Microsoft Windows Phone 7 Lands With a Thud

It was only, what, less than two weeks ago that Microsoft (MSFT) had its official product launch for Windows Phone 7. At the time I said that it was too early to tell how the product would do, but that the product launch was a strong start.

Ah, well, so much for good beginnings, as early evidence suggests a strong lack of interest in this product, which Microsoft must turn into a success if it is to continue in the critical mobile client segment. But that's what happens when your entire business model and culture haven't kept up with the changing speed of your industry.

Windows Phone 7 handsets began selling seemingly everywhere except the U.S. yesterday, and the results are ... well, put it this way, someone had better put Microsoft CEO Steve Ballmer on a depression watch. According to UK blog Pocket-lint, which showed up at one of the stores that opened early, the turnout was underwhelming:

Pocket-lint arrived at 7am to see the doors open and the queues of people pour in. A queue of two people, in fact. The first of which, Andrew Willett, queued from 5.45am.

If you turned up at the Apple Store at 5.45am the day the iPhone 4 went live, you wouldn't have even made it on to Regent Street. You would have been around the corner on Hanover Street.

The shop was packed. But it was packed with press and PR peeps.

There have been signs that, outside of product design, Microsoft has been uneven at best in its marketing. For example, there was the Michael Jackson Thriller themed event when WP7 was released to manufacturing. Microsoft razzed Apple and RIM (RIMM) and completely forgot about Google (GOOG) Android.

Then there was the new video advertising campaign in which people using non-Microsoft phones were engrossed in their phones, no matter what else was happening. The company essentially argued that the value of Windows Phone 7 was being a product you'd want to put down. I will admit sympathy for the message, but its double-edged quality sends a subconscious emotional message to many consumers that they will want the competitors' products.

There are plenty of people who seem to have it in for Microsoft. For example, I received an anonymous email tip about the Pocket-lint post. It doesn't seem likely that it was Pocket-lint itself, as someone there could simply have let me know. Was it a competitor trying to seed some old-fashioned fear, uncertainty, and doubt? Perhaps. Maybe it was someone who has a particular animosity for Microsoft -- hardly rare.

But it doesn't matter. The point is that someone can report that story. It's that the now hands-on reviews of influential sources find the product still lacking compared to the iPhone or Android. Even full-featured third party app multitasking is missing.

Of all people who have been in the industry, former Apple CEO John Scully had an insight in a recent interview about Steve Jobs:

That's it in a nutshell. Microsoft puts something out, assuming that it has the time to go back and improve it so that eventually it can compete. That may have worked ten years ago, and perhaps there is still an argument that such a strategy can work in a corporate computing setting, where buyers work more methodically and at a slower pace. The advantage then is that your company appears to be in the game and the ability to deliver on a roadmap of future development is a critical factor in the decision making process.

However, consumer electronics is far different. There is no waiting. Products have shelf lives of months. To compete, Apple has to release a new iPhone every year. Google has iterative releases of Android far more frequently. Both have had time to establish themselves as leaders.

The days when Microsoft could ignore the Internet and belatedly develop Internet Explorer and still gain huge market share (owning greatly to its control of PC desktops) are over. Microsoft has been slow and this could be its final stumble. Because it has delayed and frittered away a one-time strong position in mobile, the company is now far behind.

The only way it could have caught up was with a product not just as good as an iPhone or Android, but demonstrably better. Microsoft's only chance now would be to recognize that third time out no longer works and to rapidly and continuously improve Windows Phone starting now. But even then, I think it is too late. Mobile users don't need Microsoft, and as cloud computing continues to strengthen, people won't need the company for much of their computer needs at all. We may just have seen the final mistake that makes the company's long term future in client computing irrelevant.

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