Microsoft and mobile.
The Economist special report on Microsoft looks at how the company is approaching the markets of games, home entertainment and mobile (The Economist, November 26, 2005, pp. 85-87).
Microsoft was initially kept out of the mobile market by handset makers who wanted to avoid the fate of commodity PC manufacturers. By going directly to network operators, and offering operator-specific customizations, Microsoft have become established with over 100 different Windows-base smartphone devices. "'Microsoft still has a steep hill to climb—it is still viewed as an outsider in the mobile industry', says Ms Zweig [of the Shosteck Group]".
Microsoft's 2005 operating income for Windows (US$13.1bn) and Office (US$7.7bn) contrasts with the combined income for mobile, embedded devices and home entertainment (US$ -0.4bn). Mobile is not anticipated to give Microsoft anything like the profit it has experienced from Office and Windows—"a business that has, after all, been declared an illegal monopoly in both America and European courts".
"The best justification for its move into other markets, then, is to protect and reinforce the profits of its core business. 'If they can use these ofther devices to keep those profits rolling in, then that's justification enough', says Mr Jackson [of Forrester]".
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