The United States Dept. of Justice wants Google to give up the keys to Android — Should Microsoft give the "Surface Phone" another try?

[Windows Central]

Microsoft has utterly given up on its mobile aspirations, but maybe the right regulatory ruling could (and should) bring it back to the party.

The United States Dept. of Justice wants Google to give up the keys to Android — Should Microsoft give the "Surface Phone" another try? : Read more

 

[ShinyProton]

Seriously?
Windows Phone is long dead and already decomposed. Leave it there.

Microsoft totally lost its mobile market presence - for both consumers and developers. Furthermore, it's not even able to make a decent Android phone that would appeal the mass and support it properly.

No. Just no.

 

[GraniteStateColin]

I would love this, but I don't think MS has the culture to do this any longer. To be sure: I would love to be wrong on that. I hope I'm wrong. I want a vibrant MS.

Microsoft has demonstrated with the loss of Panay as merely the capstone example of their abandonment of end-user touchpoints and concern for great EUX (end user experience). This excellent article includes others: like the effective abandonment of Android versions of their apps and the end of Windows Phone and Duo. Other recent and key examples: their mismanagement of the Xbox ecosystem, the lack of innovation in Windows, the termination of multiple PC-based hardware initiatives, the lack of advancement in all apps (with the possible exception of Teams, but even those changes are mostly back-end and not user-facing). Hell, Excel still has a single combined undo across all open worksheets and no dark mode, Outlook is stalled pending a move to some deflated, knee-capped web-app.

I think what Microsoft has become is based on Nadella's vision for a company that provides back-end services and infrastructure to other companies. He views that as high-margin and low-risk and he does cloud services well. He tried to add holographic computing, but that was too close to a direct user touchpoint, and so it failed. His hope with AI is that MS can just function as a background provider of the capabilities, no direct user connection (and we can already see how Copilot is failing compared with others, even if its underlying AI is better). Nadella seems incapable of driving success and greatness among his lieutenants in any other areas. In fact, he seems to snuff any bright spots that do arise, hence Panay's flight for his own sanity.

Microsoft needed someone like Nadella with his Azure background and strong cloud focus to move Office into the modern era and grow MS' IaaS (Infrastructure as a Service) platform. But that is all running well. What MS now needs is a leader to rebuild their end-user experience side w/o breaking the good that Nadella has done on cloud and IaaS. Absent that, unless the government blows up Google to save MS (and as much as I dislike Google, their fall should not be due to governmental meddling), MS is going to see its ability to push its core cloud and IaaS offerings suffer against Google who can better bundle a full stack experience including end-user applications and features on dedicated hardware.

The tragic irony is that MS still has good relationships with hardware partners. It was (and for some may still be) the gold standard in treating third-party developers extremely well. It has some of the best development tools on the planet. These are all strengths, strategic assets, that MS is wasting, pissing them away. Worse, absent constant nurturing, those golden-egg laying geese weaken and wither on the vine. (pardon the horribly mixed metaphor).

So sad to see MS slowly poison everything outside of Nadella's Azure line. He did what he was hired to do: focus on and grow their cloud strengths, but he seems to lack the vision to recognize that even the cloud relies on end-user touchpoints to remain a growth engine over the long, long term. MS is no danger in the next 3-5 years. But after that, if they don't right their EUX (internally and through fostering those external software and hardware partnerships), I think they are likely to grow more slowly than the other tech companies and eventually fade from relevance as they fall not down, but behind the more rapid growth of others. It's not enough to run a good business. You must also innovate faster and delight your customers more than the competition.

 

[GraniteStateColin]

Seriously?
Windows Phone is long dead and already decomposed. Leave it there.

Microsoft totally lost its mobile market presence - for both consumers and developers. Furthermore, it's not even able to make a decent Android phone that would appeal the mass and support it properly.

No. Just no.

