Microsoft Exec Slams Android, Outlines Windows Phone 7 Strategy

A Microsoft executive answered questions today about the company's Windows Phone 7 business strategy at the Deutsche Bank Technology Conference in San Francisco.

Tivanka Ellawala, chief financial officer for Microsoft's Mobile Communications Business Division, said that Microsoft has been integrating its existing software products (such as Office, Bing search and Xbox games) plus Microsoft services with the new consumer mobile phone operating system. This integration offers an additional way for the company to monetize its existing business lines.

Microsoft expects to see Windows Phone 7-based products appearing on the market sometime this holiday season. The phones will be available in multiple form factors and offered at a wide variety of price points. The devices will vary in terms of screen sizes offered and whether they have keyboards and cameras, Ellawala said.

The questions at the event seemed surprisingly tame since Microsoft's consumer mobile OS business is a favorite punching bag for the number-crunching analyst crowd. Ellawala certainly came with the street credibility to handle such questions. He formerly served as an investment banker for Merrill Lynch's Global Merger and Acquisitions Group.

In response to a question, Ellawala specifically said he would not talk about how Microsoft expected to profit from Windows Phone 7. He portrayed a broad strategy, working from Microsoft's existing mobile base to gain mindshare, and then moving on to greater profits.

"It is an investment period. We are very conscious that we do need to create a business here. We can't be in investment mode forever," he said. "But it is a journey -- it's a longer term proposition for us."

Windows Phone 7 represents Microsoft's latest foray into the consumer space. The company's earlier Windows Mobile OS consumer line has typically trailed leaders such as Nokia's Symbian mobile OS, BlackBerry, Google's Android and Apple's iOS. Microsoft is taking some risks with Windows Phone 7 because not all Windows Mobile-based devices will be able to upgrade to the new OS.

Many of the questions centered on Android, a free Linux-based mobile OS overseen by Google. Microsoft has specialized in competing against free OSes, such as Linux. However, Ellawala even contested the "free" designation for Android. He suggested that future litigation might be a cost for OEMs developing phones based on the Android platform.

"It's interesting to think of Android as a free model," Ellawala said. "At the most simplistic level, the IP [intellectual property] issues around the Android situation and certainly the IP issues that we have discussed, it does infringe on a bunch of patents and there are costs associated with that. And this is not just an issue for us. It may also be an issue as some companies have already stated. So there is an upfront fee cost associated with Android that, I think, doesn't make it free."

Microsoft settled in April with mobile device maker HTC over patented technologies allegedly used in HTC's Android-based devices. At the time, one of Microsoft's legal counsels indicated that Microsoft had been talking with "several device manufacturers to address our concerns relative to the Android mobile platform." Since that time, Microsoft has stayed relatively quiet about any possible IP violations.

Ellawala generally downplayed Windows Phone 7's competition with Android, saying that "we haven't really been in the market with a competitive product."

"About two years ago, we did a complete reset of our mobile business, and have pretty much been out developing a new phone experience during that time," Ellawala said. "It's a fundamental rethink, from our perspective."

In response to a question about Microsoft's enterprise strategy with Windows Phone 7, Ellawala explained that much of the focus will be on meeting consumer expectations for the devices. However, in terms of making it easier to access e-mail, Office and SharePoint through a company firewall, Microsoft expects to make Windows Phone 7 attractive to the enterprise segment.

Microsoft has been focusing on getting compelling apps developed that people really want, Ellawala said. Volume is less important than quality, but Microsoft is relying on its developer partners to produce most of the Windows Phone 7 apps. He added that Microsoft has already released more than 300,000 of its software development kits for Windows Phone 7.

Ellawala refused to identify which carriers and OEMs would support Windows Phone 7, but he said that those partnerships will be apparent "in the coming months." Microsoft took the initiative to indicate hardware specs for its OEM partners with Windows Phone 7, even though different form factors are allowed. In response to a question, Ellawala denied that Microsoft is building a mobile phone hardware device itself, saying that the company "is in the software business."

One questioner asked why Microsoft should even be in the mobile OS business. Ellawala cited the product leverage afforded by the consumer mobile platform, adding that "from an overall company perspective, [consumer mobile] is a new opportunity that we are quite excited about."

An audio recording of Ellawala's Q&A can be accessed at Microsoft's investor relations Web site here.

About the Author

Kurt Mackie is online news editor for the 1105 Enterprise Computing Group.

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Reader Comments:

Tue, Sep 28, 2010 techieg

Speculation after speculation. MS already said they do not have CDMA support on WP7 and will deliver that early 2011. This is obvious because Sprint which is also a CDMA carrier cannot get WP7 devices either, so enough of the speculation about Verizon/MS relationship issues. Verizon, Sprint, and other CDMA carriers need to upgrade to GSM with the rest of the world otherwise they will continue to be last to get any mobilde device because history shows that mobile devices are released for GSM networks being a global technology. And as we all know "Volume is less important than quality", that will also be apparent when we start to compare the crappy apps on the iPhone and Android app store and the WP7 Marketplace. I will add that Android may seem to be selling at the moment but is destined for failure mainly due to fragmentation.

Tue, Sep 21, 2010 Tom

Hi Jim: I was not happy hearing that Verizon may not be carrying it either, however we really don't know the true story. For example, it's possible that Verizon was giving them a hard time about carrying WinPhone7, or not carrying it at all (perhaps due to the Kin experience) and so perhaps Microsoft decided to not release a CDMA version at this time. I don't think this is so far fetched because Verizon has made no secret of its Google relationship (e.g. vast Android offering, huge DROID posters everywhere, alleged net 'neutrality' etc). Another thing I recall: Scuttlebutt was that Verizon was to offer a reduced cost data plan for the Kin, but later decided to charge full price upon release. This certainly surprised me and probably Microsoft as well, and so it's no wonder the Kin didn't catch on. Last note is that GSM is most prevalent worldwide rather than CDMA (which is Verizon). Anyway I'll probably go with whatever carrier supports WinPhone7.

Tue, Sep 21, 2010 Jim

MS decided not to do Verizon, and I'm tired of waiting. I would like a Windows Phone 7 phone, but since they decided not to use the largest cell network in the world, I'm going with an Android phone.

Fri, Sep 17, 2010 Tom

GOB: I agree with you, it doesn't seem like anyone is doing any 'slamming' here -- Curtis: I too look forward to Win Phone 7 and having my team develop apps for it. We've been developing for Microsoft prods almost as long as they've been around and although they do have their share of problems, so do they all. Microsoft has a really hard job these days, and ironically it's due in large part to their success as a company. I'd like to elaborate but there's just way too much to say.

Fri, Sep 17, 2010 gob dallas

that was hardly a 'slam' as the headline states - but more of a realistic analysis of the reality of the Andriod OS vs. the way it is marketed.

Thu, Sep 16, 2010 OKC

Curtis > are you really waiting for a closed source peace of software that will be virus ridden and lock up all the time? I still can't believe anyone still trusts M$. Overpriced and bug ridden software.

Thu, Sep 16, 2010 Curtis GA

Why should they be in the business. Do people not remember Siemens SX66 or Himalaya and Wallaby devices. Microsoft has been in the business for quite a while. Can't wait for a Windows Phone 7 device on T-Mobile USA.

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