Steve Ballmer is Right!

Why Windows Phone 7 is indeed an early entrant to the smartphone wars.

By  |  Thursday, November 11, 2010 at 4:50 am

[NOTE: Our T-Week newsletter has been on hiatus, but it's back. Here's the lead story from last week's edition--go here to sign up to receive it each Friday. You'll get original stuff that won't show up on the site until later, if at all.]

Steve Ballmer at the Windows Phone 7 launch on Monday, October 11th, 2010

Sad news: Microsoft CEO Steve Ballmer has been found to be completely insane. The expert doing the declaring is my fictional friend Robert X. Cringely of InfoWorld, and he bases his diagnosis on a Ballmer quote in a recent CNNMoney.com story.

Ballmer is speaking of Windows Phone 7, which shipped internationally last month and hit the US this week:

“We’re early; there’s no question we’re early,” Ballmer said at Microsoft’s Professional Developers Conference. “I think we kind of nailed it. When you see it, you just go ‘ooooh.’”

Cringe thinks that Microsoft is anything but “early” to the smartphone game, and that if Ballmer thinks otherwise he’s delusional:

I suppose if we’re talking geological time, then Ballmer’s right, Microsoft is on the cusp of the smartphone epoch, and the dinosaurs just went for a dip in the tar pits. But in a market where a three-month-old device needs to be checked for liver spots and signs of dementia, spotting the competition three-plus years and then coming up with something that almost meets the smartphone standards set in 2007 is not exactly being early. It’s certainly not “nailing” it — unless we’re talking about a coffin.

Now, yanking Steve Ballmer’s chain is always fun, and I know of few tech pundits who can resist an opportunity to bring up the “Monkey Boy” video. (Cringe makes the obligatory reference in his piece, and–whoops!–I just did, too.) The period from the announcement of the iPhone in January of 2007 until Windows Phone 7′s release was an astonishingly long dead zone for Microsoft in the phone business, during which it had no credible offering. And while Windows Phone 7 is impressive in multiple ways, Microsoft has still plenty more catching up to do before anyone at Apple or Google breaks into a sweat.

Here’s the thing, though. If what Ballmer is saying is that we’re still early in the smartphone era–as usual with his pronouncements, definitive interpretations are tricky–he’s absolutely right. This is a revolution that’s still just getting underway, and there’s plenty of time left for new entrants to join the game in progress. And maybe even win it.

If smartphones were a mature market that weren’t subject to lots more change, just about all of the Americans who might own a smartphone would own a smartphone. Instead, smartphones remain less common than you’d tend to think if you read tech blogs and/or live in a major metropolitan area near a large ocean. How many of us own a smartphone? Depending on who you believe, it’s over half or 28 percent or possibly 17 percent. But nobody says it’s 100 percent or anywhere close.

No, the smartphone is like the PC was in the 1980s and early 1990s–a gadget that’s on its way to near-universal adoption, but which isn’t there yet. It’s a young product category, and plenty of smart people haven’t yet bought into it.

You don’t have to analyze Microsoft’s phone strategy very carefully to see that it’s reaching out to these smart late adopters rather than trying to convince iPhone fans and Android aficionados to switch. That’s obvious from the way its entertaining TV ads for Windows Phone 7 show smartphone owners as lame, self-involved nerds. “Don’t be like these people,” is the message. “Buy a Windows Phone 7 handset.”

I’m not saying it’s a winning gameplan, or that Windows Phone 7 is the mobile OS that will finally win smartphone unbelievers over. But this much I’m confident of: A couple of decades from now, we’ll look back at 2010 as being really early in the history of smartphones, before most of the interesting stuff happened. Come 2030, iOS 24 and Android 12.7 “Salt Water Taffy” may be around, but they’re not going to be the whole story.

Or to put it another way: Steve Ballmer may or may not be right about Windows Phone 7, but he’s right about smartphones–and he’s definitely not deranged.

 
33 Comments


Read more: , ,

33 Comments For This Post

  1. Mike Says:

    Thanks for the laugh. It is always good to start the day with some humor. Certainly the Microsoft PR department thanks you also.

  2. Mark Says:

    Wasn't IBM kinda "late" to the PC wars? And Apple II, TRS 80's and various others were early? How did that turn out? Wasn't IE "late" to the browser wars? Netscape and others were early? Ok, I'm oversimplifying a bit, but lets not think that Microsoft is all that late.

