Microthinking from Microsoft: Lost brand opportunity with Windows Phone

Editors note: With the launch of the iPhone 4S today we thought it appropriate to share some insights on the mobile phone industry. This post is by Evening UST MBA student Vitaly Demin, a strategy consultant at Eames Management Group.

“The total is much greater than the sum of the parts”
-Steve Jobs

Nokia-nokia-windows-phone-series[1]In October 2010 Microsoft released its new generation mobile operating system called Windows Phone. They were just another player in the game after Apple iPhone with iOS and Google Android but they decided not to come up with a different strategy for launching their product (I don’t see much sense in keeping Blackberry in the equation at this point).

iPhone and iOS is a unique combination of superior hardware and the most advanced mobile operating system that comes from one company. Apple managed to conquer the world with this device. Android being a multi-hardware platform operating system is a different case. Google did a great job in becoming the world’s most popular mobile operating system by getting into the race at the right time and making the system free.

So where does Microsoft fit in with their Windows Phone?

The Redmond company decided to follow Google by opening their system to all the manufacturers who already made Android phones. Being just another player in the market, they simply copied the business model from their biggest competitor and for some reason they thought it made sense.

Four months later they announced their strategic alliance with Nokia. The latter would produce only Windows Phone devices. Here comes the lost opportunity. The opportunity was to create an absolutely new and exclusive brand of a smartphone built on the Nokia hardware and running the Microsoft mobile OS. Let’s give it a name, say, “Lexor” so we have a real brand. This way, they would have become 1) different, which is the core of branding, and 2) exclusive, which would create a perception of high value and interest in the consumers’ minds.

Simply compare two scenarios:

First scenario – you have a Windows Phone mobile operating system that runs on smartphones from various manufacturers like Samsung, HTC, LG, Nokia, etc. Your strategy is no different than the one of Android – your competitor number one (I mean no iPhone owner will switch to a Windows Phone device but an Android device owner can).

Second scenario – you have a brand new phone called “Lexor” that is made by one of the world’s best mobile phone manufacturers and runs a brand new operating system by Microsoft. Not “Nokia Lexor,” not “Microsoft Lexor” – just “Lexor.”

There is no doubt that Microsoft-Nokia negotiations started much earlier than October 2010 when Windows Phone was released. If only they took their time (I mean they both were already late in the game so there was really no rush) and thought of a different approach to launching that brand new product, the customer perception would have been drastically different.

I put a part of the Steve Jobs’ legendary phrase at the beginning of this post—highlighting something Microsoft and Nokia failed to understand. The total is much greater than the sum of the parts—the total being the brand new smaprtphone “Lexor” and the parts being simply Windows Phone, Nokia and all the other phone manufacturers.

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One Response to “Microthinking from Microsoft: Lost brand opportunity with Windows Phone”

  1. moo says:

    I think your reasoning is flawed. Apple first and foremost want direct profits. Direct profits comes more from targeting specific segments, than having market share per se. Google, and MSFT – for different reasons – are primarily after market share, and not so much profits (while profits, of course, are still welcome).

    Granted, “Lexor” could’ve combined great hardware with great software and great marketing (ok, lots of marketing). They could’ve even catered to a select few price-points while they were at it. Even so, flooded by devices by their competitors, they would’ve found themselves marginalized sooner rather than later, and then having to either face a full front war with Apple (which at this point in time is hard to win), or find a less-profitable niche segment and target it like mad (in the end running a low volume, low margin business).

    TL;DR: MSFT wants market share. They see WP as a strategic asset in their 3 screen strategy. They see the need to dominate the new space to remain dominant in the old space. Ergo: They want market share. History states that a great way to win market share is by having OEMs flood the market with devices.

    If anything, Lexor would’ve been the big mistake here. Perhaps not so much for Nokia, but definitely for MSFT. (Nokia could’ve done everything else on the side. MSFT only has one go).