What Windows Phone Needs To Survive

Posted by on October 14, 2011 at 9:57 am

Dear Microsoft,

You’re screwing this whole thing up. No, I take it back, not everything. Windows Phone as an OS, now with Mango, is now competent and as other major outlets have said, remarkably similar in capability or better than Android or iOS. So how can Apple unveil one phone this month and do almost as much business as your entire lineup this quarter before it even releases? You guys are absolutely failing in your obligation to provide this industry with a new standard. You’re putting billions behind it because you realize this is your only stable attempt to bridge the ecosystem between Windows and the post-PC universe, yet you have little to show for it. They’ve even been out for a year and I still don’t have one. Look, I don’t run your business, but I did try to save Best Buy, so let me try to bail you out, too.

Here’s what you guys need:

Promote the damn thing. You guys are doing an awful job here, just as bad as that Zune thing (which is a whole other issue, by the way). Get some exciting ads about it like you do with Xbox. Get with carriers and get them to do cutting edge ads like Verizon does with Droid. They’re stupid, but they’re super effective. A bunch of phones swirling around in 3D with a bunch of squares on them says nothing. Move it!

Give the damn things away. Don’t do it through carriers, carriers mess up everything. Am I the only one who remembers when you dropped the price on the original Xbox by a whopping $100 a mere six months after launch just to spur sales against an entrenched PlayStation 2? This was an investment in the future of the platform, something you need to stick your neck out on and make happen. Give away a Windows Phone with a Windows 7 laptop instead of an Xbox 360. Don’t even make it a choice. 360’s already sell great, you don’t need any better incentive for those. Give away tons of apps, just create a value add since your app count is still so far behind the others.

Get your services in order. Sure you have Netflix, but you’ve also spent the past five years building a music and video service that you seem to completely forget about. When the Xbox 360 embraced social music sharing, you brought in, but not Zune Social. Why? When Facebook embraced social music sharing, you didn’t bring anything. Why? Apple touts large sales on media revenue because of how prolific iTunes has become despite the rapid decline of the iPod. You haven’t done anything. You could be doing so much work to get these ducks in line and you haven’t done a thing. Why? Make Windows Phone the home of your media, just tell people that, then back it up!

Get your phones in order. A year ago, you unveiled ten GSM-enabled phones with the only non-Mango iterations since then being the lonely Arrive on Sprint and Trophy on Verizon. You guys can’t stick to annual installments. You’re trying to get the satisfaction of a terrific Windows Phone experience across all hardware, but you’re not allowing for the enthusiasm that comes with a new major Android release every few months. On top of that, whatever doesn’t make it this round has to wait another year for the next major update. In a year when many phones are going dual-core, it appears that not a single Windows Phone will have one. I mentioned that I’ve been waiting for my new Windows Phone for well over a year now, but now I’m just sitting here waiting while your draconian marketing waits to unveil new hardware. Speaking of which…

Unveil those new phones like a champ. Get people excited about Windows Phone! Apple has several events a year to unveil new hardware and when they do, it’s a roaring success because everyone’s on the same page. They know what the specs are, they know what the carriers are, they know what the pricing is. Let’s pick today and try to explain the new wave of Mango phones. Okay, so AT&T is getting the HTC Radar and HTC Titan. This month maybe? And T-Mobile’s getting the Titan? And Sprint and Verizon are… hmmm, so we still don’t know what the situation is there? Why is this so difficult? Are you really going to let Apple best you on this? Right now, you have to be your own best promotion Microsoft. The carriers aren’t looking to you like a king of industry, they’re looking at you like an obligation. Show us all of the phones. Give us a date when we can buy them. Give us a time and a location. Do all of these things, you owe it to the customer.

Seriously, you could be doing so much better here and even Ballmer knows it. Look, I’ll work on a retainer, but you guys need to figure this out. No one wants to buy a Windows Phone when even you’re not sure how many you’re going to be pushing next quarter, or within the next year.

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  • Jeff B.

    Man, this nails it. Especially the promotion. The WP7 OS can hold it’s own if given a chance.

    • Anonymous

      Yes, and it’s so awful because I want them to succeed!

  • Anonymous

    You really nailed it.  But they’re not going to listen to you.  Their marketing expense on the phones appears to be more than the cost of manufacture – so it really is cheaper to just give them away than to keep doing what they’re doing.

    Anyway, their ability to take the best advertising teams in the world and turn their output into a laughingstock with negative results is pretty legendary.

    Hopefully when the line is discontinued you’ll get over it.

    • Anonymous

      Microsoft doesn’t make the phones or take losses on the hardware, that would be the hardware makers. Microsoft just needs to convince them that people want them.

      • Anonymous

        It’s possible Microsoft is letting the phone makers offset their hardware build costs with Android patent licenses to keep them in the Windows Phone game.  But that’s neither here nor there.

        On launch Microsoft’s forecast marketing budget for Windows Phone was $400-500 million.  Estimates on first-year sales vary, but 1.4 million units is widely reported.  That could give a marketing expense of as much as $357 per sold-through phone – far more than they cost to build.  If they’re getting the reported $15 per license then they’re upside down as much as $342 per phone.  Maybe they sold more phones than that, but it’s not likely enough to turn this figure right side up.  Maybe they paid less than that in marketing – which would probably have some phone OEMs pretty upset that they didn’t get what was promised: those figures are a large part of what drove many of them to adopt the platform in the first place.

        So really instead of expensive ad campaigns, product placements and whatnot they could just buy a mailing list and ship out a million phones to people likely to influence their friends that they’re great.  If they get two sold phones per gifted phone they’re likely money ahead, relatively speaking. This is in-line with your idea in the article and I support it as a successful strategy well grounded in the facts.  I’m agreeing with you.

