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The Windows Phone Dilemma: Are Crapps All that Matter, or Can Dynamics Help Save Microsoft’s $7 billion Nokia bet?
Josh Greenbaum
MAR 11, 2014 13:29 PM
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It’s almost ironic that using a Windows 8 phone is actually a major geek credential – albeit geek more in the mold of driving a DeLorean than tooling around in a state of the art Tesla. But as a Windows 8 phone user for the past five months, I can say that no one notices these days when you have a new iPhone, but running around with a Windows 8 phone certainly draws comment, a good deal of it polite, if not positive. Perceptions aside, my Nokia 928 and its software are a pretty damn good tool for work, and as a business tool it’s pretty much on par with my old iPhone – albeit not a perfect one.  And, if you put the larger form factor of the Nokia product line into the equation, the extra real-estate makes a huge difference in my day to day work and consumer life.

The work side of Windows Phone has some important things working in its favor, but the play side is a different story. In so many important ways, from a dearth of apps to stupid little things like the fact that Windows phones can’t show Amazon Prime movies, Microsoft’s Windows 8 phones just don’t compare to iOS or Android phones. The myriad lacunae in the consumer side make the numbers so dramatically stacked against Windows 8 phone that many pundits are wondering how Microsoft can ever make good on its phone strategy – a strategy that, independent of the $7 billion Ballmer-bucks it took to acquire Nokia, is essential to the ultimate success of the post-Ballmer Microsoft.

The answer isn’t simple, but it’s also clear that nothing simple is going to succeed in overcoming the lead currently enjoyed by Apple and Google (and Samsung, while we’re at it.) But I think there’s a direct, albeit complicated way out of this conundrum: instead of a frontal assault in the consumer market against two very large and dominant players, Microsoft should use a flanking maneuver against the Apple/Google/Samsung axis by establish a solid beachhead in the enterprise and driving its success from there to the consumer market. Granted, it goes against the received wisdom about consumer/enterprise convergence – but that wisdom dates all the way back about to 2010 or so, give or take a few months. So not exactly the best of historical models to follow.

Making good on reversing the tide roiling against Windows Phone is where Dynamics comes in. Leading the charge in the enterprise is definitely a role that Dynamics is already playing for Microsoft, a role that was in evidence at last week’s Dynamics Convergence conference, and it’s a role for Dynamics that has a lot of important things going for it.

Bucking the current consumer/enterprise convergence story shouldn’t be as heretical as it sounds. The phone market, particularly the smart phone market, is still a very nascent market stuck in its teething phase, and we have no way of knowing whether the enterprise/consumer influence model can be bi-directional or is forever jammed in a forward gear. What we do know is that the history of the mobile market in general is one of rapid turnover and the sudden death – and humiliation – of companies that scant months earlier were sitting exactly where Apple and Google are today. Do the names Blackberry and Palm ring a bell? Got a Symbian phone, anyone? Current market position – regardless of enterprise/consumer tidal flows – is no indicator of future position. In a market in which the future reimagines itself quarterly, that’s saying a lot.

If the flow of influence can go from the enterprise to the consumer, then Microsoft Dynamics can be a major part of the current, a fact that was on broad display at Convergence. Perhaps the best and most interesting example was the demo by Delta Airlines of the flight attendant point-of-sale systems the airline has deployed based on a Windows 8 phone platform. Every time you buy a drink or snack on Delta, your card is swiped on a Windows 8 phone and the transaction is connected via on-board Wi-Fi to a Dynamics AX system that manages credit card authorization, inventory and billing. Delta can also upsell unused premium seats after take-off using the phones, and has plans to eventually sell Broadway tickets and help consumers buy other goods and services on board as well.

This direct from ERP to phone POS connection is the kind of enterprise chops that Microsoft has in spades. Microsoft has been a POS vendor since the early days of Windows,  back when the only Google on the planet  was spelled googol and represented a big number with a hundred zeroes trailing behind it. Microsoft’s ability to offer a single platform for enterprise apps that span the mobile, desktop, and back-office world is second to none, even if the ultimate goal – a single code base for all three deployment models – is still a year away. No other phone vendor can support the holy enterprise trinity of mobile, desktop and back-office as well as Microsoft. The fact that its enterprise back-office can be delivered in the cloud via Azure is an added bonus.

Is this enough to propel Windows Phone to greater prominence? Probably not by itself. Microsoft’s Window Phone strategy is one of the more dramatic legacies of the pre-One Microsoft era. Separate codes bases, separate strategic directions, obvious technical gaps (synching my Windows 8 Phone to Office 365 doesn’t tend to work as seamlessly as it did with my iPhone) and that massive lack of apps are clearly more than a little Dynamic mojo can overcome.

