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Microsoft scores against Android by relinquishing control of Windows

Steven Max Patterson | April 4, 2014
At Microsoft's Build developer conference, Microsoft gave up control of its Windows 8 royalties for devices with screens smaller than 9 inches.

When the mobile bell finally rang at Microsoft, like a punch-drunk fighter, Ballmer came into the ring punching the air as he tried to control the mobile phone market like the company once did desktops. Now, new CEO Satya Nadella has entered the ring and dealt a stunning blow to Android, making Windows free to smartphone OEMs.

I really thought that it would take Nadella 12 to 18 months to undo any of the damage from the badly positioned Nokia acquisition, but with less than two months on the job, Nadella has taken strong measures toward a solution. Yesterday, Terry Myerson EVP of Microsoft's operating system group, gave OEMs Windows 8 for free on devices with screens sizes smaller than 9 inches. And as a further incentive to the OEMs, he included a free one-year license to a fully functional Office 360.

If Microsoft can convince smartphone OEMs to build and ship in volume it can push its cloud ecosystem onto consumer and business phones and tablets. Changing course, Nadella and Meyerson have shown that they understand the importance of acquiring consumers who use Windows contacts, navigate with Nokia Maps, communicate with Live Mail, search with IE Mobile, work with Microsoft's apps, and store and share pictures, documents, and data on Skydrive, all instead of Google's apps. But Nokia will have to be less threatening to OEMs. It should be repositioned as an advanced hardware product company like Motorola was before Google recently sold it to Lenovo. That's a gamble given that Nokia produces the lion's share of Windows Phone 8 devices right now.

Demonstrating how cost-effective a Windows Phone 8 OEM might be, Nokia announced the Lumia 630 and 635 with MSRPs in the $159 to $189 range. Specifications match up competitively with the Moto G. Interestingly, the Lumia will go on sale first in Asia, Russia, China, India, and Europe, where Microsoft can capture consumers buying their first smartphones.

BYOD economics could change with these two low-cost Lumias. Why take the risk of sharing an employee's Android or iOS device when these smartphones are almost cheap enough to be considered office supplies? Enterprises using Office, Outlook Exchange, Active Directory, and Systemcenter/Intune can extend Microsoft's rich security from the desktop to the phone and use the same system administrators and console to manage both. Extending a single user identity and data access permissions to smartphones is very compelling.

During a Q&A session at the Build conference yesterday, Nadella responded to a mobile developer's question, "why should I build for Windows?" saying, in part:

"[B]ecause we are going to innovate with a challenger mindset. We're not coming at this as some incumbent trying to do the next version of Windows. We're going to come at this by innovating in every dimension, the dimension of hardware, the software experiences across the Windows family, and go after this in such a way that you see us make progress with rapid pace."


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