2 Big Mistakes Microsoft Made This Week

Microsoft (Nasdaq: MSFT  ) must be exhausted.

Over the past week, the software giant made one of its biggest strategic shifts in 40 years, jumping head first into tablet hardware. Just days later, it unveiled the next major version of its smartphone operating system, Windows Phone 8. Those are two pretty significant announcements for one of the most important tech companies to pack into one short week.

The problem is that Mr. Softy made two big mistakes.

Surface is an unfinished product
There were many ways that Microsoft’s Surface event resembled Apple’s (Nasdaq: AAPL  ) product launches, from the incredible secrecy leading up to the event to the tight integration of hardware and software.

But Microsoft did something Apple would have never done: it unveiled an unfinished product.

Microsoft’s presentation gave way to more questions than it did answers. Important questions, too. Is there mobile data connectivity? When will it be available? How much will it cost? Those should have been among the first items to check off the list, yet even interested buyers are now left scratching their heads, wondering how much the device might cost them, along with various other technical specifications that Microsoft chose not to disclose. Tech-savvy watchers are also wondering what type of battery life to expect, what screen resolution it has, or how it handles multitasking, among other pertinent queries.

Even worse, the fancy new tablet crashed during the presentation. Windows head Steven Sinofsky was in the process of pulling up the newest version of Internet Explorer, and the screen plainly becomes utterly unresponsive to his gestures. He tries to roll with it, as the show must go on, trying to get back to the Start screen, or regain control of the device.

Eventually, he gives up, and excuses himself from the audience for a moment to run back to the podium to grab a different model in order to proceed.

While not quite as embarrassing as the time that Bill Gates ran into the famed blue screen of death during a Windows 98 presentation, the debacle hardly inspires confidence. In fairness, Apple isn’t flawless in this regard, either. Steve Jobs similarly ran into a Wi-Fi connectivity issue during the iPhone 4 unveiling, bringing his showmanship to a grinding halt for a few awkward minutes of silence.

The point is that Surface is unfinished. Not only are critically- important details notably absent, but the device itself clearly still has its bugs -- and we’re just talking about opening up a basic browser that immediately crashed the device.

I can’t fight the feeling that Microsoft jumped the gun prematurely with the event, and maybe it should have waited until it was putting the finishing touches on the device before showing it to the world. As it played out, it looked like Microsoft was still putting the beginning touches on the tablet.

Windows Phone 8 burns early adopters and partners
Microsoft detailed Windows Phone 8 just a couple days later, and there’s one big Achilles heel. Existing devices will not see upgrades to the new OS, and apps written for the new platform will not be backwards compatible with Windows Phone 7. The 100,000 apps currently in the Windows Store will be compatible, but this is a one-way street.

Exec Greg Sullivan explained: “The nature of the investment [in Windows Phone 8] is primarily in areas that are not exploitable by existing hardware.” Some of these new features include things like multi-core processor support, and NFC capabilities. Sullivan added, “To do the work to bring all of those elements to a platform that can't exploit them wasn't necessarily the most efficient use of resource.”

Still, that’s not the whole story because, obviously, there’s a level of app incompatibility between the platforms. The Nokia (NYSE: NOK  ) Lumia 900 comes to mind as a device that’s likely to get hurt the most. Even as Microkia have taken their partnership to new heights, Microsoft is effectively leaving Nokia’s new flagship out in the cold, just months after it was launched in April.

T-Mobile’s German division has even chosen not to carry the device for exactly this reason, because it rightly expects some user backlash over buying a device with a bleak future. Instead, existing users will get an incremental update to Windows Phone 7.8, which looks like Windows Phone 8, and shares common interface elements, but it isn’t the real deal.

Carrier partner AT&T (NYSE: T  ) plunged a ton of marketing dollars -- as in more-than-the-iPhone-marketing support -- to back the device that it had landed an exclusive grip on, a campaign now unlikely to pay off. In one fell swoop, Microsoft burned Nokia, AT&T, and early adopters alike.

Look at the bright side
There are some things for Microsoft to look forward to, though. Overall, Windows 8 as an OS looks very promising for tablets. If the company can overcome this speed bump of transitioning to Windows Phone 8, its grand vision of converging operating systems that share a fundamental foundation has many long-term benefits that could bolster its broader ecosystem and win over consumers.

The missteps this week weren’t fatal, but they were there. But, as we’ve seen in the past, even Apple doesn’t have a flawless streak of new product introductions.  Despite some small hiccups, Apple’s execution is near-flawless, as it’s capitalized on the Trillion Dollar Revolution in mobile more effectively than anyone else. Read more about Apple’s opportunities and threats in our brand new premium Apple research report, which offers exclusive updates from our top tech analyst for an entire year!