        I just don’t think they’ll do it.  They really should hire you to give them tips.  They need somebody with some common sense.

        • Anonymous

          I don’t consider their marketing pot to be part of their OEM relationship. Yes, they could be giving them away to celebrities, that’d be a great start, but they seems so hesitant about it. Microsoft spent $500m when the original Xbox launched and still lost tons of money on the hardware alone, but that’s part of entrenching yourself. They seem to be in a holding pattern on the whole thing. ‘Awww, gosh, we could do this, but what if it doesn’t work, and we could do this but it won’t work and…’

          They still make money on each individual phone by licensing Windows Phone OS (as I understand they still charge $5-7 per phone), but your sell-through is a little low. That 1.4m was for the previous quarter, so they’ve sold a few more than that. Not a terribly huge amount, but more. Until Microsoft does a ‘Nexus’ thing with an OEM, I don’t think any of them are excited about doing more than just porting their Android hardware. Perhaps if they didn’t keep such tight reins on the hardware, OEMs would be more excited about it. I think they could use a 1.2GHz Qualcomm processor this year. Wooo.

          So yes, we’re agreeing to agree here, I just wish they weren’t so timid about the whole thing.

          • Anonymous

            Ok, disassociate the marketing pot from the COGS.  Reference XBOX, which is still billions of dollars underwater since inception, total.  Turn your head from what it’s costing for what they get.  You’re in denial, and that’s not the winner here.

            Maybe you’re not the best guy to help them find the way forward after all.  You sound like the kind of guy now to help them continue to lose ever more money, which is not what they need.  They need somebody to dig some profitability out of this mess and apparently you’re not it.

          • Anonymous

            The Xbox brand is better off than it ever has been. Yes, they’re still underwater, but they’ve made great strides and their dominance this year on hardware sold is going to help them in the future. I wouldn’t be surprised if next gen they offer a machine that will make money from the get-go and allow them to finally be profitable. Xbox has always been at least a twenty year plan for Microsoft, so them tossing out $500m out front to promote the brand then lose on most everything else for the first six years is just part of building the brand. That’s not a gamble they were going to make with Zune against the iPod, it is one they’re going to need against iOS and Android.

          • Anonymous

            N.  Apparently we’ve reached the maximum depth of this comment system, so I have to post this inline.

            Yes, XBOX is doing the best it ever has — which is not the same thing as saying it’s a runaway success.  Unfortunately a new generation of console is due.

            Let’s surmise about the next gen when we at least see some specs.  We’re a long way from that.  Currently we’re in denial that a next gen is even needed and so two relations far from speculation of what it might need to be.

          • Anonymous

            I never said the Xbox was a runaway success, but they’re building toward one. Unless there are some drastic price cuts on these current systems, then console growth is shot. We’ve seen persistent y-o-y declines in video game purchases which means two things: the barrier to entry is still too high (remember Sony touted that they sold most of their original PlayStations once the hardware went to $150?) or we’re looking for better value at a higher price point. I expect a new generation of consoles (yes, even the Wii U, I suppose) within the next two holidays.

  • Johnny

    Nice article, Nick.  I have a Windows Phone and I’ve never seen another one in the wild.  After Mango, people actually take a positive interest in my phone when they see me using it, but it doesn’t have any mindshare at all.  Microsoft is doing nothing to pull the eyes of phone users away from their iPhones and Androids.  I really like this phone, but it’s going to suck if this awesome OS tanks because Microsoft can’t figure out how to get it out there.

    They need to go after people who haven’t already decided on an iPhone or Android, but the other problem is in-store promotion.  I’ve never seen a sales person talk up Windows Phone in the carrier stores.  WP7s get completely lost in the avalanche of Androids and iPhones on display.  I once asked a T-Mobile sales person about the Windows phone just to see what she’d say.  She said, “You don’t want that.  I heard they don’t even turn on half the time.  Why would you want one of those?  You should check out this Android phone over here.”

    • Anonymous

      Yeah, I’ve never seen a Windows Phone in the wild that wasn’t the Arrive we tested, which is sad. In many ways, store reps are just as far off as consumers are. I remember some of my co-workers dissing the Palm Pre, despite how excellent webOS was, because of the awful build quality. Windows Phone doesn’t have this problem, but they’ve gotta work through it, just like they did on the Xbox.

      • Anonymous

        I actually have the HTC HD7 with WP7.  Well, actually my wife does.  Every time I show her a cool new app on my Samsung Galaxy S Epic with Android she demands I get it on her phone.  Unfortunately the answer is usually “your phone does not have that app”. I got her an Android tablet to make it up to her, and now she uses the phone for talk and text and the Android tablet for stuff she might use a smartphone for.

        It is a nice enough phone – bright and responsive, good talk and text, slim as you could hope for and good battery life.  I hear it is a benchmark WP7 phone.  Neither of us is a fan of Metro, but that is irrelevant.  It does not have the cool apps. It is her last Windows Phone.

        Eventually we will get her an Android phone and I will find a way to put Android on this thing, making it a toy for the kids, a music and video player for me.  Until then it may as well be a feature phone.

        But yeah, last Christmas I did see Windows Phones on shelves at the mall, in the tech stores I go to – but not the last few months or so.  If they’re not on the shelf it’s going to be hard to get people to buy them.

        • Anonymous

          “Neither of us is a fan of Metro”

          Then you and your wife have suckass taste if you like the awful Android and not Metro, which wipes the frickin’ floor with Android. Android is a pile of shit. I know because it was the first phone I owned.

          • Anonymous

            Well now we are at differing opinions of quality.  We have your opinion, and my opinion.  My opinion stands without change.  I won’t weigh any impression of your opinion.  Let’s let the market decide.