    Microsoft may rankle some tech fanboys but in a market that really began with Iphone (sorry MS mobile, sorry RIM) in 2007, the days of the smartphone really are in their infancy. Yes I know palm phones, Rim, and MS Mobile through 6.5 have been around since the late 90s but really I look at the Iphone as the death of smartphone as we knew it. Or perhaps kicking off Smartphone 2.0 to borrow from Web 2.0. The market in its current form is very young. Who knows who will win it but I bet any of those other competitors are not taking Microsoft's latest entrant into the market lightly. IBM destroyed the competition to be overrun by PC clones later on (and their own ill-advised attempt into PS/2). IE crushed Netscape. The tech world is replete with these kind of stories.

    Will that happen again? Who knows? But it's fun to watch and choice is always good for the consumer.

  3. Robert X Cringely Says:

    All Cringely's aren't created equal, Harry.

    All the best,

    Bob

  4. Trent Shields Says:

    The smartphone market is still in its infancy, making its first stuttering steps towards its potential. As web standards improve and more services mature our phones will become the interface to our world. With the steady improvements in input and display, they may also completely replace our desktops and laptops.
    Already, I see children and their friends using their phones as primary and their netbooks as secondary access devices. Soon, they won't use anything else.

  5. Tom Says:

    What makes something late?

    What makes it early?

    A revolutionary and magical product makes its own market and thus its own time.

    A knock-off product wins to the extent it is 'cheaper but nearly the same thing'.

    Timing here is relevant only if other knock-off products already occupy the space.

    Thus, Is Windows 7 revolutionary and magical? If so who cares about timing.

    Or, if not, is it 'cheaper but nearly the same thing.'?

    If not, and it is in fact neither a knock-off nor revolutionary and magical then there is little need to find for the whom the bell tolls…

  6. Joel Clermont Says:

    I read Ballmer's comment as "It's very early for Windows Phone 7 in the marketplace," meaning "it is early to cast judgement on our new foray into this market." I don't think he was saying anything along the lines of your analysis.

  7. Nicholas Says:

    In order to play the game, a competitor needs to bring something new to the table. What is Microsoft bringing that will pull developers and users from the top two platforms? I started developing for the iPhone, but almost everybody I know is buying an Android.

    Frankly, I believe that we will find the platforms to be irrelevant and the services to be critical.

  8. Mister Snitch Says:

    I think this post is a good take on the situation. However, there's another way of looking at this.

    Rather than looking at where we are "in the smartphone era" [early], look at it in terms of being the first-mover. If you believe the first-mover with the right product is the player who gets the lion's share of the market (as is historically the case), then MS is doomed to a third-place finish – at best.

    There are exceptions that prove the rule. Google is the most famous of these. They weren't first in the search-engine business, but they had some better ideas. That allowed them to overcome the (considerable) lead of others. If MS does have a product with advantages that catch on with buyers, they can overcome the lead of Apple and Android. But since that is unlikely, they'll no doubt settle in to a third-place standing.

    That's not so bad, considering the potential (inevitable?) size of the market. But there's one more factor: Making money. Everyone knows Apple is making money. Incredible money. Google, however, is giving away Android for free. MS must now compete with 'free'.

    Therefore: Yes, MS has gotten into the race in plenty of time to assure itself of a third-place standing. But in terms of corporate profits, the smartphone business, for them, will be hard-pressed just to break even. So why, then, is MS huffing and puffing so hard to keep up? Ballmer's ego. And the fact that, as a corporate entity, MS is simply incapable of doing anything beyond playing-catch-up where new products are concerned.

  9. FoobarMeister Says:

    Windows Phone 7 uses IE7 rendering engine as browser.
    This (non-grammatical statement of) fact dooms all MS' efforts.

  10. Hamranhansenhansen Says:

    No, smartphones are ahead of PC’s. They’re more mature than PC’s.

    Every Windows PC that has been sold is still just DOS. It’s still selling to CTO’s who bought Microsoft because before that they bought IBM. PC’s still have moving parts and require I-T help. The killer app is MS Office, a 1980′s typewriter replacement that still can’t publish to the 20 year old Web.