I have no argument with your summary statements -- you are indisputably correct on where things stand as of now. But that doesn't mean Microsoft can't learn from what it did wrong, make changes, and be better. In the world before Windows Phone, Microsoft's successes frequently came from failed launches followed by perseverance and iterations, with each new version fixing the problems with the prior version until they got it right (e.g., Excel taking over from Lotus 1-2-3, Word taking over from WordPerfect, taking over GUI leadership from Mac, Outlook taking over Novell Groupware, Windows Mobile coming from behind Palm to mobile dominance, IE dethroning the seemingly unstoppable Netscape, Xbox 360 trouncing PS3). That was how MS beat all its larger competitors to achieve its various dominant positions, approaching each of those as the smaller upstart.

That approach will work in any area where MS has:

1. The resources to keep iterating until it gets it right
2. Strengths it can leverage to have a novel advantage in a new product area

For mobile, MS has the money to pursue a mobile presence. Three obvious strengths it has that no one else can bring to mobile: MS has the Office install base, IT departments across many enterprises, and Xbox gamers using Gamepass or interested in boosting their Gamerscore (though all of these are fading in importance by the month as MS fails to support them). Further, MS has arguably the best AI backend to produce the most capable mobile device or toolset (whether on top of Android or their own). Therefore, MS has the foundation and resources to prosper in mobile IF IT CHOOSES TO FIGHT FOR THIS SPACE.

Also, MS should not just scrap things and start over when it realizes it's doing something wrong, but merely iterate in small steps of continual improvement: shave off the rough patches and expand on the parts people like so that it doesn't alienate the early adopters with each generation (e.g., the way they kept shooting themselves in the foot by starting over from Windows Phone 7 -> 8 -> 10).

MS lost this space because it threw in the towel rather than doubling down and fixing its prior mistakes via iteration. MS has also NEVER leveraged their strengths properly, which is key to any success like this. Basic corporate strategy training teaches using SWOT analysis -- Strengths, Weaknesses, Opportunities, and Threats to develop a plan. Instead of using that, MS threw some crap against the wall, saw it didn't stick and, per Nadella's "Hit Refresh," shrugged and walked away.

DO NOT HIT REFRESH. ITERATE.

 

[ShinyProton]

I have no argument with your summary statements -- you are indisputably correct on where things stand as of now. But that doesn't mean Microsoft can't learn from what it did wrong, make changes, and be better. In the world before Windows Phone, Microsoft's successes frequently came from failed launches followed by perseverance and iterations, with each new version fixing the problems with the prior version until they got it right (e.g., Excel taking over from Lotus 1-2-3, Word taking over from WordPerfect, taking over GUI leadership from Mac, Outlook taking over Novell Groupware, Windows Mobile coming from behind Palm to mobile dominance, IE dethroning the seemingly unstoppable Netscape, Xbox 360 trouncing PS3). That was how MS beat all its larger competitors to achieve its various dominant positions, approaching each of those as the smaller upstart.

That approach will work in any area where MS has:

1. The resources to keep iterating until it gets it right
2. Strengths it can leverage to have a novel advantage in a new product area

For mobile, MS has the money to pursue a mobile presence. Three obvious strengths it has that no one else can bring to mobile: MS has the Office install base, IT departments across many enterprises, and Xbox gamers using Gamepass or interested in boosting their Gamerscore (though all of these are fading in importance by the month as MS fails to support them). Further, MS has arguably the best AI backend to produce the most capable mobile device or toolset (whether on top of Android or their own). Therefore, MS has the foundation and resources to prosper in mobile IF IT CHOOSES TO FIGHT FOR THIS SPACE.

Also, MS should not just scrap things and start over when it realizes it's doing something wrong, but merely iterate in small steps of continual improvement: shave off the rough patches and expand on the parts people like so that it doesn't alienate the early adopters with each generation (e.g., the way they kept shooting themselves in the foot by starting over from Windows Phone 7 -> 8 -> 10).

MS lost this space because it threw in the towel rather than doubling down and fixing its prior mistakes via iteration. MS has also NEVER leveraged their strengths properly, which is key to any success like this. Basic corporate strategy training teaches using SWOT analysis -- Strengths, Weaknesses, Opportunities, and Threats to develop a plan. Instead of using that, MS threw some crap against the wall, saw it didn't stick and, per Nadella's "Hit Refresh," shrugged and walked away.

DO NOT HIT REFRESH. ITERATE.

I will NOT happen.

