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Why Windows Phone Failed - And How They Could've Saved It

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10:58   |   Nov 09, 2018

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Why Windows Phone Failed - And How They Could've Saved It
Why Windows Phone Failed - And How They Could've Saved It thumb Why Windows Phone Failed - And How They Could've Saved It thumb Why Windows Phone Failed - And How They Could've Saved It thumb

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  • Windows Phone: a product with so much potential that had everything going for it, and yet
  • one that failed spectacularly.
  • Despite the billions of dollars and the priceless connections of Microsoft, the Windows Phone
  • never took off and would go down in history as one of Microsoft’s most expensive mistakes.
  • In this video, we’re gonna look at the reasons behind its failure and the actions Microsoft
  • could’ve taken to possibly prevent it.
  • This video is brought to you by Dashlane.
  • Keep your passwords safe and strong across all your devices by registering with the link
  • in the description.
  • When Steve Jobs announced the iPhone in 2007 he took the smartphone world by storm.
  • Well, how do I scroll through my list of artists?
  • How do I do this?
  • I just take my finger and I scroll.
  • Up until then, smartphones had a big problem: they had small screens with interfaces that
  • were hard to navigate, and the reason for that was because half of the phone was occupied
  • by a keyboard with tiny buttons you could hardly press with any precision at all.
  • What Steve Jobs showed to his extatic audience was a game changer, but it wasn’t just Apple
  • fans there were watching.
  • The engineers at Google, which for the past two years had been building a smartphone of
  • their own, had to scrap their entire project and to start over with a touchscreen design.
  • Their final product, Android, would arrive more than a year later, at which point the
  • iPhone had taken the smartphone crown.
  • The iPhone’s model was built on exclusivity: it was entirely produced by Apple to establish
  • maximal control over the user experience and the quality of the product, which allowed
  • Apple to charge a premium for their phones.
  • To succeed Android would have to adopt a different strategy: instead of going for exclusivity,
  • Google tried to be everyone’s friend, partnering up with as many phone manufacturers as possible
  • with the selling point of their phones being the fact that they were cheap, yet functional.
  • For a time, the smartphone world was in balance, with Android and the iPhone occupying very
  • distinct segments of the market.
  • And yet, this balance would soon be disturbed by another tech giant, Microsoft.
  • Now, out of the three companies, it was actually Microsoft that had the most experience with
  • mobile devices.
  • Back in 1996 Bill Gates unveiled what he called the handheld PC, which was really more of
  • a tiny laptop.
  • I’ve asked Tom McGill from the Windows CE group to join me on stage and give us a quick
  • glimpse of some of the neat things that are built into the handheld PC.
  • For those of you that might not have seen one yet, Bill talked a little bit about the
  • handheld PC and this happens to be the Casio unit actually.
  • The Casio unit is typical of the handheld PC, so it’s got a physical keyboard, a 480x240
  • 2 bit per pixel screen, IR, PC card, upgradeable RAM, 2 AA batteries.
  • So this is a pretty typical handheld PC.
  • The operating system it ran was known as Windows CE, which was basically Windows 3 modified
  • to function on the lowest specifications possible.
  • Over the next decade, Microsoft would add features and develop this product line extensively,
  • making another 6 full releases.
  • Between 2006 and 2008 Microsoft’s mobile devices claimed a 15% market share, greater
  • than any of their competitors except Symbian by Nokia.
  • But this success is exactly what blinded Microsoft to threat of the iPhone.
  • When Steve Ballmer, the CEO of Microsoft at the time was asked about the iPhone his reaction,
  • well, let’s say it hasn’t aged very well.
  • Steve let me ask you the iPhone and the Zune if I may.
  • Zune was getting some traction and Steve Jobs goes to Macworld and he pulls out this iPhone.
  • What was your first reaction when you saw that?
  • $500, fully subsidized with a plan!
  • I said, 'that is the most expensive phone in the world' and it doesn't appeal to business
  • customers because it doesn't have a keyboard, which makes it not a very good email machine.
  • What’s even more priceless, however, is the frankness of the next question.
  • How do you compete with that though?
  • He sucked out a lot of the spotlight in the last few weeks because of what happened at
  • Macworld, not only with the iPhone, but with the new iPod.
  • How do you compete with that, with the Zune?
  • Right now, well, let’s take phones first.
  • Right now we're selling millions and millions and millions of phones a year.
  • Apple is selling zero phones a year.
  • Notice the stark difference between the two men: the reporter very clearly sees the innovations
  • of the iPhone as a threat to the old smartphone establishment, but Microsoft’s CEO can barely
  • look past the sales numbers.
  • And just in case you’re thinking he’s an exception, the CEOs of Blackberry and Palm
  • were equally skeptical of the new iPhone.
  • It took Microsoft a full year of declining market share to finally realize that something
  • had to be done.
  • Unlike Microsoft, Blackberry’s sales were still increasing, which gave them a sense
  • of confidence they never recovered from.