    Apple’s PC sales are up over 50% year over year. HP’s are up 3% year over year. That is PC’s maturing to catch up with the 2007 iPhone. The iPad and the latest MacBook Air are 10 years ahead of any Windows PC. The average retail of a Windows PC is below that of a smart phone because Windows PC’s are so immature. So Microsoft is not even ready with a 2010 PC, let alone a 2010 phone. Again, phones are ahead of PC’s.

    Going forward, the pre-2007 devices all drop away, including Windows PC 7 and Windows Phone 7, which no matter when it is released is a pre-2007 device. It doesn’t even have an HTML5 browser, it doesn’t have a desktop class operating system core. It can’t even run YouTube. Macs continue to rise because they’re modern: HTML5, Unix, no viruses, consumer usability, miniaturized, no moving parts, instant on, reliable, mature software. As PC’s catch up to smart phones we stop looking at them as separate devices. You can see this in the fact that Apple runs the same OS X core operating system on all of their devices, whether iPhone or Mac Pro. Users want the Mac experience on all their devices, not the DOS experience. That is the promise Microsoft used to sell but failed at when Windows never became a Mac. That is the promise Android phones advertise but also do not deliver.

    Microsoft is woefully, woefully behind. You don’t get to 2030 by being stuck in the 80′s (Office) or 90′s (Windows PC) or early 2000′s (Windows Phone). They are still not a consumer company when technology has become very personal. A CTO in 2030 has as much chance of choosing what brand of devices his workers use as he has of choosing what brand of clothes they wear.

    Finally, consider the iPod in 2004, when sales went from thousands per year to millions per year and the iPod era truly began. Only 3 years later, the iPod era was over when iPhone was introduced, but instead of the end of the iPod era killing Apple, it made them even more successful because iPod morphed into iPhone. Windows Mobile 6 did not morph into iPhone because it had not even caught up to iPod yet. Being behind like Microsoft is not a strategy for mattering in 2030. They can’t leap ahead because it isn’t just their products that have to grow and mature, but also their company, their culture, their processes. To get to 2030 they have to go through 2007, 2008, 2009, 2010, and so on, just like the rest.

  11. techpunbit Says:

    The history of computing is about competitors who entered existing markets.

    First, MS is in smartphones early, as they had some of the first. When Apple entered in 2007, that was pretty late — and it didn't support 3G or apps! When the G1 came out in October of 2008, that was even later, many said too late to compete with the iPhone.

    Today, there is no lock on smart phones. Every couple of years, pretty much every smartphone owner upgrades. And apps simply aren't lockin… first, they're relatively cheap, and almost all of the "must have apps" exist on all platforms, are all free, and all keep their data in the cloud.

    The fact of the matter is, it's the cloud services that will be sticky — the phones will be interchangeable fashion acccessiories for accessing the cloud.

  12. Harry McCracken Says:

    Hi, Bob: Stay tuned–I'm working on another story which may please you and which acknowledges the multiple-Cringely situation.

    Regards,

    –Harry

  13. Harry McCracken Says:

    Good thoughts. I think that Windows Phone 7 is neither magical and revolutionary nor a cheap knockoff, so I'm not sure how it'll do. Then again, traditional PC Windows wasn't magical and revolutionary when it caught on–heck, it NEVER became magical and revolutionary. Magical revolutionariness is the best path to success, but not the only one.

    –Harry

  14. Harry McCracken Says:

    Might be (like I said, it's hard to tell). But judging from my discussions with other Microsofties, I think the notion that they're going after the majority of folks who don't yet own smartphones is accurate.

    –Harry

  15. Harry McCracken Says:

    The IE engine is a huge issue for Windows Phone 7 long-term; here's hoping Microsoft really has a mobile version of IE9 that's quite far along, but just isn't talking about it yet.

    –Harry

  16. winphoneblog Says:

    Thanks Harry, Judging by the comments, your readers are people who have some intelligence in them. I don't always agree with them though.

    I found it quite disturbing that certain reporters, especially those ones from WSJ, trash everything from Microsoft. They even distort facts, or make up stories. To honest, I am ashamed.

    To state my opinion about WIndows Phone 7, I think this is only piece of software that will have a chance to dominate the smartphone market. I used to say, WP7 will be only OS that everyone will use. I still maintain that.

