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Microsoft Hopes Mobile Success Will Be Fun and -- More Important -- Games

Microsoft (MSFT) has had a big problem on the mobile front -- namely, its gigantic pratfall from being so slow to create a modern smartphone operating system that was the equal of Apple's (AAPL) iOS for the iPhone/iPad or Google (GOOG) Android for phones, set-top boxes, tablets, and probably soon to come to a breakfast cereal near you. But Microsoft hasn't given up, and its announcement of an opening 50 highly popular games for Windows Phone 7 shows a smart strategy: use content that consumers want, you have, and others can't get.

As Apple has shown, content -- whether music, applications, video, or books -- can be a key way to make a company stand out from competitors and draw in customers. And you want control over that differentiation, particularly if it's critical. That's why companies use trademarks, patents, copyrights, trade secrets, and exclusive agreements to lock in what makes them special.

Apple has gained its differentiation in part by forcing iOS developers to sell their wares only though the company's store. People often assume that a company like Apple will always ride high because of its access to music, video, and apps. And for now, it does have them.

But when a company essentially becomes a retailer and republisher, that's not a given. If a developer decides to walk or just port software to another platform instead, there's not a lot that Apple, Google, Nokia, or any other platform vendor who resells content can do. As my BNET colleague Damon Brown has discussed, cross-platform game development weakens phone vendors' positions.

Look at some recent examples. First, Pink Floyd has pulled some of its classic albums offline since its contract with EMI expired at the end of June, depriving digital music sellers of their access to "Money." Then Yoko Ono said that neither Apple (AAPL) iTunes nor any other digital download service had enough soul for Rubber Soul -- or any other Beatles works.

It's not as though Apple, Amazon (AMZN), or others will suffer unduly because of these walkouts. But it shows how beholden retailers can be when key rights holders say no. In the mobile world, this increasingly will become a major issue. That's why Microsoft's (MSFT) actions on the mobile gaming front are so interesting. Not only does it have developers who are heavily invested in doing business with the company, but it also owns some key products and licenses, which gives it an advantage in gaming -- a key area in mobile computing.

This is a big reason why, for all of its mobile strategic errors over the years, Microsoft is hardly a company to write off. It has a huge wealth of content that it either developed, bought, or that is most likely tied up for the Xbox game console or PCs. That's why it could announce a slate of 50 highly popular games for Windows Phone 7. It's not that all the titles are exclusive. Far from it, when you include titles like Bejeweled, which is a small screen standard. But Microsoft is working with other companies to develop titles for the platform. Why the cooperation? Because no gaming company likes the aspect of potentially being locked out of the Xbox market or, maybe more importantly, Xbox Live.

Some gamers are bound to mistakenly think that they will be able to use everything on Xbox Live and they may not. Mobile versions will likely need some rework and might not have exactly the same feel or features consumers are used to. But even adaptations will give it a huge advantage in a software category that has proven highly popular with smartphone owners. And the company has apparently gotten off to a good start. As Damon notes, Microsoft will make Apple fight for mobile dominance.


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