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Will Microsoft Be Able to Make the Jump?

In marketing terminology this is called ‘jumping the S-curve’. Microsoft, however, has left its jump rather late. One could argue that we are well and truly at the top of the S at the moment, so it will be interesting to see if Microsoft can still take the leap towards the enormous growth that is currently taking place in the group of digital media companies such as Google and Apple.

In her recent book entitled Summer Players Carol Velthuis uses the four seasons of the year to plot where the various companies are in relation to their ongoing performance in the market. When comparing successful companies with those that are lagging behind it becomes clear that the differentiating variable is the ability and willingness to adapt to the new environment that has been developed over the last decade.

While Google and Apple are ‘Summer Players’, Microsoft is an ‘Autumn Player’. Nevertheless there is no reason for the software giant not to leap back into the race and position itself alongside those other leaders in the emerging digital economy market.

I have always found it difficult to understand why Microsoft has left it so late to fully embrace the new environment—in relation to both the Internet in general and mobile broadband. The Windows Phone7 should be able to provide that seamless transition between the many Microsoft applications that more than a billion people already use and the mobile world. For too long it has left it to handset manufacturers to take the lead, but in the process it began to lose traction, with Blackberries and iPhones offering far more appealing products.

This will be one of those decisive moments for Microsoft. If it fails here it will become increasingly difficult to keep pace with this rapidly changing market. It should try to quickly manoeuvre itself back into ‘summertime’, a place it was occupying a decade or so ago.

The PC version of Windows 7 has been given the thumbs-up by our very critical BuddeComm office team, so, together with the new phone, the company certainly could have a winning formula to compete with Apple and Google.

Looking at it from the telecoms side, I see this development as another nail in the coffin of the mobile operators’ business models. These new smart phones are generating an enormous demand for access to mobile broadband and this is rapidly becoming a commodity. With their totally flawed mobile portal business models the telcos have lost the lead in this market and they are now being forced the follow the market led by the device vendors. They need to adjust their business models quickly and start looking for wholesale services they can offer as value-added services to content and application providers.

M-billing could be a possibility—but never, ever, at the current rate of approximately 35% of revenues generated by these apps. I think 10% would be the upper limit of such a charge.

So the new Microsoft phone will not only change the situation for Microsoft; it will also put further pressure on the mobile telecoms operators to make significant changes to their industry.

By Paul Budde, Managing Director of Paul Budde Communication

Paul is also a contributor of the Paul Budde Communication blog located here.

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