer, Sinofsky -- who led Windows 7 and Windows 8 development -- was barred from working for Apple, Google, Amazon, EMC, Facebook, Oracle or VMware. Last month he signed up as an advisor to Box, a cloud storage vendor that has aggressively courted enterprise clients, the same customers Microsoft's after for its cloud-based services like SkyDrive and SharePoint Online.

Thompson obliquely blamed Microsoft's culture and history for what he saw as its shortsightedness. "The OS layer was a great place to be [because] it has high prices and high margins, but that layer doesn't exist in mobile. It's been eliminated in mobile, where things are much lower-cost [than PCs].

"From a cultural perspective, I don't think Microsoft has really processed the fact that owning the OS layer, and profiting from it, is no longer an option," Thompson continued.

Most analysts, however, have taken a much more conventional view of the Nokia acquisition.

"Ballmer said Microsoft would become a device and services business. And buying Nokia is the most logical way to get into the mobile device business quickly," said Jack Gold of J. Gold Associates, in an email.

"This purchase will enable Microsoft to better integrate hardware and software, in keeping with its strategy to deliver devices and services across multiple form factors," added Charles Golvin of Forrester Research in a note to clients. "Committing to a vertically integrated approach to smartphones is a logical step in line with Microsoft's stated new strategy."

So said researcher IDC, too. "IDC believes that the deal fits into Microsoft's new and broader strategy articulated by Mr. Ballmer in July. This post-PC strategy has shaped Microsoft's latest reorganization and the Nokia transaction provides the first glimpse of the new Microsoft in action," wrote analyst William Stofega in a client note.

Not surprisingly, Thompson didn't agree with the consensus opinion -- that Microsoft's move was necessary, rational in the light of its expressed strategy and ultimately correct.

"Microsoft ought to have their entire weight behind protecting their business turf and winning in the cloud and premium consumer services," said Thompson. "Clearly, Microsoft can't let go of their OS fixation. I think their Internet Explorer victory in the '90s has fooled them into thinking they have a chance today. The problem is that Web pages, theoretically, work anywhere; apps don't."

Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at  @gkeizer, on Google+ or subscribe to Gregg's RSS feed . His email address is gkeizer@computerworld.com.

See more by Gregg Keizer on Computerworld.com.

Copyright © 2013 IDG Communications, Inc.

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