Microsoft's Chicken and Egg Problem

Who says money talks? Greenbacks have apparently gone mute in their service to Nokia (NYSE: NOK  ) and Microsoft (Nasdaq: MSFT  ) . Widely reported efforts to pay developers to create software for the forthcoming Windows 7.5 mobile operating system -- or "Mango," as it's called -- don't appear to be having the desired effect.

The New York Times reports that software creators are waiting to see how well new Windows phone handsets sell before taking coding time away from iOS and Android. The CEO of app developer Bump Technologies told The Times that his company gets more users in a day from iOS and Android than "Windows devices are sold in a week."

Ouch, but also probably fair.

The two leading U.S. smartphone operating systems have generated headlines and profits for Apple (Nasdaq: AAPL  ) , Google (Nasdaq: GOOG  ) , and developers alike even as they've put pressure on Nokia and Research In Motion (Nasdaq: RIMM  ) , among others.

Nokia, in particular, has had a rough year. Last quarter's big growth driver was feature phones, dumb handsets that can't realistically compete with smart alternatives from Apple, Motorola Mobility (NYSE: MMI  ) and HTC -- especially as prices come down.

Partnering with Microsoft to sell smartphones in China alleviates this risk somewhat, but how many other regions offer as much opportunity? A growing numbers of users worldwide are adopting iPhones and Android handsets, leaving little room for new Mango-flavored gear when it becomes available.

It's sad in a way. Give Mango a look. The system's tile metaphor is far more flexible than the apps motif you'll find on an iPhone. Navigation also emphasizes people over software. Thus, you find your friend and then open her Twitter feed, rather than open Twitter and find your friend.

Reviewers appreciate the inventiveness. If only developers were as grateful.

Now it's your turn at the podium. Do you believe Mango will be a success? Please weigh in using the comments box below. You can also keep tabs on the mobile movement by adding these stocks to your Foolish watchlist:

Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team. He owned shares of Apple and Google at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Google+ or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.

The Motley Fool owns shares of Microsoft, Google, and Apple. Motley Fool newsletter services have recommended buying shares of Google, Apple, and Microsoft. Motley Fool newsletter services have recommended creating a bull call spread position in Apple and a bull call spread position in Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On November 14, 2011, at 11:31 AM, AubreySmoot wrote:

    Microsoft had years head start over Apple and Google in the mobile market. I used to own a Windows Mobile 6.1 phone. It was marginal at best. They had their chance and failed to provide real value. They offered no innovation. The user experience was one of constant frustration. Regardless of how good the new stuff is, it is yet again Microsoft's attempt to copy other's initiative and steal the market. If I were to move from my Android based handset, it would be to Apple. Microsoft is not a consideration.

  • Report this Comment On November 14, 2011, at 3:53 PM, lucasmonger wrote:

    MicroWho? What's a Zune? Mango? Sorry the only recognizable fruit in my household are Apples.

    I still get much enjoyment watching YouTube videos of Steve Ballmer's scoffing of the original iPhone. He didn't get it then, and still doesn't get it now.

    Nokia and Microsoft have devices and an OS, but what they're missing is content. There's nothing equivalent to the the scale of the Apple App Store, iTunes, iBookstore, etc. Microsoft cannot lure developers to Mango if sales on iDevices and Android are demolishing their numbers. Their only hope is to:

    1. Acquire Netflix or Hulu and give away free content (no subscriptions)

    2. Port the entire Halo ecosystem to Nokia phones

    3. Create their own business ecosystem with free Word/Excel/PowerPointf on Mango devices

    4. Bring Kinnex technology to their phones possibly adding facial movements to voice recognition to combat siri

    5. Do something new in Search (nothing in Bing is compelling enough to cause people to switch)

    6. Buy out Facebook to finally get into the Social (instead of the so, so which is what their social attempts were so far with the Zune).

    7. Convince Nintendo to bring their entire Mario franchise to Windows Phone.

    Otherwise, the blood has already been spilt and they are doomed.

  • Report this Comment On November 14, 2011, at 4:55 PM, etaster wrote:

    The real issue here is not whether MSFT will populate the planet with WP7.5 gadgets, it's whether they will make money on them.

    MSFT is playing defense and will spend whatever is necessary.

  • Report this Comment On November 14, 2011, at 5:22 PM, techy46 wrote:

    WP7.5 Mango is already a success, let's see how Windows 8 and WP8 Tango do in 2012-13.

    Bangalore: Nokia announced its first Windows Phone smartphones, Lumia 710, and Lumia 800. Both smartphones will be available in India in December this year and are likely to be priced Rs 19,000 and Rs 29,000 respectively.

    Not surprisingly, 91 percent of developers are "very interested" in developing for the iPhone and 83 percent are very interested in developing for Android phones. Windows Phone, by comparison, merits that level of attention from just 38 percent of survey respondents. But that is a rise of 8 percentage points since June and, coupled with RIM dropping 7 points to 21 percent, Windows is now the clear third choice.

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