Microsoft's Ad Campaign: Not Just for End-Customers but for the Ecosystem

The Fall seasons opens with a new advertising campaign.

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At a first blush, one may think this is just about getting end-consumers to not give up on Windows, That is partly true. It is equally about keeping its business network (ecosystem) excited and committed to the Windows platform.  We have come a long way from the tight network of Wintel (Windows and Intel) architecture embraced by companies such as Dell, HP, Sony, Adobe and others.  Intel chips power Macintosh computers. Sony competes against Microsoft. Dell and HP are looking for ways to add their own flavor to their branded machines. 

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Business Week ran an interesting story recently about the activities within HP. 

HP's "customer experience group"—formed nine months ago and headed by vice-president Susie Wee, a former director in the company's research labs—is developing software that can complement Microsoft's Windows operating system to make it accessible to more users. Wee's team is tackling touchscreen technology and software that lets users circumvent Vista to watch movies or view photos, as well as transferring ideas from HP's Halo videoconferencing system to mass-market products. "Our customers are looking for insanely simple technology where they don't have to fight with the technology to get the task done," says Phil McKinney, chief technology officer in HP's personal systems group. "For us, it's about innovating on top of Vista."

 It went on to say that:

Others in HP's PC division are exploring the possibility of building an HP operating system for mainstream desktop and notebook computers based on the open-source Linux system, which competes with Windows, say people familiar with the company's plans. The goals may be to make HP less dependent on new releases of Windows, and to strengthen HP's hand against Apple, which has gained market share with computers that boast innovative features and inspire a loyal following of users. 

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This points to the inevitable tension about the roles of different entities in an ecosystem over time. During 1995-2005, Microsoft and Intel orchestrated the ecosystem and others played supporting complementary roles.  Dell and HP were happy to ride the wave of network effects enjoyed by the Windows platform--acting as 'branded resellers' of Wintel machines (assembled through Asian contract manufacturers).  Now, that Vista has received rather lukewarm support, they are examining ways to create differentiation on top of Vista.  If that differentiation sticks, then they can run Linux or any other variant. If that differentiation is marginal, they are consigned to be branded resellers within the Windows ecosystem. 

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Networks are dynamic and roles continually shift and evolve. Examining alternative trajectories of network evolution is key to crafting winning strategies for the network era.

Symbolic versus Substantive Support Within Ecosystems

Over the last two days, two news items caught my attention: (1) Nokia buying out partners in the Symbian venture to make the software available free; and (2) Google is delaying the launch of Android-powered mobile phones. There is a connection between these two stories: it's about the fundamental differences between symbolic versus substantive commitment to ecosystems in network-based competition.
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Nokia--which had 48% equity stake in Symbian--clearly wanted to make Symbian OS to be made available free to developers and operators so that they can be persuaded to be part of the Symbian Foundation ecosystem. It paid $400 (plus) million dollars to the other equity holders in Symbian and then is spinning it off into an open source foundation. Other equity holders may still support Symbian but nevertheless took their share of Symbian in cash from Nokia. It is not that the equity holders collectively pledged to change Symbian from a profit-motivated entity into a not-for-profit foundation. That was Nokia's call. They were symbolically supported by many of their erstwhile shareholders. Two quotations that I have reproduced from the Press Release is illustrative.

SonyEricsson:

The complete, consistent platform that the Foundation plans to provide will allow manufacturers to focus on their unique differentiation at a device level” said Dick Komiyama, President of Sony Ericsson. “Sony Ericsson believes that the unified Symbian Foundation platform will greatly simplify the world for handset manufacturers, operators and developers, enabling greater innovation in services and applications to the benefit of consumers everywhere.

AT&T:

Mobile phones have turned into sophisticated multimedia computers and smart phones continue to grow in popularity," said Kris Rinne, Senior Vice President of Architecture and Planning at AT&T. "The Symbian Foundation will reduce fragmentation in the industry and holds the promise of incorporating leading technology and the most mature software into a unified platform for the entire industry. This will create an environment that will encourage and enable developers to build compelling applications that will positively affect our customers' lives and support AT&T in offering its differentiated services to consumers.

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Such symbolic support is welcomed to signal commitment from the ecosystem for the new idea. But the real strength of the ecosystem lies in the substantive support provided by the ecosystem members: How many new models will Sony Ericsson design and launch with the Symbian OS? What will be the share of Symbian OS within Sony Ericsson's portfolio in 2009? 2012? Similarly, where will AT&T place Symbian-operated mobile phones relative to RIM (Blackberry), WindowsMobile (Microsoft), Apple iPhone (remember that AT&T was an exclusive, first-of-its-kind launch partner for Apple iPhone in 2007) and Palm?
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Why is this distinction relevant? For that, let us turn to Google and Android. On November 5, 2007 Google announced the launch of Open Handset Alliance with 34 members. Two companies are common with the Symbian Foundation--Motorola and NTT DoCoMo.

It will be interesting and worthwhile to watch how these two companies balance their commitments to Symbian and Android.
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Google's initiative with Android is a classic example of network-based competition. Wired Magazine ran a story recently about Google's Android. This paragraph from the article is illuminating.

So far, Android has been able to persuade only T-Mobile and Sprint Nextel to join the Open Handset Alliance. Neither is a surprise: T-Mobile partnered with Rubin on the Sidekick, and as one of the smaller carriers it's more willing to take risks. Sprint, suffering from massive consumer churn and almost junk-rated debt, seems game for anything that might help. But the two biggest players, Verizon Wireless and AT&T, have passed. "There wasn't anything viable we were willing to entertain," says Verizon Wireless spokesperson Jeffrey Nelson. This spring, the carrier even backed an Android competitor, an open source consortium called the LiMo Foundation.

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Google needs to use revenue-sharing to convince network operators to join the Android ecosystem since 'free software' does not seem to have done the trick. Nokia is catching up to the free software rule-of-the game.
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This ecosystem is evolving and many different players are jockeying to be the orchestrator of core mobile business models. In such ecosystems, we need to see more than symbolic quotes on press releases. We need to see who commits substantively. We need to see how Motorola and NTT DoCoMo navigate the competing requirements from the different ecosystems. We need to see how developers navigate the pulls from different OS such as Apple iPhone, Symbian, Microsoft Windows Mobile and Android. When will Verizon and AT&T support Android? How significant will be their support? Only when we see the actual moves, we will know who is leading and who is lagging. This network-based competition is just starting out; 2009 will be just the beginning but we will see who is gearing up for the long haul and who has fallen by the wayside.