WPC 2014: Microsoft's Android Counterattack

WPC 2014: Microsoft's Android Counterattack

As with Chromebook, an emphasis on price-matching

During the second Worldwide Partner Conference keynote this week, Microsoft's Tony Prophet explained how the firm has responded to the low-cost Android tablets and smart phones that are now flooding the market. We won't know whether Microsoft's strategy will be successful until a new generation of Windows-based tablets and handsets hits the market throughout 2014. But we do know this much: The strategy relies almost completely on meeting Android on price.

I wrote about Microsoft's approach to the Chromebook problem the other day in WPC 2014: Microsoft's Chromebook Counterattack. You won't see much difference in how the software giant is tackling Android. But the issue here is more pronounced: Android dominates the market for personal computing devices, is gaining share every year, and is expected to do so for the foreseeable future. In other words, while Microsoft's answer to Chromebook seems reasonable—hey, it worked with netbooks—it's not at all clear that it will work against an entrenched market leader.

While it's fair to say that Windows and Android are now in the midst of a race to the bottom when it comes to price, I'd also (non-cynically) point out that that's the nature way of things for the volume leader. The devices market has thus far mapped very closely the PC market before it and while may think it's either ironic or notable that Apple is on the receiving end of this trend in each of the three markets (PCs, smart phones, tablets), whatever. Apple is not the explicit target here.

If you've been reading this site for a while or have listened to me on various podcasts, you've heard me tell the story about my initial reaction to Linux in the mid-1990s, and how I wondered how Microsoft could possibly compete with an OS, and potentially an Office suite for that matter, which was free. My theory was that all a free Linux/Office had to do was meeting the top 20 percent of what people wanted and Microsoft would be in trouble. That never really happened with Linux, though Microsoft had to respond to the original generation of netbooks by offering a really cheap Windows version (XP Starter) that could help PC makers compete on price. The result was immediate: Linux disappeared from the PC market forever.

Since then, however, a combination of factors has combined to make similar competitive efforts with Chromebook and Android much more successful. And with Android in particular it doesn't hurt that this mobile OS is in fact the most powerful and flexible mobile platform on earth.

That said, Android isn't technically free. The Android everyone is really worried about is the free Android Open Source Project (AOSP) plus Google's Play services and apps, which are not free. So Microsoft isn't exactly competing with free. They're competing with low-cost. They can compete with low-cost.

To do so, it made Windows and Windows Phone available for free on devices with screens that are 9 inches in size or smaller. That includes handsets and phablets (Windows Phone) as well as mini-tablets (Windows 8.1). On the Windows 8.1 front, it has created a Starter edition for a new generation. Called Windows 8.1 with Bing, this entry level Windows version is free on the device types we're talking about here.

The problem is that Microsoft's device-based offerings aren't really competitive with Android. Yes, the firm has made great strides with Windows 8.1 Update 1, in particular, by molding the system in such a way that it can run on tablets with just 1 GB of RAM and 16 GB of storage. And yes, the Windows 8.x app and digital media ecosystem has grown, though Microsoft won't say by how much exactly, which should trouble everyone. (At WPC, the company made the vague claim that the Windows 8 app ecosystem has grown 50 percent year over year, for example, and that there were now "hundreds of thousands" of apps in the Store.)

Android has the most apps. It has most of the best apps. (Apple still has a big lead when it comes to quality, actually.) It is supported by mature digital media ecosystems. It is in effect a de facto standard, much as Windows is on PCs. By comparison, the Windows you will run on a phone or tablet—i.e. Windows Phone or just the touch-based parts of Windows 8.x—are well designed but still immature and even lacking some basic functionality that Android users take for granted.

And Android is already consistent between phones and tablets, something Microsoft is racing to fix with the still-different Windows and Windows Phone. Yes, there is the notion of phone apps and tablet apps in Android, but it's all the same platform, the same APIs and SDKs for developers.

While Microsoft tries to close the gap technologically, it can at least point to the many wins it's seeing from a hardware maker adoption perspective. On the day before Microsoft announced that Windows Phone OS would be available for free, there were basically four Windows Phone licensees: Nokia (which was part of Microsoft by then anyway), Samsung, HTC, and Huawei. Now there are 12-15 companies making Windows Phone handsets. Ditto for mini-tablets: There were perhaps four decent Windows-based mini-tablets leading up to Build, but now we know of dozens in the works from a variety of device makers. And some will be sold for as little as $99 this holiday season.

Yes, those devices will be terrible. But they allow Microsoft and its partners to compete with Android on price, which is the point. As is the case on Android, we will at least have a wide range of device types and price ranges from which to choose.

When I look at Microsoft's similar strategy against Chromebook, I naturally wonder whether competing on price is enough. With Chromebook, the issue is simplicity: Until and unless Windows RT matures to the point where it no longer provides or needs the Windows desktop, Microsoft just doesn't have a PC OS that is both simple and useful. The story with Android is similar, though in this case Microsoft comes up short on the other end of the equation: From the perspective of most users, Android is simply better than Windows is on phones or tablets. So competing on price is important, but it's not all that needs to be done.

And that's the problem in a nutshell: Competing on price is only part of the solution. And it appears that for fiscal 2015, that is all Microsoft can do.

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