Is low-cost enough for global success?

Or, what Allwinner et al. and the device vendors around them will need in addition to the low device costs made possible by the SoC vendors themselves? (The new SoC market sweetspots established by Allwinner: the A10 is available @ $7 and the A13 is @ $5).

In some markets, yes: Here Comes the First Real Alternative to iPhone and Android [Mashable, Dec 2, 2012]

In China, things work a little differently than they do in rich countries. Retailers like D.Phone, for example, wield outsize influence over the rest of the mobile device market. In the West, cellphone carriers generally pay the handset-makers part of the cost of a phone in return for being the exclusive carrier for that particular device. In such a market, a new phone based on an OS that nobody has heard of doesn’t stand a chance because the carriers won’t take a gamble on it; they might not recoup their cash outlay. In China, however, the retailers buy handsets and charge customers full price for them. The way carriers compete for exclusivity is to offer retailers and their customers the biggest possible amount of free airtime.

as in the case of the brand new mobile OS, Sailfish from a brand new startup Jolla.

But in other markets not:

Here is what made Windows Phone 7.5 experience (Sept. 2011) much more convenient than either the iPhone or Android one:


– here are the so called ‘hubs’ crucial to the experience

– and here are the browser (on the left) and the apps marketplace (on the right)
– finally how hubs are accessible via so called ‘live tiles’ on the start screen, or additional screens almost unnoticed (as in the case of a ‘group’), and how easy it was to deliver a poster type ad message to the wide public using the same (on the right)

Nevertheless Mobile operators unconvinced by Nokia’s revival bid [Reuters UK Edition, April 17, 2012]

Four major telecom operators in Europe, where the phones have been on sale since before Christmas, told Reuters the new Nokia Lumia smartphones were not good enough to compete with Apple’s APPL.O iPhone or Samsung’s (005930.KS) Galaxy phones.

Sceptics among operators say the sleek, neon-coloured phones are overpriced for what is not an innovative product, cite a lack of marketing dollars put behind the phones, and image problems caused by glitches in the battery and software of the early models.

Nokia’s big bet made a year ago to put Microsoft’s (MSFT.O) Windows Phone software in its smartphones looks far from certain to pay off, operators said.

No one comes into the store and asks for a Windows phone,” said an executive in charge of mobile devices at a European operator, which has sold the Lumia 800 and 710 since December.

Introducing the Newest Release of Windows Phone 7.5 [windowsphone YouTube channel, Sept 26, 2011]

See how Windows Phone 7.5 makes it easier to stay close to the people who matter. Now you can organize friends into Groups, track conversations across texts, Facebook and IMs in one place, and much more. Be among the first to check out some of the best new Windows Phone features, all set to the beats of Kids of ’88’s “Ribbons of Light”. Learn more about the mobile apps, features & updates available on Windows Phone 7.5: http://www.microsoft.com/windowsphone/en-US/features/default.aspx

So a natural question was hanging in the air even 9 months later: What’s Wrong With Windows Phone? [PCWorld, June 3, 2012]

By any measure of success Microsoft’s Windows Phone is a flop — so far. The bitter irony for Microsoft is, it’s a great phone. What’s going wrong?

When Waterloo, Canada resident Bilal Khan found his father struggling to use an Android Samsung Galaxy SII smartphone, the younger Khan lent him his Lumia 710 instead. Khan told his father to use it for a couple hours while he went out for a workout. “When I came home two hours later, he didn’t want to give it back,” Khan said. And his father didn’t for about a week. Finally, he returned the device to his son, but only after purchasing his own Windows Phone.

Khan and his father are part of a small and devoted fan base for Windows Phone and its slick Metro UI design. Devotees note that the Windows Phone is intuitive and easy to use. Within an hour after picking it up, Khan said, his father was using advanced features such as the Nokia Play To app to connect the phone to his laptop via DLNA.

Ease of use coupled with the phone’s deep personalization and integration with Microsoft Office and Xbox Live have won over many. But adoption rates are anemic. Google’s Android platform, by comparison, had captured 12 percent of American smartphone subscribers about 18 months after its U.S. debut. As of late April, Android’s smartphone market share is nearly 51 percent in the U.S, metrics firm Comscore recently reported.

Charlie Kindel, a former Microsoft employee who ran the Windows Phone developer experience, believes a mobile OS lives and dies with the support (or the lack thereof) of wireless carriers such as AT&T, Sprint, and Verizon.

“The most important factor is whether carriers are pushing your platform,” Kindel says. “Up until now carriers have not been selling Windows Phones.”

Ask Windows Phone users why they favor Microsoft’s platform and they point to the refreshing Metro UI that goes beyond the typical grid of icons on Android and iOS. Instead, Windows Phone focuses on large tile icons that display Facebook and Twitter updates, weather, and e-mail at a glance.

“I think the challenge is to get someone to try something that’s completely different,” says Juuso Myllyrinne, a former digital marketing manager for Nokia.

As for Windows 8, the new touch-friendly OS (expected in October) could also help Windows Phone since it will introduce a similar Metro-style interface to users. “I think it will be additive,” says Kindel of Windows 8. “I don’t think it’s going to be the thing that tilts the scales, but it is definitely going to have a positive impact.”

