Windows Mobile: What Microsoft Needs to Fix

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At Microsoft "all those [technology] pieces exist, it's just a matter of pulling them together," says Scott Rockfeld, group product manager for Microsoft's mobile communications business. In February the Redmond (Wash.)-based giant acquired an outfit called Danger, which makes software that supports wireless cloud services.

In December, Microsoft also announced it's working with Blockbuster (BBI) to deliver movies to cell phones. Eventually the service will let consumers start watching a movie on one device—say, a TV—and continue watching it on a cell phone while on the go. Microsoft is also beefing up mobile services through its acquisitions last year of Musiwave, which provides music services for cell phones, and TellMe, offering voice-based mobile search services.

Delivering fancy new services is cheaper when it's down through cloud computing, analysts say. A device that does less processing doesn't need as much memory. Consultant iSuppli estimates that the Android-based G1 costs $144. According to research firm NPD Group, an average Windows Mobile gadget costs $10 more, $154. The cloud services would also let carriers conserve valuable network bandwidth. Danger services deliver social-networking site updates using one tenth the bandwidth required to send if users went directly to a social network Web page, says Hank Nothhaft, who was CEO of Danger before its sale.

Developers Want an App Store

Meanwhile, to win back developers Microsoft must unveil its own applications store similar to Apple's App Store. Without a store, developers have to spend a lot of money peddling their wares to handset makers and carriers worldwide. "Because of this very expensive business development cost, people are losing money," says Satoshi Nakajima, CEO of Seattle-based startup Big Canvas, which has developed a mobile social-networking application for the iPhone. Nakajima was software architect at Microsoft for Windows '95 and Internet Explorer until 2000.

Analysts say Microsoft is already working on something called Skymarket, which will offer applications and cloud services. "If customers ask us for [an application store], we'll entertain the idea," Rockfeld says. In the past Microsoft rejected the possibility of building its own application store, instead directing consumers to partners like mobile store Handango. Microsoft could open its own store by extending its existing Total Access social site, where some 2.7 million Windows Mobile owners can already download free games, Rockfeld says.

One step Microsoft should avoid, analysts say, is building its own branded phone, as has been rumored. Such a phone would damage the behemoth's existing relationships with handset makers. Rockfeld is adamant that the company has no plans to make its own phone. "Our strategy hasn't changed one bit," he says, concerning a Microsoft-branded phone. But, analysts say, Microsoft will need to alter its approach to other areas of the mobile market—and fast.

Business Exchange related topics:
Microsoft Vs. Apple
Google
Cloud Computing
Mobile Industry

Kharif is a senior writer for BusinessWeek.com in Portland, Ore.