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!
