- Mar 3, 2013
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Microsoft ranks in the top five (5) companies in terms of Market Capitalisation. I?m not certain, but still confident that it ranks in the top one hundred in terms of yearly revenue. Yet even for a company as ?large? as Microsoft, the company?s coffers are not deep enough to close the app gap, a corollary of which would be an increased user base and an uptick in smartphone market share. It would be tomfoolery to assume that the number of apps is the root of the problem. The problem is a simple one of money. Microsoft does not have the type of money to throw at every big name company (google included) to entice them to build much needed apps. Had they, then we would not be having this unpleasant problem. Microsoft (a first world technology company) has found itself in the unenviable task of having third world success in its mobile business. Thus it might make economic sense to start looking at their situation from the appropriate point of view (a developing company).
For the most part, Microsoft has been able to financially bulldoze its way thus far - acquired Nokia and a host of equally strategic purchases and alliances necessary for success in growing mobile space. In so doing, they now have the infrastructure to produce; the human resources necessary innovate; the requisite vision and strategy to market a product that captures customers from the existing smart phone markets, lures others from the feature phone market and more importantly, create a new market of customers that just never existed before windows phone.
How then does Microsoft remedy the problematique of having a winning product, but no environment with which to ensure growth? The answer is - App development by invitation. App ecosystems and by extension app development is gregarious in nature. That is, it has a snowball effect. The more apps are built, the more people will build. Again, how can Microsoft get developers to build?
Microsoft needs to woo and fawn developers. This activity should be phased in years. This should include but not limited to:
1) Phase 0 ? Phase out and abandon all incentives currently available to app developers.
2) Phase 1 - Introduce memorandums of intent, that app revenue will be levy free for an incubatory period of X years.
3) Phase 2 - Offer a generous and progressive taxation period on app developers after the initial X years. (this could be tied to interest rates)
4) Phase 3 ? Offer for the first time a competitively aggressive revenue sharing approach to developers.
5) Phase 4 ? Reintroduce the any existing incentives that have already been given up until this point.
As each phase progresses, the previous phase is abandoned. It is my belief that overall net benefit can be had from being aggressive. This model has been tried in developing countries to certain degrees.
Roadblocks: These are bound to occur.
a) Opposition will be voiced by shareholders. Direction such as this carries with it cost/benefit analysis that would require the most innovative minds to net a profit in the short run.
b) Next will be the man or men in charge of convincing the shareholders that this project will work. It will take fortitude and sacrifice on behalf of the managers in charge of Microsoft (C.E.Os.). Their bonuses are tied to profit margins performance goals. As such agency problems may arise. Further work must be aimed at reassuring heads at Microsoft that this is a project that will take time to mature.
For the most part, Microsoft has been able to financially bulldoze its way thus far - acquired Nokia and a host of equally strategic purchases and alliances necessary for success in growing mobile space. In so doing, they now have the infrastructure to produce; the human resources necessary innovate; the requisite vision and strategy to market a product that captures customers from the existing smart phone markets, lures others from the feature phone market and more importantly, create a new market of customers that just never existed before windows phone.
How then does Microsoft remedy the problematique of having a winning product, but no environment with which to ensure growth? The answer is - App development by invitation. App ecosystems and by extension app development is gregarious in nature. That is, it has a snowball effect. The more apps are built, the more people will build. Again, how can Microsoft get developers to build?
Microsoft needs to woo and fawn developers. This activity should be phased in years. This should include but not limited to:
1) Phase 0 ? Phase out and abandon all incentives currently available to app developers.
2) Phase 1 - Introduce memorandums of intent, that app revenue will be levy free for an incubatory period of X years.
3) Phase 2 - Offer a generous and progressive taxation period on app developers after the initial X years. (this could be tied to interest rates)
4) Phase 3 ? Offer for the first time a competitively aggressive revenue sharing approach to developers.
5) Phase 4 ? Reintroduce the any existing incentives that have already been given up until this point.
As each phase progresses, the previous phase is abandoned. It is my belief that overall net benefit can be had from being aggressive. This model has been tried in developing countries to certain degrees.
Roadblocks: These are bound to occur.
a) Opposition will be voiced by shareholders. Direction such as this carries with it cost/benefit analysis that would require the most innovative minds to net a profit in the short run.
b) Next will be the man or men in charge of convincing the shareholders that this project will work. It will take fortitude and sacrifice on behalf of the managers in charge of Microsoft (C.E.Os.). Their bonuses are tied to profit margins performance goals. As such agency problems may arise. Further work must be aimed at reassuring heads at Microsoft that this is a project that will take time to mature.
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