Microsoft destroyed every consumer ecosystem they had. Windows is only alive because of the corporate world and, to a lesser extent, the gaming. The operating system that ruled the world is almost not relevant anymore.

Microsoft is almost an exclusively cloud computing company nowadays.

Consumers are gone. They are mobile. With them, developers jumped ship long ago. The Windows Store is a pathetic confirmation of this trend that started almost a decade ago. And it will not change.
Windows and Office are the last remnants of the glorious era. And both are facing a slow death toward the irrelevancy path. And Microsoft does not really care.

So, forget about a consumer ecosystem return in the Microsoft realm. Neither Microsoft nor consumers want it.

 

[GraniteStateColin]

I will NOT happen.

Microsoft destroyed every consumer ecosystem they had. Windows is only alive because of the corporate world and, to a lesser extent, the gaming. The operating system that ruled the world is almost not relevant anymore.

Microsoft is almost an exclusively cloud computing company nowadays.

Consumers are gone. They are mobile. With them, developers jumped ship long ago. The Windows Store is a pathetic confirmation of this trend that started almost a decade ago. And it will not change.
Windows and Office are the last remnants of the glorious era. And both are facing a slow death toward the irrelevancy path. And Microsoft does not really care.

So, forget about a consumer ecosystem return in the Microsoft realm. Neither Microsoft nor consumers want it.

I agree with most of that. I disagree that no one wants it. I want it. More important, and the reason I want it: it's in Microsoft's strategic interest to want it, even if their current leadership disagrees. They are objectively wrong. With their current path, they are setting themselves on a glide path to irrelevancy, which squeezes margins and hurts shareholders. Nothing that will happen this year or next, but if all a company has is a service with no brand value, then it will eventually become a commodity, and a commodity has negligible value beyond its book value (no goodwill or brand value on top of that, which is where most of the profits lie). That's a horrible place for any tech company to end up and it will shred their market cap.

 

[Gabe Szabo]

Microsoft burned me with Windows Phone, Surface Duo, Surface, Cortana, Kinect, and they're finally burning me with Xbox, SwiftKey and Launcher. Most if not ALL of these are/were great products that Microsoft eventually gave up on. I'm sure I'm missing dozens more. I think, as Jez points out, Microsoft de-emphasized most if not all consumer products and services - maybe not Xbox, maybe not Windows, but that's probably it. Even Windows is more focused on enterprises.

I think they should spin off/sell off the consumer-focused parts of the company (or whatever is left of it), including Xbox.

Edit: oh yeah, add Skype, Teams and People to that list.

 

[Sex Pistols]

At this moment I'm using my MS Surface Duo 2 and I'm very glad with it. It's a shame that MS never updated it from Android 12L and also now don't update the security software. Therefore I bought a refurbished iPhone 13 mini 256GB and using all my bank account, medical app's and other private apps like from the goverment. As long as other Android apps keep on working on my MS Surface Duo 2 I'm gonna use it.
I also have a Lumia 950 which is still working and on charging by Qi 24/7.
I would be very happy if MS makes a new mobile device (phone) and surely gonna buy it!
I'm using as less as possible Google app's and didn't use Google wallet for pay also.

 

[notforhire]

all of these arguments are the exact opposite of my arguments re Samsung. Samsung's ecosystem is magnificent as long as you're totally mobile. Google offerings are always lacking and change month to month on a whim, even though they're available both on the web and mobile.

I use MSFT where I can, and even dipped my toe back in to Microsoft Launcher.... briefly. at the end of the day, MSFT could be more mobile if it wanted. they don't want to.

 

[jajunk]

Microsoft had to get Azure right first. There was no way they were going to survive on the revenue from consumer facing goods. Look it up. Now that they have Azure in a good spot. And contrary to the news media. CoPilot had been pretty well received from what I have seen.

With the recent meddling around in the space from the EU. And the Google breakup. I would expect the next couple of years be interesting. A mobile phone from Microsoft wouldn't be surprising.

Most of the complaints I see from consumers about Microsoft is that it is not the Microsoft from 20 years ago. I agree there are things I miss. But just because I miss them doesn't mean the other consumers miss them. the market changes. Oh well....

