John Gruber has some interesting thoughts about the odd-man-out at Google’s I/O conference this week:
The big loser this week, though, was Microsoft. They’re simply not even part of the game. RIM looms large, as BlackBerrys continue to reign as the best-selling smartphones in the U.S. But Microsoft? They’ve got nothing. No interesting devices, weak sales, and a shrinking user base. Microsoft’s irrelevance is taken for granted.
Google’s competitive focus on the iPhone at I/O was intense and scathing. But it’s Microsoft’s lunch they’re eating. Apple’s and RIM’s game is selling the integrated whole — their own devices, running their own software. Google is playing Microsoft’s game — licensing a platform to many device makers.
This is the way I’ve seen the mobile market shaking out for quite some time now. Google’s Android fills precisely the same niche that used to be filled by Windows Mobile, but it does so with New Hawtness that Microsoft just can’t seem to match. The Kin will never be the hit the Sidekick was, because the market is different now and app-based smartphones are the norm, not the exception. Yes, the Kin line is supposed to merge with Windows Phone 7 eventually, but by the time it does, Android 2.2, with all its speed and Flashy goodness will be the norm, if not replaced by Android 2.3 or later. Microsoft is caught between a rock (okay, an Apple) and a hard place (a shiny, cheerfully multicolor hard place). They’ll never have the kind of market share needed to make their $8-15 mobile OS license business model pay off.
So the real question is this. Microsoft can see the writing on the wall. They know mobile is the Next Big Thing, as big a shift in personal computing as the advent of the GUI over command line interfaces. Not participating would be corporate suicide. But what they’re doing with Windows Phone 7 can’t possibly succeed. Google gives Android away for free. They can’t beat free. So what do they do?
Microsoft’s only hope is to merge the Kin, Zune, Xbox Live and Windows Phone 7 into a single platform, and do it now. Release a kick-ass smartphone with Zune and Xbox integration and a ready to go app store this year, before the holiday shopping season. And make it pretty. Oh, so pretty. They can’t compete with Google on price, so they have to compete with Apple on user experience and integration.
(Now might be a good time to sell those shares of MSFT you’re still hanging on to.)