[Disclosure: Microsoft is a client of the author.]
This month, Microsoft announced that they would end support for Windows 10 Mobile by year end. Thus ends one of the most painful eras at Microsoft (and one that was likely instrumental to Steve Ballmer being asked to step down as CEO).
I followed the Windows 10 Mobile debacle closely. At the heart of the failure was the near-complete lack of understanding for a competitive process that defined Microsoft’s initial success in the 1980s – and then was institutionally forgotten – called “embrace, extend, extinguish.” This, coupled with an inability to fund or execute timely, showcased another endemic problem that defined Steve Ballmer’s term as CEO: an inability to fully assess the cost of success and instead setting spending by some other method.
I was a huge fan of Windows Mobile and carried a Windows phone right up until it was clear the platform was dead. It really had the potential to be a brilliant platform and I doubt there was anyone more disappointed than I was when it failed.
So why did Windows Mobile fail?
Embrace, extend, extinguish
“Embrace, extend, extinguish” was the near-legendary way Microsoft came up underneath Lotus and effectively took that company out of the running. Yes, they were assisted by the almost hostile acquisition of Lotus by IBM, which also didn’t go well. But the strategy was brilliantly executed. The phases, in a nutshell:
- First, create a clone of the competing product (in the Lotus example, it meant Excel)
- Then, extend that product (Excel lead to the full Office suite)
- Finally, users abandon the now-lesser product, thereby extinguishing the original offering
Windows played with this strategy against Apple as well. It was only the prospect of facing massive anti-trust problems (were Microsoft to put Apple under) that kept Apple alive prior to Steve Jobs return (which really saved that company). The last time Microsoft appeared to attempt this strategy was with the Xbox. But they failed to extinguish Sony’s PlayStation because they dialed back both the advocacy and the aggressive competitive (read: unprofitable) push against Sony.
Google, ironically, picked this up with Android and while they too failed to extinguish their competitor – in this case Apple again – they did take most of the market, leaving Apple with about a third. There is nothing Google did with Android, particularly given Andy Rubin (the father of Android) had been trying to create the same thing at Microsoft, that Microsoft couldn’t have done. Microsoft had bought Danger, a very real challenger to Apple, (which Rubin ran), and then effectively killed it. (Rubin had also worked At Apple and wasn’t exactly a fan of Steve Jobs…Jobs was no fan of Rubin). Google bought Android for around $50 – a small fraction of what Nokia cost Microsoft – and Rubin then did to Apple in the 2000s what Microsoft had done to Apple in the 1980s: pretty much kicked their collective butts.
The point being that Google executed this “embrace, extend, extinguish” strategy thanks largely to Rubin, and ended up basically owning the smartphone market after taking it from Apple. Microsoft didn’t, and, well, we all know what happened to their smartphone effort.
Zune: It could have been a contender
Inside Microsoft, after being frustrated with their Plays for Sure platform, Steve Ballmer went against a group of advisors and created Zune. This was pre-iPhone, and the advisors argued that rather than competing with the iPod, Microsoft should instead create a smartphone/iPod hybrid. Ballmer ignored the advisors and instead created the Zune. The stated strategy was sound, and, on paper, they should have kicked Apple’s butt. But…
The strategy was to create a product that would accept iPod playlists, allow music sharing and do what the iPod couldn’t – play video for the same price as the iPod. (At the time the iPod only did music). But execution truly sucked.
Once the product came out, Microsoft’s legal department had apparently blocked the feature that would have allowed the Zune to play iPod playlists. You could only share music if both people had Zunes and they both had music subscriptions (which eventually became popular, but Steve Jobs successfully disparaged until Apple had its own such service). There was no video service so getting videos on the device was near impossible. And, oh yes, the thing was butt-ugly.
I still recall when I was shown my first Zune. I was speechless and asked if it was a joke or some kind of engineering mule. The executive presenting it to me laughed and told me brown was the new black (it wasn’t, and many referred to it as a square turd) and that, didn’t I know it takes Microsoft three tries to get hardware? I told him he would likely be let go within a year and he was. Eventually Microsoft made a better product, but they cut the marketing budget and it failed.
It’s interesting to note that at Palm something similar occurred. An internal skunk work-type group came up with an iPhone-like product well before the iPhone, but the then CEO of Palm said it was stupid and that smartphones were only for business. That one mistake basically killed Palm.
Windows Mobile
At the heart of Windows Mobile’s failure was Windows itself, an OS designed for a big screen, crammed into a little screen product. This was a repeat of the mistake that Microsoft made when they blended Windows NT – a server/workstation product designed to compete with UNIX – with Windows 9x, a product designed for end-user PCs. This decision significantly drove the growth of Linux, and Microsoft’s decision to then blend Windows Mobile with Windows resulted in Windows 8…arguably the biggest OS failure in the company’s history.
The Windows Mobile effort then became an effort to throw good money after bad. Microsoft continued to increase budget, up until the point where they bought most of Nokia, but behind where it needed to be to counter a strengthening Apple and Google. This was like being in a drag race where you initially have the faster car but are afraid to mash the accelerator for fear of putting too much stress on the engine. Had Microsoft invested at the beginning to the level they invested at the end they’d have likely been successful, because Apple was still very resource-limited compared to Microsoft at the start. Google’s effort was far more constrained as well.
So, Windows Mobile was crippled because it was too tightly connected to Windows, and Microsoft executed a too-little, too-late, strategy regarding funding. The other irony is that Steve Ballmer is famous for a high energy talk (I’m kind of surprised he didn’t have a heart attack) where he yelled “developers, developers, developers.” The guy had a lot of passion for Microsoft before he was CEO, but someone convinced him he needed to look more presidential and, in my opinion, taking that advice was one of his biggest mistakes. Passion is incredibly important in a CEO. While he was publicly ridiculed for this level of energy, it was well-received by the Microsoft rank and file. The developer talk focused on the core problem with Windows Mobile: the lack of developers interested in the platform.
Wrapping up: Lessons learned
Windows Mobile had a lot of potential but was terminally plagued by a series of unforced and often repeated errors. These ranged from not assuring the success of Danger, which became foundational to Android, to not executing on an historic Microsoft strategy, to not funding timely…and some of the most horrid execution I’ve ever seen.
The critical lessons learned from this are: embrace, extend, extinguish works if you execute. If you don’t execute it really doesn’t matter what your strategy is. It’s far easier to anticipate where a company is going and get there first than it is to try to catch them from behind. Given IBM had the first smartphone, and Philips, Palm and Microsoft had the idea for an iPhone before Steve Jobs did, execution is also more important that inspiration.
And finally, you must invest at a level that assures success If you’re unwilling to spend what it takes to win, then you’re better off leaving the race.
Microsoft is largely successful today because Satya Nadella knows what it takes to compete with Amazon and is willing to commit the resources to be competitive. Had Steve Ballmer done this, he’d likely still be CEO and Windows Mobile – instead of Android – would now dominate the mobile market. He did significantly outspend Google, but it was always too little, too late.
Oh, and he forgot about the developers, developers, developers…
RIP, Windows 10 Mobile.