An opportunity missed, Microsoft and smart phones

In 2007, the cellular phone space was a very different market than in 2022. It was twenty-four years past the first commercial release of the Motorola DynaTAC 8000X and personal cellular phones were now capable of much more than simply taking or making phone call with widespread marketing to average consumers taking place in 1995 with the Motorola Flare (Edwards, 2018). In January of 2007 Steve Jobs announced the first iPhone which would go on sale in June of that year in two different models priced at $499 and $599 with a two year contact from the mobile service provider. While other phones at the time had similar features, functions, and some even exceeding the technical specifications of the iPhone, it was Apple’s ability to cohesively bring the hardware and user experience together which aided in its appeal to the broader public. At the time, many of the more expensive phones were owned and utilized by individuals in business roles who wanted access to email, documents, and other items when not in front of a computer or while not at the office.

It is through the lens of a business professional that Steve Ballmer and other executives at Microsoft analyzed the smart phone market and gave criticism when seeing the phone Apple was about to launch. Upon its’ release, Ballmer was quoted as saying “Five hundred dollars!?! … most expensive phone in the world … (and) … it doesn’t appeal to business customers because it doesn’t have a keyboard” (Katt, 2007). Statements like these demonstrate that Microsoft was continuing to think about smart phones from the perspective of what business professionals want. They believed and aligned their business strategy towards mobile devices that took the use cases of a typical working computer and shrunk the screen and keyboard to a size which allowed them to fit into pockets and bags. In this regard, Microsoft was performing a classical forecasting; taking the current market conditions, identifying potential needs of their market segment, and creating a roadmap which they believed aligned the products being developed with the features and functions business professionals would want. The forecasts made my Microsoft turned out to be inaccurate as by early 2010 the iPhone was ten percent ahead of Microsoft Windows Phones in the smartphone market. Apple’s approach to understanding what the public would want and be receptive to was much more closely aligned to reality than Microsoft originally believed it to be.

If Microsoft had attempted to perform scenario planning instead of simply forecasting the needs of business professionals, perhaps they would have obtained a new or more comprehensive understanding of the smart phone market in the late 2000’s. Scenario planning allows for the creation of multiple possible outcomes for a given current state which are driven by emphasizing, including, or limiting specific factors or variables which can alter the outcomes (Schwarze, Taylor, 2017). The rapid development of technology, specifically related to mobile telephones, and their associated networks coupled with the potentially larger market demands for mobile devices should have prompted Microsoft to transition away from traditional forecasting to a much more comprehensive approach of scenario planning. If a simple two by two grid of scenarios was constructed with demand being a variable between business professionals and the general public, Figure 1 displays the constricted scenario plan.

Figure 1

Scenario planning for smart phones

With the additional potential future states listed, Microsoft may have performed more research into understanding what would need to be true for these outcomes to occur. As it happened, demand for smartphones increased at an unanticipated rate across all demographics. Had Microsoft understood that the market of the future would include non-professionals, teenagers, and everyone else who wanted to have a means of connecting to the Internet and other digital resources, their strategies on product development, marketing, and potentially even partnerships may have changed to enable them to meet these demands. The amount of iPhone products in use by Microsoft employees was an indication that they had missed the opportunity to become a major competitor within the smart phone market (Cox, 2010). Developers, managers, and even members of the executive team were picking the iPhone as their personal smart phone in spite of the perks afforded to them if they had chosen to utilize a Windows phone instead (Wingfield, 2010). Ultimately, Microsoft exited the smart phone market completely and now focuses on developing their office suite of software for Andriod and iOS platforms. In this regard Microsoft is still focused on business professionals and their need for conducting business while not in front of a laptop or personal computer. In this regard it is uncertain if Microsoft has actually learned any lessons from its failure in predicting the wants and desires of the marketspace.

