At the tail end of Microsoft's marathon Windows Phone Summit keynote, the company's own Kevin Gallo said the following: "Everyone in the Windows ecosystem benefits." He was waxing poetic about the myriad new features coming to the outfit's latest and greatest mobile operating system, and nothing about his quote was incorrect. Developers will adore the shared codebase. Users will adore the new additions to the software framework. Carriers probably won't shun the opportunity to push yet another platform this holiday season. But the one word in there that sticks out most to me is this: "Windows."
I've been wrestling with the ecosystem issue for some time, but the gravity of it has never been so evident. Starting in 2008, one could argue that it stopped being purely about hardware. Purely about design. Purely about software. Purely about partnerships. Particularly when it came to smartphones. Slate-style handsets were en vogue years ago, with design changing extremely little and software becoming ever more of a factor. But it wasn't just software in the simplest sense -- it was how the software was interconnected to every other piece of the digital ecosystem. Phones were no longer standalone devices; they were simply the most convenient entry into a rabbit hole that Microsoft's going to have a tough time digging people out of. Allow me to explain.
As of this month, Apple has moved over 345 million iOS devices. That includes iPhones, iPads and iPod touches. In truth, there are far more iOS devices being used in conjunction with non-Macs than there are with Macs. The halo effect is working, it seems, but it's certainly not putting OS X on the fast track to 51 percent market share in the desktop space. During Apple's Q2 earnings, it revealed a 7 percent uptick in Mac sales compared to Q2 a year ago -- that's four million computers in three months, which is obviously far, far fewer than the Wintel world collectively delivered. But honestly, most of that is somewhat beside the point. Regardless of what desktop platform an iPhone user relies on, the revitalization of the cloud in the consumer space has made switching out of an ecosystem doubly painful.
You see, those who bought in early with iOS soon began spending time and money in the App Store. They developed habits. Workflows were born. Accessories were purchased. Heck, perhaps the inclusion of iPod support swayed them from one vehicle to another. (You laugh, but I've seen it first-hand.)
And then, there's iPad. I'm still not fully convinced Apple's lone tablet is indeed the ideal 'third device' for me personally, but sales figures indicate that it's precisely that for many. And increasingly, tablets (meaning mostly iPads, based on the overwhelming market share numbers) are standing in as computers in the home. Turns out, Apple was onto something when it believed that a mere slate could perhaps replace one's next laptop purchase, and Microsoft is doing its best to politely agree with the recent introduction of Surface.
Even for those who couldn't find reason to splurge on a $999+ Apple laptop, a $399 iPad 2 is proving to be the perfect compromise. Yet again, owning both an iPhone and iPad digs one even deeper into the iTunes ecosystem -- everything from apps to games to movies to music. There's genuine value in being able to purchase an app in one place and use it in another, and the same is true for pretty much any digital application or piece of media. In fact, I'd argue that each additional day spent intertwined in the iTunes ecosystem makes it that much more difficult for any other company to yank that person out.
The issue is compounded when you toss iCloud into the mix. Suddenly, the majority of things you care about on your iPhone and / or iPad is now available anywhere that there's an internet connection. It makes the inclusion of a Mac in the equation even more seamless, and the thought of owning multiple iOS devices even more reasonable. I'll be the first to admit that iCloud is far from feature-complete; enabling support for a litany of third-party apps should be high on Apple's list of priorities, but the reality is that most sane individuals understand the premise. They grok the promise. And if you've already got one foot in the iTunes river, it's impossible not to appreciate it all... if only a little bit.
In the effort of fairness, the vast majority of what I've said rings true for Android, too. Google's suite of products has been so well received, that many users are tapping into Google Docs, Google Drive and Gmail despite similar offerings being available from Apple, Microsoft, etc. (Let's just say there's a reason behind the very real sentiment that the Gmail iOS app isn't 'good enough.') Folks who have wandered over to the Android side, devoted their browsing to Chrome and have cast an eye in the direction of [insert Android tablet here] fully recognize that they too are part of an ecosystem. Sharing tabs between Chrome instances provides real value. Syncing Google Play purchases between phone and tablet -- with practically no involvement on the end user's part -- provides real value. And for the small contingent of Chromebook users, there's yet another layer of tightness that makes the usage of the entire family feel more involved.