  17. Marcos El Malo Says:

    There is no basis to think that everyone will be using WP7 besides wishful thinking. MS has a solid first iteration in the smartphone market with WP7, but it's not like iOS or Android are going to stand still. WP7 has about as good a chance as Meego, Symbian, QNX, or WebOS at this point, which is to say, as good a chance as anyone.

    Can you identify any reasons why MS will extend their monopoly into the mobile market, or is this just fanboyism?

  18. Bill Snyder Says:

    I have trouble believing that Ballmer meant early, as in early to market. Maybe, as someone commented earlier, he meant it's early in the life of Phone 7 to make judgments, or maybe he simply misspoke and meant late. Maybe I'm trying to hard to make sense of something that's not sensible.

  19. Walt French Says:

    I’m of the belief that customers build “value proposition” models based on a couple of key attributes: 4G speed, openness, AppStore, Love/Hate-of-Apple, ItJustWorks, facebook integration, battery life, whatever.

    Individual preferences are shaped by advertising and the buzz on the street, but for any individual, if there are significant differences in any individual product’s attributes, the customer will choose the device that meets the Big 3 the best, and figure the rest will take care of itself.

    If this is right, what will the Big 3 be for MS customers? Enterprise integration? Out-of-the-box facebook? XBox games? Sharepoint? Metro? Somehow the only ones I see sticking are those that would be driven by Corporate IT telling employees, “get one of these. It’ll do your facebook and personal stuff, and you’ll get secure email plus our CRM system.”

    But Metro? Yes, it’s nice and different, but will people make a choice based on it? Is IE good enough to be a differentiator against Safari or Chrome? Somehow, it’s hard for me to imagine. OTOH, the empty/hostile apps store is a signal that you won’t see a friend playing a great game on their Droid and go get it. Or the new twitter client. Or the iPhone app that guides you around the Museum of Modern Art. The zero-based app store is a warning for people who treat their phones as fun devices to explore and experiment with. And THAT, methinks, is what the whole post-2006 smartphone revolution has been about so far.

  20. winphoneblog Says:

    Marcos, actually no. You say the same thing to Andoid 1 year ago. 1 year ago, I would never imagine anyone would change IPhone. It look as if the IPhone was going to conquor the world. It didn't happen. Actually, IPhone market share is down 0.5% from last year. Of course they still sale a lot more than last year. But market share matters. If Android can do that in a short time. I would think WP7 will have a better chance: WP7 is superior to Android. If you argue about this, you don't unstand the business. The only you can argue is some missing features, apps. That will solve itselft. It's not anybody's concern. What's more important is the strategy behind WP7 is much better than Android. I know you don't like to believe me.

  21. JohnS Says:

    This was my interpretation, too.

    I will say that Ballmer is so opaque, though, that I agree with Cringely that Ballmer is a nut and doesn't know what he's talking about. He simply spews forth as many words as he can and hopes something sticks. Typical schleppy sales guy.

  22. Stilgar Says:

    Hey Robert, what happened to NerdTV on pbs.com? I loved your interviews on there! Gimmie!

  23. Tom Says:

    So what are you saying here?

    Because traditional Windows was fairly awful but became successful anyway so will Windows Phone 7?

    The problem occurs when the competition is already revolutionary and magical. Dare I say traditional Windows would also have failed in these circumstances – I really can't draw comfort from that analogy.

    It's on Microsoft to invent a better phone, make it cheaper (through subsidy if necessary), get the carriers under control (that would be a competitive advantage) – possibly even by buying or starting there own network, and finally, and not least, build a ton of applications that mirror the grassroots applications already present on the iOS platform. If Microsoft did ALL of these things then MAYBE the marketplace might consider them serious about winning in the phone business. This current, weak, slightly pretty offering with no real app support appears doomed at the moment. But hey, if they don't want to do the things to outflank 'revolutionary and magical', they deserve to lose and likely will do so…

  24. Harry McCracken Says:

    Naw, like I said, the point of this piece wasn't to predict whether Windows Phone 7 itself is going to succeed–just to say that there's lots and lots of room left for major changes in the market. I dont think we're locked into a market where only the iPhone and Android will thrive for the next ten or fifteen years.

    (If you pressed me to guess as to whether Windows Phone 7 will do well, I'd probably still try to avoid the subject, but here's one thought: The next major update to the OS is just as important as this first version. It made one great leap forward this time, but it needs to make another one to be competitive.)

