Quick thoughts: on Microsoft’s IFA announcements

Half the tech world is making announcements this week at the IFA trade show in Germany. A couple of other companies are making announcements elsewhere (Motorola today/tomorrow in Chicago, Apple next week in Cupertino). Samsung, Sony and other companies’ IFA announcements have received plenty of coverage, but Microsoft’s have flown somewhat under the radar, at least in part because there was no new flagship device. And yet I think there’s more significance in Microsoft’s IFA announcements than people realize. Here’s why.

Reconciling “devices and services”: a third way

There’s been significant discussion about how to reconcile Microsoft’s continued focus on both cross-platform services and making its own devices (this is a topic I’ve previously tackled here). The question has been: does Microsoft distinguish its services on the basis that they work just as well on any device, or its devices on the basis that its services work best on them? This week’s announcements suggest a third possibility: Microsoft will distinguish its own devices through commercial bundling of its services at attractive terms in a way others can’t match. For example, bundling in three months of Skype international calling with one of its new phones. We’ll see more of this sort of thing going forward both with Lumia smartphones and Surface tablets. Incorporating Nokia into Microsoft made this sort of thing much easier, and it will fully take advantage of that.

Smartphone positioning beyond low end remains challenging

Microsoft was smart to sit out this round of flagship phone announcements – Nokia’s flagships haven’t sold well anyway, but going head to head against new entrants from Samsung, Sony, Motorola, Apple and others seems particularly foolhardy. But Microsoft’s big challenge is that it’s been unable to establish a solid set of differentiators in the mid and high end, even as its “cheap, but still good” strategy makes big inroads at the low end. Its 500-series devices are its top sellers in almost all its major markets, and that’s useful for scale purposes, but it doesn’t help at the high end (and in fact may hurt if the Lumia brand gets a reputation for being a budget marque).

Branding strategy is confused but should be reconciled soon

The IFA announcements also highlight some brand confusion caused by the co-existence of the Nokia and Microsoft marques on the devices announced. The two smartphones are dubbed Nokia Lumia, while the accessories are the Nokia Wireless Charging Plate and the Microsoft Screen Sharing solution. The Nokia brand is supposed to go away soon except for low-end phones (since it belongs to the rump of the Nokia corporation), but that hasn’t happened yet. And yet Nokia needs to do more than just replace the Lumia brand – it ideally needs to reconcile its various hardware brands, at the very least Surface and Lumia.

Microsoft Screen Sharing has promise but not just yet

The Microsoft Screen Sharing device flew almost completely below the radar, but has in fact been heavily trailed for months. It’s a Chromecast equivalent, but at an Fire TV / Roku price point, and that’s its first big problem. But it’s symbolic in that it’s Microsoft’s first foray into the living room for non-gamers. The second big problem is that Microsoft has done very little to promote the Miracast support in its devices until this point, mostly because it hasn’t had a companion device to sell. But now that it does, the challenge will be educating existing device owners that their devices are compatible. Microsoft Screen Sharing may become a Google Cast / AirPlay equivalent brand which we’ll see show up in more places now, and I think Microsoft should absolutely play that up. But it should also cut that price significantly and/or enable carriers to bundle it for free with Lumia devices.

I’ll be publishing more on Windows Phone in the coming weeks as I have an in-depth report on the state of the platform coming shortly, though I may follow Microsoft’s lead in waiting until after the IFA / Apple hubbub dies down…