Here's where Microsoft enters the picture. The company has an absurd slice of the desktop OS marketshare, but a lot of that has to do with enterprise roots. People are ushered into Windows at work and school, and it becomes familiar. If and when the time comes to buy a PC at home, familiar typically wins. This is most certainly not a hard-and-fast rule, in general I've found it to be accurate. But having the lion's share of the PC market clearly doesn't do one much good when it doesn't also offer a highly compelling smartphone and tablet platform. Five years ago, Apple somehow managed to coerce a world full of Wintel users to give its smartphone platform a chance. It somehow managed to convince a world of Wintel users to get out of whatever ecosystem they were in, and into iTunes. How, exactly, did it accomplish such a feat? By offering a platform that was so much more compelling, it actually dulled the pain of switching.
A year later, Google did the same thing. And where, might I ask, was Microsoft? A month after the T-Mobile G1 was unleashed upon the world, Microsoft was unveiling Windows Mobile 6.5. It was quite possibly the world's weakest attempt to combat the rising tides of Android and iOS from any company with as much money, resources and clout as Microsoft. In fact, the introduction of iOS and Android caught Microsoft so off guard, that it wasn't until February of 2010 that we saw even the first tangible evidence that the company had a product in the same league. On the tablet side, Microsoft attempted to make itself believe that Windows 7 was its "tablet answer." Or, maybe it was that short-lived Embedded Compact 7. Either way, neither worked. No one bought into it, and the introduction of Surface makes blatantly clear that the "shove Windows 7 on a tablet and call it ideal" wasn't a real strategy. Surface is a strategy, and a thoroughly beautiful one at that. But, here's the rub: it's 2012, and Microsoft is only now getting its modern ecosystem play together.
In theory, one could dive headfirst into SkyDrive, snap up a Surface Pro slate, invest in a Windows 8 Ultrabook and pony up for a forthcoming WP8 handset, and they'd be just as cozy as folks are today with iOS or Android devices surrounding them. But how many consumers even remotely interested in digital ecosystems are still waiting around to choose a side? Have those in Microsoft's target market truly sat around since the middle of 2008 without investing themselves in an ecosystem already?
The point is this: by waiting until the tail end of 2012 to assemble an ecosystem that works, end-to-end and in impressive fashion, Microsoft has put itself at a massive disadvantage. The most recent Comscore figures show Android and iOS accounting for over 80 percent of the US smartphone share, with Microsoft at 3.9 percent. That's just marginally higher than Symbian, an OS that hasn't been actively marketed here in the better part of a millennium. Globally, the latest IDC research figures paint a nearly-identical picture; iOS and Android represent 82 percent of the pie, with Windows Phone claiming 2.2 percent. It's not lost on me that both iOS and Android started at zero, too. Much of their ground has been gained at the expense of Nokia and RIM, and there's a very real possibility that Microsoft gains at the expense of Apple and Google. But just how realistic is it?
The switching costs in the smartphone market today are monumentally more significant than they were in 2007. It's more than a phone you're switching -- it's a lifestyle. It's an ecosystem. Somehow, Microsoft has to convince people not only that Windows Phone 8 is truly as awe-inspiring as it looks, but that its Surface tablets really will be a Windows tablet worth owning, and that Windows 8 really is a fantastical step ahead of Windows 7. In my estimation, it'll need to deliver a magical SkyDrive marketing message that not only rivals that of iCloud, but surpasses it, if it truly wants a significant amount of the smartphone marketshare. Microsoft has 100,000 apps in the Marketplace as of June 2012, but Apple has 550,000 more reasons to invest your time in a far deeper app library. And, if you're already invested in that library, Microsoft needs an overwhelmingly convincing pitch to get you out of where you're comfortable.
Windows Phone 8 is unquestionably the most exciting thing Microsoft has done on the mobile front in years. But is it exciting enough to get me to cut loose from 3+ years of app purchases, information input and workflow patterns? Tempt me this holiday, Microsoft. I'll be waiting.
