Windows Phone – The Problem with Coming Late to the Party

Trying to launch a product into a well defined marketplace is not an easy endeavor. Thanks to Microsoft, we have a perfect case study to watch.

First off, let’s put aside the fact that Microsoft has had a phone operating system for years. Instead, let’s focus on the relaunch of Windows Phone 7 to compete against the dominant mobile operating systems, RIM, iOS, and Android.

Give Microsoft credit for doing some research and at least looking for a way to differentiate in this crowded market.  They identified a great insight that most smart phones users were highly engaged with their phones causing them to miss events happening around them.

So how did Microsoft use this insight?  When the phone launched back in October, the idea that a smartphone could be too engaging was at the forefront of their messaging. However, while the commercials were cute, it was confusing what Windows Phone actually did differently?

Prof. Calkins, from Kellogg School of Management, captures the difficulty of acting on this insight,

How do you get people to stop focusing on their phones?  I suppose you could produce a phone that doesn’t work very well, or is so frustrating to use that it isn’t worth the time.  You could also create a phone that simply shuts off, perhaps after you’ve used it for more than seven hours in a day.  It looks like Microsoft will promote the product by saying it is so easy and quick to use that you can check it and then focus on other things.  I’m just not sure this is how the world works.  There is always something else to check, or a new app to use, or a new website to visit.

Fast forward to March of 2011 and things aren’t going so well.  The original message doesn’t seem to have worked and sales aren’t taking off.

So, here comes round two of the product message:  “When was the last time your phone surprised you… in a good way?”

So, is this the message that really explains what the phone does?  It’s a phone for gamers. It’s a phone for movie watchers. It’s a phone for business. It’s something your old phone isn’t??

As far as I can tell this could be an ad for any of the smartphones out on the market – they are all app platforms at this point.

If there is something special about this phone, Microsoft isn’t doing a good job helping it standout. First it’s like no other smart phone out there and now it’s doing the same apps as Android and Apple. This is where launching late has really put Microsoft in a bind.  The race to develop apps is on and the competition already has a massive lead (Apple Apps – 350k, Google Apps – 250k, Microsoft Apps – 10k).

I have never owned a Windows Phone so I can’t tell you if the phone is better or worse than others on the market but I can tell you that I have not seen anything yet that peaked my interest to find out.

This has to be the hardest part of trying to get attention in a marketplace that is dominated by other players.  Incremental improvements will make it difficult to stand out and impossible to “surprise” people.

 

Image credit:  bthouse68

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  • http://www.rocketwatcher.com April Dunford

    I think differentiation is really had to do. Early or late to a market, there are always alternatives out there and coming up with compelling reasons why prospects should pick your solution rather than what they are doing now always has to me more than just fluffy stuff like “We’re so surprising!” In my opinion Microsoft needs to highlight more concrete things that are different about their phones and forget about all that cutesy wootsy fluffy branding stuff until they have some traction.nApril

    • http://www.arandomjog.com/ Joshua Duncan

      April,nnThanks for adding. I wouldn’t be surprised to find out that there are some really cool things about the WP7 but you are spot on. There needs to be more of a concrete message and less wootsy. nnThanks again,nnJosh

  • http://twitter.com/letsfixtheworld Rutul Davu00e8

    MSFT did a great job of differentiation with XBOX when they were late to the party. nNot so much with Zune (or whatever the mp3 player was called). nnIs there always an opportunity for coming into a crowded market with differentiation in the product? Seems like sometimes it’s business practices (IE browser) that might be needed more than product features for entering late into a market.

    • http://www.arandomjog.com/ Joshua Duncan

      Rutul,nnGreat point about the XBOX. It can be done but has needs a different angle. There were a lot of first to market features that XBOX came to market with not to mention HALO and other games only for the platform. nnThanks for the comment!nnJosh