Myllyrinne expresses similar sentiments. “Once [the Metro UI] becomes the norm [on PCs] it might be easier for people to adopt that sort of logic on phones as well.”

And in November this year we have an even further evolved experience built on the same basic ideas illustrated above: Meet the new Windows Phone 8: Reinvented Around You [windowsphone YouTube channel, Nov 11, 2012]

The new Windows Phone is the only phone with Live Tiles, designed to keep you closer to what matters most. Pin your favorite people, apps and more. Arrange your Start screen just how you want it and see everything that’s going on, as it happens. Only Windows Phone has Live Apps— a delightful innovation that makes apps easy to use and more amazing than ever. They bring the information you want right to your Start screen. Windows Phone is the smart phone built not for all of us, but for each of us. It’s the smartphone reinvented around you. Meet yours http://newwp.it/aP85hI

Nevertheless how it was when the Microsoft, Nokia and the carriers were approaching the joint launch of Windows 8 and Windows Phone 8? According to a business discussion imagined in The Conversation Amongst MSFT, NOK, VZW, & ATT [Charlie Kindel on his cek.log, Oct 4, 2011]:

NOK to MSFT: We really need to get all major carriers at WP8 launch.

MSFT to NOK: Agree! Let’s make it happen.

NOK to VZW: Do the 920 for launch!

VZW to NOK: Well, ok. Maybe.

MSFT to VZW: Do WP8!

VZW to MSFT: One word: Kin.

MSFT to NOK: Hey, Elop [Nokia’s CEO], beg them please!

NOK to MSFT: Ok, working on it…

Meanwhile.

MSFT/NOK to ATT: Do the 920 at launch.

ATT: Sure. We’re in. Let’s do it.  But we can’t spend much on marketing.

MSFT/NOK to ATT: What would it take for you to spend more?

ATT: How about an exclusive?

MSFT/NOK to ATT: Can’t really do that. Need to support all carriers. What else?

Meanwhile…

NOK to MSFT: VZW is dragging their feet. I think they hate you.

MSFT to NOK: Yea, they’ve always hated us. Fuck.

NOK to MSFT: Maybe we should give ATT a 3 month exclusive. It’s clear VZW is not committed. Better to have one committed carrier than two who aren’t really committed.

MSFT: Agree. Let’s do that.

Meanwhile…

which is a very effective expression of Kindle’s view of the current situation well described in his earlier post:
Windows Phone’s Canary in the Coal Mine [Charlie Kindel on his cek.log, Sept 1, 2012]

My day-after-Christmas blog post last year, titled “Windows Phone is Superior, Why Hasn’t it Taken Off?”, was hastily written (on the beach) as a response to a Hackernews comment that galled me.

I must have hit a nerve because not only did the reaction to that post cause my blog to come crashing down, it made the top of Techmeme for almost 2 full days. Once the nice folks at WPEngine had my blog running on something more solid than my home server that post had over 70,000 views.

I was trying to articulate that Windows Phone 7, while a really, really, good product, had entered an exceedingly complex multi-sided market where the parties responsible for SELLING it were not incented to do so.

Consumers do not buy things.

Consumers are sold things.

Broad marketing, including advertising and grass-roots evangelism, have a huge impact on what consumers end up buying. I discuss this in my post on brands. Like it or not, the masses are very much influenced by what they are told via brands, brand marketing, and advertising.

While much has changed, some things have stayed the same:

  • The carriers still hate and distrust the OS providers in general and Microsoft in particular (I’m quite sure Verizon remembers Kin).
  • Apple’s products are easy to explain, well marketed and thus highly desired, and easy for RSPs to sell. Apple continues to have no problem getting carriers to do a great job of assorting iPhones.
  • Apple continues to provide an alternative channel for the iPhone with its Apple Stores.
  • The Android device manufacturers (with Google’s help) continue to pour money into media advertising and incenting carriers to assort Android phones.
  • Consumers like to feel like they have choice. Two strong options provide choice; it is not clear a third option is needed.
  • Most people (and that includes RSPs because they are people too) still have an iPhone or Android device in their pocket while out on a date.

Windows Phone 8 looks great. Its features and capabilities are far better than Windows Phone 7 (and you know I already think WP7 was a “superior” product). It has a well-designed look and feel that enables it to stand out. It has all the features the competition has and also some innovative capabilities they don’t.

Will Windows Phone 8 devices sell in sufficiently large numbers to make Microsoft a strong force in the smartphone space and keep Nokia in business?

I don’t know.

And you don’t know either.

But I do know the way you can tell if it is working or not is to go to the carrier’s stores once WP8 phones are actually available and ask the RSPs what phone you should buy. Heck, even handicap them by saying “I hear Windows Phone is great. Help me pick one out.”

If they steer you to a WP8 device then the air is clear. The canary is happily chirping. Coal mining can continue. Sales will skyrocket.

If they steer you to an iPhone or Android device then I’m sorry, but that’s the equivalent of the canary lying feet up in the bottom of the cage.

One thought on “Is low-cost enough for global success?

  1. Pingback: Allwinner interest in 2013 | USD 99 Allwinner

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