  • Now as they say, it’s better late than never and when Microsoft finally got around to it,
  • their development was actually pretty fast.
  • Microsoft began developing a touchscreen based mobile device in late 2008 and it took them
  • only two years to get it ready for market.
  • What Steve Ballmer unveiled was indeed a very unique product whose advancement of smartphone
  • design isn’t really widely recognized, but it should be.
  • At a time when the iPhone and Android were stuck with static icons, the Windows Phone
  • gave you tiles with live information.
  • Overall, critics had much to praise: in terms of design the Windows Phone user experience
  • was right up there next to Apple and because Microsoft had very strict requirements for
  • the hardware used by phone manufacturers, all of the early Windows Phones were very
  • powerful machines for their time.
  • And yet, Microsoft ran into a big problem very early on.
  • You see, Microsoft was trying to do something very difficult: it was emulating Apple in
  • trying to establish strict control over the user experience and hardware, but unlike Apple
  • it wasn’t actually making its own phones.
  • This approach made the Windows Phone a very refined product, but the degree of control
  • Microsoft wanted made working with them much more difficult for phone manufacturers compared
  • to working with Android.
  • Unsurprisingly, most phone manufacturers decided to partner up with Google, which left Microsoft
  • in a very bad position: it had a great product and no one to make it.
  • The only saving grace for Microsoft was a lucky connection: when Nokia replaced their
  • CEO in September 2010, the new guy, Stephen Elop, was a former Microsoft executive and
  • the first item on his agenda was to try to restore Nokia’s declining market share by
  • abandoning Symbian and pivoting towards Windows Phone.
  • Now, you can tell that this was a very premeditated plan because this massive transition, during
  • which Nokia completely changed their product offerings, happened in the span of a single
  • year.
  • Nokia started selling their first Windows Phone in November 2011 and I can tell you
  • right away that this was possible thanks to the billions of dollars Microsoft poured into
  • Nokia as “platform support payments”.
  • Nokia was supposedly paying Microsoft a licensing fee, but in reality it was actually getting
  • $250 million back from Microsoft every quarter, which more than made up for their expenses.
  • Of course, the other phone manufacturers knew that this was happening, which pushed them
  • even farther away from Microsoft.
  • After all, why would they fund their own development and pay a licensing fee to Microsoft, when
  • Nokia was getting it all for free?
  • Effectively, Microsoft had gone all in with Nokia and there was no going back.
  • But sadly for Microsoft, it was far too late.
  • By the time Microsoft solved its production issue, four years after the introduction of
  • the iPhone, it had fallen to a 2% market share.
  • Nobody was developing applications for the Windows Phone and why would they, considering
  • that Android and iOS were clearly the winners here.
  • For its first three years, the Windows Phone App Store was empty: it didn’t have Instagram,
  • it didn’t have YouTube, it barely had anything.
  • By 2013 the stock price of Nokia had fallen by 75% at which point angry shareholders were
  • threatening to just fire Stephen Elop and get rid of Microsoft altogether.
  • In the end, that didn’t happen: Microsoft instead just purchased Nokia’s mobile phone
  • division for $7.2 billion in 2014.
  • Here’s the funny thing though: the very next year Microsoft wrote off their investment
  • for $7.6 billion, and then to top things off they fired almost 8,000 employees.
  • Microsoft kept Windows Phone on life support until October 2017, but it was clearly dead
  • a long time before that.
  • And yet, it’s easy to imagine the different path Windows Phone could’ve taken had it
  • only not been as greedy with its original philosophy.
  • Had Microsoft been willing to compromise on its control over production, it would’ve
  • easily convinced the big manufacturers to use Windows Phone instead of Android.
  • After all back then Google had practically no ecosystem to speak of, while Microsoft
  • had been a software titan for decades.
  • There’s a lesson to be learned here about the importance of compromising in business,
  • but there’s one sphere in life where you shouldn’t compromise and that is keeping
  • all your passwords secure.
  • Luckily for you, with Dashlane managing your passwords is a breeze.
  • Dashlane can generate strong passwords and can store them safely across all of your devices,
  • automatically filling them in when you need them.
  • Dashlane is available on every popular desktop and mobile device, and it would’ve even
  • been available on Windows Phone if Microsoft hadn’t screwed it up.
  • On top of managing your passwords, Dashlane also offers a VPN for every one of your devices,
  • and it also monitors the Dark Web to make sure your data hasn’t been leaked by hackers.
  • You’re probably catching my drift here, but Dashlane really is great.
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  • Use the code ‘businesscasual’ to get the discount.
  • Anyway, thank you for watching.
  • Make sure to like, subscribe, leave a comment, check out both my Skillshare classes (I just
  • released a new one) and we’re gonna be seeing each other again in two weeks.
  • Until then: stay smart.

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56th video of the Behind the Business Series.

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