Innovating planning requires that the team or individual performing the planning make an accurate assessment of many different possibilities which may present themselves in the future. Because it is impossible to pick the exact possibility which will play out based on factors which arise between the present and the future, scenario planning is the only viable option to obtain actionable conclusions. While the example shown in Figure 1 represents a very simple approach with two questions resulting in four possible outcomes, more advanced scenario planning techniques can have multiple variables resulting in matrices or n-dimensional constructs being created. It is important to keep the number of factors or questions to a reasonable amount or the number of outcomes will cause specific factors to be diluted and conversations related to each outcome will be difficult to explore in detail due to the amount of overlap which may arise between scenario planning exercises which have too many options. The example with Microsoft demonstrates the importance of taking into consideration the social and cultural impacts future outcomes may bring about. Without evaluating how the public demand or perception of a good or service may change based on outside factors results in a poor process of analysis. As it relates to technical advances, understanding how price or other barriers to entry dropping result in changes the outcomes is crucial. The advent of technology also changes the way in which individuals and organizations may operate. If Microsoft had looked into how businesses would change if everyone had a smart phone or analyzed how the quality of life for individuals would be impacted if they had information and resources more readily available to them, perhaps they would have understood the transformative nature of smart phones and had invested more in their products to allow them to appeal to a broader demographic than just business personnel.

When considering the social impact of change it is important to acknowledge that both positive and negative impacts can occur and must be addressed with the same thought and rigor. While smart phones enable individuals to be more connected and able to communicate with each other in a variety of video, voice, and text based platforms and approaches it is not all positive. Issues such as cyber-bullying, self-esteem, and mental health can all be impacted by the always-on, always-connected, and the feeling of always needing to view the curated images and lifestyle others are portraying on social media platforms. When evaluating how innovation may drive the creation of new products, services, or entire industries scenario planning or other types of predictive techniques must examine all aspects of how the technologies may be utilized and try to identify the negative and positive impacts then can have to individuals, demographics, or entire societies. To simply assume everyone will act in good faith when a technology is available is naïve and responsible invention, innovation, and future-casting should be honest about the nature of both the individual and the crowd and accept that their ideas or technologies will be misused. If the benefits to society are deemed to outweigh the negative impacts, it should be moved ahead, but if the benefits do not tip the scales in a positive nature, serious thought should be given to understanding why and how to mitigate these issues as much as possible.

References

Cox, J. (2010). Microsoft's mobile shakeup: Will it unleash Windows phone?: Microsoft CEO Steve Ballmer announces major changes in the company's entertainment and mobile device businesses. Network World (Online), https://coloradotech.idm.oclc.org/login?url=https://www-proquest-com.coloradotech.idm.oclc.org/trade-journals/microsofts-mobile-shakeup-will-unleash-windows/docview/347803690/se-2?accountid=144789

Edwards, B. (2018, April 12). The golden age of Motorola cell phones. PCMAG. https://www.pcmag.com/news/the-golden-age-of-motorola-cell-phones

Katt, S. F. (2007). Ballmer won’t iPhone home. EWeek, 24(4), 47.

Montgomery, A., & Mingis, K. (2021, September 23). The evolution of Apple's iPhone. Computerworld. https://www.computerworld.com/article/2604020/the-evolution-of-apples-iphone.html

Schwarze, M. L., & Taylor, L. J. (2017). Managing uncertainty — harnessing the power of scenario planning. The New England Journal of Medicine, 377(3), 206-208. http://dx.doi.org.coloradotech.idm.oclc.org/10.1056/NEJMp1704149

Wingfield, N. (2010, Mar 12). Forbidden fruit: Microsoft workers hide their iPhones; Steve Ballmer sours on Apple product; work for Ford, drive a Ford: [1]. Wall Street Journal (Online) https://coloradotech.idm.oclc.org/login?url=https://www.proquest.com/newspapers/forbidden-fruit-microsoft-workers-hide-their/docview/237971436/se-2?accountid=144789