It has been an interesting couple of months at Microsoft. First the company announces a $7.2 billion plan to acquire Nokia's phone business, signalling a dramatic shift in strategic direction from a mobile OS provider to a hardware manufacturer. Then the CEO announces that he is leaving the company, which raises a host of questions around who is actually leading the foray into consumer handsets or indeed Microsoft's strategic direction. Never has a company been in such a promising and precarious position.
Microsoft is sitting on an incredible array of technology properties. Of all the big tech companies, it has arguably the best set of toys in its living room to play with. Walk into the Microsoft playroom and you are instantly spotted by the Xbox Kinect, called by a buddy over Skype and sent Microsoft Office documents from your boss using Sky Drive or your private Microsoft cloud. You can skim through those documents on the Surface or any Windows device, while listening to songs through the (re-branded) Xbox Music service and using Bing to look into which Windows Phone to buy next. No other tech company has such a broad arsenal of consumer and business facing products.
This arsenal is just waiting to be joined together and the purchase of Nokia's handset division could be the first step. While the Windows Phone has not been the success that it might have been, Microsoft has an extremely strong communications environment to leverage. Importantly, it owns the most popular VOIP service in the world in Skype. A bold play would surely be to couple Skype with a cutting edge Nokia handset and dub it the "Skype Phone". This device could use Skype's VOIP by default and should be able to reduce the time that users are charged by their carriers for making calls over the network.
On top of this, Microsoft has been pioneering research into white space spectrum. If this Skype Phone could utilise white space along with the existing array of free Wi-Fi networks in urban areas, then Microsoft could offer the first mobile phone without the need for a carrier or sim card. Add in seamless integration with Microsoft's business and consumer products (Office, Sky Drive, Xbox, etc) and a unique proposition begins to emerge. Join the dots and Microsoft becomes exciting!
But sadly, this almost certainly won't happen. The company is renowned for fierce in-house fighting and the current situation feels particularly messy. Rumours abound claiming that Nokia was on the verge of leaving Windows Phone for Android (or bankruptcy), implying that the Microsoft purchase was less a strategic play into mobile hardware and more a desperate attempt to keep the mobile dream afloat. Couple this with the conflict of interest that exists by licensing the Windows Phone operating system to OEMs while simultaneously creating a competing Windows Phone device, and the new strategy looks even less planned.
The fact is that Microsoft hasn't needed to connect the dots up until now. It owns a large number of successful technology products that stand up in their own right and do not integrate with each other. A quick look at the design of each of the product websites (links above) demonstrate just how uncoordinated the Microsoft behemoth is. But this industry norm is changing. Tech companies are increasingly moving towards integrated products in order to lock the consumer into one operating system and technology environment. Despite being in the perfect position, Microsoft has failed to do this. As the Google's and Apple's of the world move towards an integrated ecosystem, Microsoft's promising playroom is moving into an ever more precarious position.