  • Tim Johnson

    Microsoft’s modus operandi for years has been (to put it somewhat less than complimentary) embrace, extend and destroy. The cynic in me says this is another example of that model. By putting their name and their marketing muscle behind a technology, they have repeatedly been able to control, overtake or consume any market they chose. Doesn’t seem to be working here.nnBut that was all repeatable in the workstation/Server/OS model where they had a huge amount of market power of the suppliers in that space (ie: Intel). Such is not the case in mobile computing & phones. MSFT does not have the market power with their OS nor do they have any appreciable market power with Nokia, RIM, Ericsson/Sony, LG, etc. nor with network suppliers like Verizon, AT&T, et al. And since there are no (and will never be any) defined market-defining apps, they can’t buy the market by buying that leader, either.nnNo, this is one case where MSFT will have to prove beyond a shadow of a doubt that their offering is significantly different enough and desirable to justify switching costs. Their’s is just another phone OS that has some nice things about it and some not nice things about it – like all operating systems – and may have some appeal for a subsegment. The market has already tipped to iOS and Android (masked complexity, elegance and panache or totally open, tinkerability and ubiquity) and irreversibly tipped away from them.

    • http://www.arandomjog.com/ Joshua Duncan

      Tim,nnAs always, thanks for the thoughtful additions. There is a lot you can do with the muscle and money that MS has but I think you are right, the market has tipped and it isn’t about the OS anymore. It’s the entire ecosystem that you need to compete with and you can’t buy your way into that over night. nnWill be interesting to see how much they are willing to spend to chase.nnThanks again,nnJosh

  • Scott Sehlhorst

    Great post Josh!nnI think this is a tough one to summarize, but my first impression of WP7 is that it is a (potential) innovation success encumbered by several execution failures.nnWhen I heard the original messaging, I thought “wow, does that _not_ appeal to me!” But who might it appeal to?nnThen I got to thinking – what about that giant massive huge market of “feature phone users” – what are they going to do _next_? Why aren’t they already using smart phones? My wife prefers the feature phone.nnThen I thought “very clever, MS” – you’re targeting the not-smartphone-users market. You’re not actually competing for smartphone users. You’re starting to the right of the chasm, and your goal is to get those feature phone users who’ve been mocking all of “us” with our heads down and that pale zombie-glow in the movie theater, the kid’s soccer game, on a date…nnI’m not a message-expert at all, so no idea if their campaign will work – and it looks like it isn’t working. But it may be an execution problem.nnWP7 released “too soon” – with bugs and missing features. OK. I’m agile, the world is agile, etc – releasing “too soon” is actually good, IF. Make that “IFF” (if and only if, in science-land).nnReleasing an incomplete product is only good IFF (and only if) you make rapid updates, and iterate – incorporating feedback from your customers and insights from your market, as well as fixes from your internal teams.nnGuess what MS has NOT done with WP7?nnReleased updates. They attempted a “pre-update” update (designed only to update the updater software), and they didn’t get that right.nnIn how many months?nnIn the same amount of time, how many updates were made to android when it launched on the Nexus? A couple months later, seems like it was 1.5 or 1.6 by the time it got to the Droid.nnIn the same amount of time, how many updates were made to the original iphone? IIRC, not as many increases in capability (and then only non-functional “-ilities”), but definitely a lot of bug-fixes and patches. Apple demonstrated investment and incremental improvement on a rapid timeline, combined with their annual cadence for “new stuff.”nnSo – Microsoft’s execution failure (possibly from engineering, but my intuition is more about break-downs with complex relationships with the carrier-partners, and possibly phone hardware partners) to get updates to customers / improve the product for prospects, is hurting (maybe killing) the product.nnCan you overcome those kinds of intrinsic shortcomings in the product with a good campaign? Works for a lot of politicians. Guess we’ll see.

    • http://www.arandomjog.com/ Joshua Duncan

      Scott,nnWhat can I say? Thanks for adding such great insights to the post. nnI do think it is a message and execution problem. All of these issues add to the perception that things are going well. nnTo Patrick’s point, it is early and MS may be gathering momentum, but it is my intuition that it is too little too late.nnThanks again,nnJosh