Fool contributor Evan Niuowns shares of Apple and AT&T, but he holds no other position in any company mentioned. Click here to see his holdings and a short bio. The Motley Fool owns shares of Microsoft. The Fool owns shares of Apple. Motley Fool newsletter services have recommended buying shares of Microsoft and Apple. Motley Fool newsletter services have recommended creating a bull call spread position in Microsoft. Motley Fool newsletter services have recommended creating a bull call spread position in Apple. The Motley Fool has a disclosure policy.

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Read/Post Comments (7) | Recommend This Article (7)

Comments from our Foolish Readers

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  • Report this Comment On June 22, 2012, at 8:42 PM, Solov wrote:

    Wow... so many fancy sentences and utter lack of substance (but hey I put "Microsoft" and "Mistake" together in headline, I can't go wrong... *aeee*wrong!).

    Unfinished product because they didn't disclose price and mobile network plans for product that won't be shipping in at least 4 months? Wow, it must have been really good presentation if that's all haters have to say. That and demo device bug of course. And quoting Bill Gates in similar situation you mentioned: "It must be why we're not shipping it yet".

    One way street for WP Apps? And Siri works on IPhone 4 and 3 of course? Oh wait, it's one way street too... bummer.

  • Report this Comment On June 22, 2012, at 9:12 PM, xmmj wrote:

    I remember working a contract tech writing. Granted it was a lot of years ago (about 10) using windows NT. MS Word would crash the whole computer on average of 8 - 10 times per week, sometimes 4 or 5 times in a day. It was very frustrating. Not only took time, but interrupted the work flow.

    This demo reminds me of that.

    I was using Mac at home back then - still on OS 9. I would never say it was perfect, but NEVER anything like that! Nowadays I go weeks without restarting my Mac and I am a very heavy user with as many as 20 applications running at one time (more typically 8 - 10).

  • Report this Comment On June 22, 2012, at 9:19 PM, xmmj wrote:

    @ Solov

    Quit trying to hide the facts here. Siri is one program that relies on faster hardware. Other than that, virtually all apps will run on most of the older models.

    In fact iOS 6 will run at least on iPhone 4S and the new model, and probably on iPhone 4 as well. So all the new programs will work these old models if they do not specifically need newer hardware.

    This is precisely the opposite with MS OS8 which will not even run on a 1 day old Nokia. Therefore NONE of the OS8 software will run on the old model phones/tablets.

    If you do not see the difference between the two situations, then you are blind.

  • Report this Comment On June 22, 2012, at 9:37 PM, TMFNewCow wrote:

    I think a more appropriate analogy would be like Apple releasing the iPhone 4S in October, then in December saying it wouldn't get iOS 6, or Google saying the Galaxy Nexus wouldn't get the next major Android version 2 months after launch.

    -- Evan

  • Report this Comment On June 22, 2012, at 11:33 PM, techy46 wrote:

    I'm an early adopter of an Lumia 900 and it's fantastic. MS and NOK didn't burn me. I get W7.8 and will upgarde to WP8 when it's been out awhile. You guys are such a bunch of Apple bigots.

  • Report this Comment On June 23, 2012, at 11:42 AM, Minow wrote:

    Wow-techy46,

    what is it you didn't understand or glean from this article?

    Instead, existing users will get an incremental update to Windows Phone 7.8, which looks like Windows Phone 8, and shares common interface elements, but it isn’t the real deal.

    sounds and smells like you just got burned-

    early adopter, because Exec Greg Sullivan explained: “The nature of the investment [in Windows Phone 8] is primarily in areas that are not exploitable by existing hardware.” Some of these new features include things like multi-core processor support, and NFC capabilities. Sullivan added, “To do the work to bring all of those elements to a platform that can't exploit them wasn't necessarily the most efficient use of resource.” In a nut shell...

    The Nokia (NYSE: NOK ) Lumia 900 comes to mind as a device that’s likely to get hurt the most!!

    Swoosh,

    Apple makes a three-pointer again...stick with the first mover---techy46!

  • Report this Comment On June 23, 2012, at 1:03 PM, melegross wrote:

    Solos, it's because they announced almost nothing. Nothing, get it?

    All we know is the size, the weight, and that one will have an ARM, and run RT, and that the other will be heavier, more expensive and have x86 inside, .and that's it!

    Oh, and Netfilx.

    We know nothing else.

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