    Oddly enough, Windows Phone 7 is a far better product than early versions of desktop Windows, which basically grafted a crude ripoff of the Mac user interface onto a command-line operating system. There are fresh ideas in WinPhone 7; there really weren't any in the first few versions of Windows itself.

    –Harry

  25. @gorash Says:

    I like how you so eloquently explained all your reasonings, all this from a user called "winphoneblog"… Sigh, why do I even bother.

  26. BGrader Says:

    Cont…
    Folks what I am trying to say is that I believe there is this big technology pool where we have mobile, OS, servers, desktops, MPs players, TV, software suites for home, office, home-office, corporate on cloud on thin client or thick client and many more to come. In this big pool of technology every tech company is going to be a winner. Some will have more share if not all in one subset of technology and some will have it in other. This share keeps changing based on how end users react.
    So why not just stop talking about this small sudden changes in one piece of technology and get emotional about my Microsoft or my Apple or my Google is better than your company. In that they all are winning and we a.k.a end users (like me) are not only wasting time reading articles and then spending time replying to it. If you like something and you can afford it then buy it. I am sure all these tech businesses like any other business would love to see us spend.

  27. lrd Says:

    WM7 could very well be Ballmer's down fall. It most certainly would have had it not been for the Xbox's new Kinet platform extension.

  28. Pix Says:

    So by your definition, a product which rips out 90% of the functionality found in a RIM/WM/Nokia device and replaces it with an interface which is basically some childish icons in a rigid rectangular grid, which allows the user to utilise only one application at a time, locks you into just one outlet for obtaining applications, provides a shoddy camera and so on – that sort of product completely blows away its prececessors which featured more advanced cameras, quicker navigation and an open platform for applications? Right…. thanks Apple!

  29. Windows® = Freedom™ Says:

    The vast majority of people don’t have to actually perform work on their phones. Their requirements are low to nonexistent. Today’s phones reflect this: they’re for fun, not for computing. If they weren’t they would have been running Windows (and Mac OS, Linux) from day one.

    Among the hundreds of thousands apps I can’t find the ones I use, nothing even close. The apps I need run only on Windows. That means I miss ALL my apps on the current phones. As computing platforms they’re worthless to me.

    I’ll buy the first phone that runs a virtualizer like VirtualBox.

  30. WaltFrench Says:

    “The vast majority of people don't have to actually perform work on their phones.”

    There's a fair number of us whose work calls for a mix of activities. Yeah, I'd hate to debug my Excel macros on a smartphone — it's awful enough on a multi-screen desktop — but my real work is collecting, analyzing information and transforming it into actions. A mobile device is a tremendous complement to the desktop tools.

    And my work is morphing to require ever more contact with clients, co-workers, etc in ways that Office/Outlook aren't designed for, while iGizmos are helpful. Microsoft may own the desktop but they have not yet managed to translate that into innovations that work well in the explosive levels of business done in the mobile space.

    I'll predict that some Wave-inspired mobile-based product hits critical mass well before MS gets critical mass on its advertised trivial editing of a spreadsheet to show “Sales=3700.” Keep your options open, assuming you're not planning on retiring in the next 5 years.

  31. Tim Draper Says:

    Speaking of out of context quotes. If asked how he felt WP7 was doing now that it's released, they are indeed VERY early – not in the smartphone wars, but in the release life of the product being discussed.

  32. HD Boy Says:

    "…Wasn't IBM kinda "late" to the PC wars? And Apple II, TRS 80's and various others were early? How did that turn out? Netscape and others were early? Ok, I'm oversimplifying a bit, but lets not think that Microsoft is all that late…"

    Well, we ended up with technology created by Apple but a computer world dominated by cheap, insecure, virus-filled PCs with a crummy, second-rate operating system. That's how it turned out. It's taken more than 25 years, but people finally are beginning to understand the beauty of superiority of Apple's unique combination of custom hardware and software. I think the next 25 years will bring about a renaissance in desktop and mobile computing, once again led by Apple. Maybe this time, the teeming masses won't be fooled so easily.

  33. videomaker114 Says:

    WOw this is an excellent view. i really like the blog post which you have made. i was in Cruise agency with them, but
    i really like the way they have predicated every thing. Thanks

Comment on This Story