 

[Mapplesoft]

If Windows Phone came back, I would give it another try. It was a fun and revolutionary OS. In the meantime, I will hold on to my iPhone. Not interested in Android, even if it is Microsoft.

 

[MisterBear]

Satya Nadella is not a forward facing CEO. If Microsoft ever wants to be cutting edge and innovative again, he will have to go. Microsoft will continue to go without a presence in mobile, and their platforms on the consumer front will slowly whither. It's happened and continues to happen. Even their AI platform is someone else's creation.

 

[TheFerrango]

As much as I loved my Windows Phones, no thanks. I don't trust them one bit with a consumer-first product.

 

[fjtorres5591]

Microsoft is and always has been a tools and platforms company.

Are we agreed on that? Whether it be BASIC, WINDOWS, DIRECTX, OFFICE, VISUAL STUDIO, LINKEDIN, BING, COPILOT, OR GAME PASS, their business is about one or the other, preferably in synergy. Windows helps Office and Visual Studio, and DirectX helps Windows and Visual Studio.

MS does hardware when it helps support at least one major product line. Whether it be a CP/M card or mice or gaming consoles, hardware has to line up with either a platform or a tool.

It's not about consumer vs enterprise but about synergy. And profit margin.
Nadella may blame himself for killing Windows Phone but MS didn't lose the mobile platform business because of him. That happened before him when WindowsCE was backburnered, starved, and killed.

Windows CE was years ahead of the market and killed just as the market for it started to emerge. Windows Phone was a belated effort to undo that mistake and buying Nokia s bigger mistake. It took most of a decade for Android to evolve the capabilities (true multitasking in particular) that CE had since its infancy.

WindowsCE served a purpose and it extended more than one core platform (Windows APIs, Visual Studio, Office, Browser, to name a few) into both mobile and embedded systems. It had synergy up the wazoo.

Windows Phone, for all its virtues, was like ZUNE a too late me-too product into a market that had already defined itself. WindowsCE and its Smartphones were ahead of the market and windows phone was behind it. It never had enough market share to attract the light apps that define mobile and even today Windows still lacks, for all the widget models MS tries to graft on Windows.

They missed the boat and they know it.
They tried again with the Duo but the market isn't there. Not because it wasn't a good product or lacked *some* synergy but because it didn't fit the market. And the true market of smartphones isn't the consumer but the telecom. The needed synergy isn't with the OS or the apps but the services it links to. The Duo provides added value to the user but not to the telecom. To them it was just another phone. And a pricey one.

And the same thing applies to a MS Android phone, regardless of user features.
Android phones are commodities, fancy features or not. And commodities are by definition low margin products. And MS has little interest in low margin products unless they serve a strategic purpose. mice where useful during the transition to GUIs and when an MS mouse could command a premium (and bigger margin) but once those advantages faded, they offloaded the business. Like they offloaded Expedia when it was no longer needed to promote CD-ROM PCs.

Where's the value of a MS Android phone to justify a premium? MS already offers a hundred apps on any Android phone and already lets you tightly link the phone to Windows. They're even dropping Android emulation because it (apparently) isn't adding enough value to Windows. Maybe Windows doesn't actually need light apps when the same benefits can come via browser?

The time for a Microsoft phone, CE, Windows, or android is past. Way too late.
It offers no value to MS.

What MS needs to do is figure out, like others are already doing, is looking for ways to leverage "AI" on wearable tech.

Microsoft Glasses maybe.
Microsoft Band 2.0? Possible.
MS commbadge? hmm...

Don't fight the last war, look to the next one instead.

 

[fjtorres5591]

I think they should spin off/sell off the consumer-focused parts of the company (or whatever is left of it), including Xbox.

They could spin-off XBOX, theoretically.
Their structure allows it, easy.
They won't.
Not anytime soon.
Not with XBOX on the ascendancy and delivering revenue *growth* to the bottom line. (At mature companies growth is hard to come by. Any segment that lets them show steady growth, year after year is priceless.)

And not when it offers significant synergy to Windows, DirectX, Visual Studio, AXURE, and Copilot. Remember, the Xbox network runs off AZURE and they charge for it. That alone justifies XBOX.
For that matter, how much relevance would the Windows store have for gaming without plays anywhere?

