A couple of weeks ago I interviews with the field developer evangelism group at Microsoft New England.
Since some will ask…..
Yes, I considered going back to Microsoft. I think they are doing some interesting things and the recent changes in senior management should be good for Microsoft’s developer focus over the next few years.
No, I didn’t get the job. The heaviest focus for the position was on driving apps into the Windows Phone Store and engaging college students. I don’t have any apps in the Windows Phone Store, wasn’t really a Silverlight guy and am 53 years old.
But the interview process caused me to update my look at Microsoft developer focused strategy and the state of affairs of Windows Phone 8 and the mobile apps development landscape.
According to Business Insider, Windows Phone & Skype lose Microsoft about a half a billion dollars per year. Meanwhile, Microsoft’s revenue from the sale of Android Phones tops two billion dollars.
This makes sense if you think about it because Microsoft’s revenue on Android phones is basically patent insurance. Android manufacturers pay Microsoft in agreements that keep Microsoft from suing those manufacturers for what Microsoft claims are patent infringements present in Android. Thanks means the per device cost to Microsoft is ZERO and the revenue is 100% profit.
So as I look at Microsoft’s huge focus on growing the Windows Phone market share I’ve been thinking about WHY Microsoft would bother. I mean Android is king and enjoys something like 1.5 million activation EVERY DAY! With Microsoft being paid between $5.00 and $10.00 per Android handset, that seems like a ton of net new profit for Microsoft with absolutely no ongoing investment necessary to sustain that revenue stream.
So why would Microsoft bother to continue to sink money and time into a phone operating system on which they have spend many billions of dolars to develop and market only to achieve 5% (USA) market share to date.
I think there are several reasons.
1.) Microsoft controls the licensing fees for the Windows Phone OS and their per devices licensing fee is greater than the patent fee they receive from the sale of Android phones. So, the more new Windows Phones they can sell and the more they can displace existing phone customers, even Android users, the larger the per device dollar figure they receive.
2.) There are SEVERAL ancillary revenue streams that come with winning the device market share for Microsoft
- Microsoft charges developers an annual membership to submit apps to the store and takes 30% of all app revenue.
- The greater the use of Windows Phones the greater the demand for apps. Microsoft’s Visual Studio, Expression and MSDN sales go up.
- Microsoft’s developer tools simplify the integration of Microsoft Azure based cloud services with will make their use preferential to other cloud services.
3.) There is a combinatorial benefit across form factors in that today I can share large portions of code across Windows Phone, Tablet, and Phone devices. (And it appears that Microsoft will continue the runtime convergence that makes this possible.)
4.) Microsoft’s Android patent revenue trick may not last forever. The actually validity of Microsoft’s patent claims have not been really tested in court. Especially outside the USA, Microsoft may not find courts favorable to their patent claims.
So it’s good for Microsoft but is it good for me, the developer, if Microsoft succeeds in making Windows Phone successful at the expense of Android or iOS?
I have enough experience with the iOS and Android development tool stacks to comfortably say the Windows Phone 8 development experience puts the others to shame, but event the best development experience may not be interesting to me if the market share hovers at 5%.
IDC says Windows Phone 8 is the fastest growing mobile phone operating system. I’m not sure that means anything though. When your competitors have 96.1% of the existing market share, virtually any growth in your market share makes you the fastest growing.
Still, there are compelling reasons to develop for Windows Phone and there are reasons to think Microsoft might continue to grow the Windows Phone market share.
1.) Windows users are used to paying for premium software (and Android users are notoriously not). So developers may experience better financial success with apps in the Windows Phone Store than in the Android / Google Play store or the saturated Apple Store.
2.) The hardware is better. Yes, I know you may want to argue about this but if you look at the cool new devices coming out of Nokia (which is being acquired by Microsoft) and the sheer pace of new device appearance, he cool hardware factor has to go to Microsoft’s favor.
3.) Desktop Synergy. Microsoft still owns over 90% of the desktop market share. Yes, I know that only 10% of that is Windows 8 but it still leaves Microsoft with the customers ears and the PC manufacturer relationships to keep their hold on the desktop user (especially “consumer” users).
4.) With Xamarin’s products I can take my Microsoft code and target Android, iOS and OSX users as well.
So as of today, the reach opportunity on mobile is Android and the revenue opportunity slights favors Android but if Microsoft gets Windows Phone 8.1 & 9 right, if it gets the legacy Windows Desktop upgrade story right and drives the OS and Tablet prices down (I know, some big ifs) Microsoft has a good chance to become a really significant player in the mobile space.
Enough so that, while I probably won’t be deploying FirefoxOS or Ubuntu Phone apps for my upcoming applications venture, I’m definitely adding Windows Phone to iOS and Android in my mobile plans,