  • http://twitter.com/pjmasi Patrick Masi

    Since we’re drawing conclusions based on the data, it should be noted that the quoted marketshare statistics are for all of Microsoft, which is mostly older WinMobile phones, and only can be used to judge Microsoft’s position in the smartphone market as a whole. While it is true the WP7 has failed to stop MS’s slide overall, WP7 is still in the process of growing. The losses are from the fragmented WinMobile customers switching to other platforms. nnNow you could ask why that segment isn’t upgrading to WP7 instead, which is a valid question. I’d guess its because WP7 is essentially a reboot of the platform, not an extension. This means an upgrade-vs-switch decision doesn’t favor the incumbent in any way.nnThe original article, two links away from this blog post, takes a more balanced approach to the numbers and suggests that this game isn’t over by long shot – http://www.eweek.com/c/a/Mobile-and-Wireless/Windows-Phone-7-Market-Share-Dips-ComScore-294527/. Even that article has a misleading, attention-grabbing headline when its own lead-in paragraph says “Microsoftu2019s Windows Phone 7 failed to halt the company’s market-share slide”. That’s not the same thing as “Windows Phone 7 Market Share Dips”.nnScott, I think you mostly had it right until assuming that the reason people aren’t buying is the release of an incomplete product. You’d have to see people returning their phones to draw that conclusion, but if MS is to be believed, they’ve got a 93% “satisfied or very satisfied” rating from customers who have purchased. That would suggest that they just need time to build momentum, not some massive execution failure.

    • Anonymous

      Great points Patrick!nnThe ‘incomplete product’ label has some interesting thresholds I would expect us to be able to see in the datan(1) Tragically bad – people return the phones for refunds.n(2) Tolerably bad – people keep their phones, but are not ‘satisfied or very satisfied’ when surveyed.n(3) Lost-Opportunity bad – people are satisficed (with a C) and use their phones, ‘good enough for me’, but don’t go out of their way to recommend the phone to anyone else. The lost opportunity is the loss of word-of-mouth marketing to drive hockey-stick style growth.n(4) Not-Magical bad – people who use it love it, but other people don’t abandon what they have because of the “I’m missing out on the magic” vibe.nnBased on the data point you shared, I would guess they are at level 3 – and I haven’t heard people going out of their way to recommend the product. Completely unscientific, since I haven’t particularly tried to listen either.nnScott

      • http://twitter.com/pjmasi Patrick Masi

        That’s a great list of thresholds. I’d guess you’re right, its somewhere between 3 and 4 based on what I’ve read. The comparison below to Xbox and Zune is a very good one. Xbox broke into the “magical” category through a combination of a killer app (Halo) and an excellent xbox live service, the first of its kind for console gaming. Zune, however, never broke through level 4, despite their great Zune Pass service and an application that is usually judged as “better than iTunes”. nnThis is mostly a marketing issue, and its a question for the company as a whole. I think they have an excellent opportunity to tie a bunch of related markets together. As soon as Verizon comes out with a WP7 device (hurry up!) I’ll be able to edit an Office document stored on my Windows Live account that I originally wrote in front of my powerful home PC. Especially for businesses, that could be a powerful story that is beyond just “we’ve got apps!” and a real differentiator.nnUnfortunately, years of taking the market for granted has left them with a significant trust issue. People assume that if its from Microsoft, something’s wrong with it. It’ll take years – maybe even a generation – to undo that image. n

        • http://www.arandomjog.com/ Joshua Duncan

          Patrick,nnFirst off, thanks so much for adding your insights to the post. You are definitely correct that the stats may be misleading and it may be more of a time to build momentum issues. nnI do think that a lot of this is a marketing issues but I am not sure how great the opportunity is anymore. At one point in time (I am thinking back to my Palm Trio days), I would have said that having the ability to edit my Office docs on the go would have been a Killer feature. Now, it’s getting my cable on demand, playing the latest Angry Birds game, and accessing my files over Dropbox. Microsoft can add these features but they alone won’t differentiate from the other two app leaders. nnTo add to the app challenges, the real dark horse here may be the educational apps that are becoming available. For $4 last week I bought a National Geographic dinosaur app that had stories and videos for my seven year old. My four years is using my iPad to read Rapunzel and play a princess puzzle. This type of content could be a huge deal and I am skeptical here that the market is big enough for 3-4 different app operating systems. nnI can’t agree more with your last point on trust. Losing the markets trust is a big deal. It can be repaired but will take time – and to your point, maybe a generation to do so! nnThanks again,nnJoshnnn