Submitted for consideration: XBOX is not a standalone platform but rather a low-end extension of PC gaming. And the primary driver of content to Game Pass which drives revenue to AZURE which is *the* cash cow of cash cows.

XBOX has never been about just selling consoles or games.
Look up its history.
And remember that Sony used to hype the PS2 as a "home computer" that would do photo editing and browse the internet.
That rang alarm bells in Redmond who tried the same with MSX.

Rediscovering the MSX: Celebrating 40 Years of Microsoft's Journey into Gaming - Xbox Wire

How the pioneering engineering of MSX still sparks nostalgia and has shaped the games we play today on Xbox.

news.xbox.com

XBOX is a strategic product line and a profitable one going back to the 360, red ring notwithstanding. More so these days with Game Pass delivering $4B+ a year in revenue all by itself. It's already bringing in as much direct revenue as windows and it is about to bring even more as cloud evolves.

Nope.
Not going to happen.

 

[Laura Knotek]

I agree with most of that. I disagree that no one wants it. I want it. More important, and the reason I want it: it's in Microsoft's strategic interest to want it, even if their current leadership disagrees. They are objectively wrong. With their current path, they are setting themselves on a glide path to irrelevancy, which squeezes margins and hurts shareholders. Nothing that will happen this year or next, but if all a company has is a service with no brand value, then it will eventually become a commodity, and a commodity has negligible value beyond its book value (no goodwill or brand value on top of that, which is where most of the profits lie). That's a horrible place for any tech company to end up and it will shred their market cap.

The thing is, for consumers, Microsoft products are commodities. Windows and Office are what they use for work. The average consumer at home isn't interested in using at home what he or she spends using all day at work. The brand value Microsoft has it for business purposes, not for consumers to enjoy.

 

[Laura Knotek]

They could spin-off XBOX, theoretically.
Their structure allows it, easy.
They won't.
Not anytime soon.
Not with XBOX on the ascendancy and delivering revenue *growth* to the bottom line. (At mature companies growth is hard to come by. Any segment that lets them show steady growth, year after year is priceless.)

And not when it offers significant synergy to Windows, DirectX, Visual Studio, AXURE, and Copilot. Remember, the Xbox network runs off AZURE and they charge for it. That alone justifies XBOX.
For that matter, how much relevance would the Windows store have for gaming without plays anywhere?

Submitted for consideration: XBOX is not a standalone platform but rather a low-end extension of PC gaming. And the primary driver of content to Game Pass which drives revenue to AZURE which is *the* cash cow of cash cows.

XBOX has never been about just selling consoles or games.
Look up its history.
And remember that Sony used to hype the PS2 as a "home computer" that would do photo editing and browse the internet.
That rang alarm bells in Redmond who tried the same with MSX.

Rediscovering the MSX: Celebrating 40 Years of Microsoft's Journey into Gaming - Xbox Wire

How the pioneering engineering of MSX still sparks nostalgia and has shaped the games we play today on Xbox.

news.xbox.com

XBOX is a strategic product line and a profitable one going back to the 360, red ring notwithstanding. More so these days with Game Pass delivering $4B+ a year in revenue all by itself. It's already bringing in as much direct revenue as windows and it is about to bring even more as cloud evolves.

Nope.
Not going to happen.

How do Xbox games sell on PC compared to Steam games?

 

[fjtorres5591]

How do Xbox games sell on PC compared to Steam games?

Timely question.
Steam is facing a class action suit from developers because of its dominance (75% US, 80% EU, 50% global) in PC games both PC only or with console equivalents. (Since they don't do Plays Anywhere one would expect a slight tilt towards MS from folks interested in cloud gaming. So far it hasn't factored in.)

In the US MS probably moves maybe 15% of PC games, both XBOX-equivalent and PC only, maybe less, even though they only charge 12% transaction fees instead of the "industry standard" 30%. Tough row to hoe.

Which probably explains Spencer's comments about bringing Steam and other stores to XBOX, which obviously hints that the NextXbox will be PC compatible, though I seriously doubt it will be a rebadged gaming PC as some suggest. That wouldn't align with Spencer's other comments about $1000 consoles.