But these and other gaps are being closed rapidly. The one that may be the hardest is the apps gap  -- there really is no way to compare what’s available on iOS and Android to the slim pickings available on Windows 8 phone – unless you look at the Microsoft platform as an enterprise-first platform.

In that guise, it’s easy to see much of what iOS is famous for – and I’m just judging from what pops up in the Apple Store and in online “top iOS apps” list – are the kind of apps that from an enterprise perspective are better referred to as call crapps – apps that are more likely to help you pass or waste time than do something productive.

Nothing wrong with wasting time, unless when you’re at work. Crapps at work are the bane of productivity, and half of what I don’t like about BYOD comes from the availability of smart phones to suck productive time from our work lives. (The other half comes from the obvious and as yet unsettled security problems that come  from BYOD policies, particularly for the largely unsecured Android platform.)

This makes the apps gap a bit of a virtue for Microsoft, and when you add a superior sense of security and an at least theoretical adherence to a much more rigorous privacy model than either Google or Apple ascribe to, Windows Phone starts to make sense in the enterprise. Add to that the mobile-ready enterprise apps and cloud functionality that Dynamics brings to the party, and suddenly Windows Phone starts to look like an enterprise leader in the making.

An interesting detail in the Delta deployment is that the off-the-shelf Nokias they are using have no cellphone contract – they’re Wi-Fi-only devices. That not only saves money, but also places a healthy restriction on their use. This makes a ton of sense for a device that’s transmitting thousands of credit card authorizations on the 5000 flights Delta provides each day. Restricting consumer-like usage patterns in an enterprise device makes sense: In the post-Target data breach era, not having funky personal apps that can leak data on a POS device is hugely important.

The good news for Microsoft is that the smartphone market in the enterprise is still up for grabs: while the iPhone is all over the place in the enterprise, its role as a strategic platform is less well-established (ubiquitous doesn’t equal strategic, it’s important to note). This is particularly true in the enterprise, a place where Microsoft’s biggest smartphone rivals – Google and Apple on the OS side, Samsung and Apple on the hardware side – have traditionally lagged Microsoft.

How much do these rivals lag in the enterprise? My favorite example comes from the embedded OS market. A little known fact is that most hand-held enterprise devices -- RFID readers, warehouse scanners and the like – run an ancient Microsoft OS called Windows CE. As CE – based on Windows XP – aged gracelessly and Window 8 loomed on the horizon, embedded developers clamored for a new OS from Microsoft, largely to no avail. Years literally passed before Microsoft released a Windows 8 Embedded preview in November 2012 that is now part of what is called Windows Compact 2013.

During the gap years, if Apple or Google had wanted to make their own flanking inroads into the enterprise, a concerted effort towards an embedded OS would have been relatively easy. Microsoft pissed off a huge number of developers, ISVs, and VARs with its devil-may-care, we’ll upgrade CE when we get around to it attitude, and pretty much every one I talked to during that time would have been happy to consider an Apple or Google alternative. The fact that neither company took the bait shows how limited their enterprise vision really is.

Will a flanking maneuver to the enterprise pay off for Microsoft? I’m certain it will, but the bigger question of whether it will be enough to drive Windows Phone into the consumer space remains hard to answer. But it’s important to remember that the phone market refreshes much more quickly than the PC market ever did (I’m writing this on a laptop – still a top of the line touchscreen, hybrid tablet, Windows 8.1 machine – that I bought three smart phones ago. I’m pretty confident I’ll upgrade my current phone before I upgrade my current laptop) and all those iPhones and Samsung Android phones in the enterprise today will be ready for an upgrade in a year at most.

Windows Phone, meanwhile, will soon overlap with Windows tablets and desktop machines, and the ability to build apps that span a phone, tablet, desktop, and back-office use case will be uniquely Microsoft’s. Those apps will be unlike anything that can be done with iOS or Android. As these first multi-platform apps and business processes roll out, their functionality, security, and cross-platform usability may help send a standard for consumer apps that Microsoft’s rivals will be hard-pressed to compete with.

As with everything new and different, the answer will boil down to execution – how well Satya Nadella can embrace the vision of a unified platform, how well Microsoft’s infamously siloed operations can continue the One Microsoft momentum and deliver the goods, and how well its partners will continue to build the last mile or yard of functionality and deliver it to the customer – enterprise or consumer.

But the seeds of change are planted, and Dynamics clearly has a role to play that may be more important than just securing the enterprise. It may be an exaggeration to say one day that the battle for the future of Microsoft was won on the playing field of Dynamics. But five years from now that might be more true than anyone will admit today. 

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