Walled garden pricing models are getting serious scrutiny these days and the some of the dominant players aren't going to enjoy where it is heading. Google and Apple, for starters. AZURE and cloud computing are getting questioned, most commonly in Europe where underinvestment has left them at the mercy of the big US players.

Sony is facing a similar lawsuit in the UK which they will likely lose because, unlike XBOX they don't allow other retailers to sell digital codes. Nintendo might be next.

The other whipping boy, Amazon, has been repeatedly sued over the Kindle ebook store but they are golden because the DOJ antitrust suit proved Agency (and its 30% cut) was literally forced on them by the big publishers. So unlike the console vendors they get walled garden commissions while making a reasonable profit on hardware. Some folks just don't think things through.

That last applies to the nostalgia for Windows phone.

There simply isn't enough profit in the category for anybody else.
Theoretically, MS could do an XBOX phone as their entry into mobile gaming but neither the tech nor the market exists for it, not at a profitable price. Consider that foldable phones still only hold 1.6 of the market despite moving 18M units. Does anybody think MS could move that many high end phones off Windows compatibility? The Duo was aimed at their bread and butter corporate productivity market and failed to make a dent. They looked at a foldable screen version and walked away instead.

Phones are commodities. (Unless you spend a half billion a year in commercials pretending yours are somehow magical.)
Commodities need massive volumes and small margins.
Finally, Samsung is already there and they are relatively good partners to MS. So why mess that up for at best minimal gains?

In the MS corporate mindset ventures need a path to billions in profits. And there simply isn't one for phones. It's not a nascent category like AI or AR wearables.

Too late the hero.

 

[Laura Knotek]

Timely question.
Steam is facing a class action suit from developers because of its dominance (75% US, 80% EU, 50% global) in PC games both PC only or with console equivalents. (Since they don't do Plays Anywhere one would expect a slight tilt towards MS from folks interested in cloud gaming. So far it hasn't factored in.)

In the US MS probably moves maybe 15% of PC games, both XBOX-equivalent and PC only, maybe less, even though they only charge 12% transaction fees instead of the "industry standard" 30%. Tough row to hoe.

Which probably explains Spencer's comments about bringing Steam and other stores to XBOX, which obviously hints that the NextXbox will be PC compatible, though I seriously doubt it will be a rebadged gaming PC as some suggest. That wouldn't align with Spencer's other comments about $1000 consoles.

Walled garden pricing models are getting serious scrutiny these days and the some of the dominant players aren't going to enjoy where it is heading. Google and Apple, for starters. AZURE and cloud computing are getting questioned, most commonly in Europe where underinvestment has left them at the mercy of the big US players.

Sony is facing a similar lawsuit in the UK which they will likely lose because, unlike XBOX they don't allow other retailers to sell digital codes. Nintendo might be next.

The other whipping boy, Amazon, has been repeatedly sued over the Kindle ebook store but they are golden because the DOJ antitrust suit proved Agency (and its 30% cut) was literally forced on them by the big publishers. So unlike the console vendors they get walled garden commissions while making a reasonable profit on hardware. Some folks just don't think things through.

That last applies to the nostalgia for Windows phone.

There simply isn't enough profit in the category for anybody else.
Theoretically, MS could do an XBOX phone as their entry into mobile gaming but neither the tech nor the market exists for it, not at a profitable price. Consider that foldable phones still only hold 1.6 of the market despite moving 18M units. Does anybody think MS could move that many high end phones off Windows compatibility? The Duo was aimed at their bread and butter corporate productivity market and failed to make a dent. They looked at a foldable screen version and walked away instead.

Phones are commodities. (Unless you spend a half billion a year in commercials pretending yours are somehow magical.)
Commodities need massive volumes and small margins.
Finally, Samsung is already there and they are relatively good partners to MS. So why mess that up for at best minimal gains?

In the MS corporate mindset ventures need a path to billions in profits. And there simply isn't one for phones. It's not a nascent category like AI or AR wearables.

Too late the hero.

Thanks for providing the data regarding the PC game sales. Since I've never owned any game consoles besides the Atari 2600, I've never bothered with Xbox games. All my PC games are from Steam or GOG.