Why ecosystems reallly matter


At the weekend I decided to buy a TV Series. I watched all but one on Netflix but I wanted to binge watch. I took out my (Android) smartphone and used the Google Play Store to buy a series. Later I used the phone to send the series to my TV via Chromecast.

After this I reflected. Three years ago I would have rented video using my Windowsphone and watched it via an Xbox.

Today I use Spotify for my music instead of Xbox Music, primarily because Spotify has a family plan.

My work is all in the Microsoft environment but as a consumer I have an Amazon Echo and my entertainment choices, except for gaming, have moved decisively outside the Microsoft ecosystem.

My wife has a Lumia 950 and pretty soon she will probably want to upgrade he phone. She will probably find it easier at that point to go Google. Going Google is a frictionless processs.

When Microsoft abandoned the first party smartphone market it also headed dramatically towards losing the ecosystem war. They have an app for everything but customers are being nudged towards Google and Apple solutions.

Ecosystems matter, For consumers it seems Microsoft doesn’t have one.

Comments (7)

7 responses to “Why ecosystems reallly matter”

  1. TheJoeFin

    For Microsoft the financials didn't work out. It seems like Microsoft has been rallying around products which have a more definitive future like Cortana, Azure, Xbox, Windows, Visual Studio, and Office.

    Windows 10 Mobile was a pain for Microsoft, a pain for developers, and a joy for a teeny tiny percent of consumers. It just didn't make sense to keep going. I bet Groove was the same way. Microsoft was keeping this service on life support but it was clear that the music streaming space was not profitable, very crowded, and Microsoft had nearly 0% of the market. Companies need to be realistic about their products, unfortunately that means shutting some projects down.

  2. hrlngrv

    Even assuming 2-3 times the per user profits from Windows phone users, with less than 2% of the worldwide smartphone market, Windows phones plus Windows/MSFT Store were never going to generate US$1 billion annual profits for MSFT. Xbox also doesn't generate US$1 billion annual profits, but it's #2 in its market, something Windows phones weren't going to become because Google and Apple weren't going to make the boneheaded mistakes MSFT's software rivals in the 1990s did.

    Had MSFT been more aggressive, their margins from phones and Store would have been thinner. I figure there was no plausible scenario in which MSFT mobile + Store became profitable or at least #2 in market share. #3 and low, erratic profits isn't something MSFT tolerates.

    How much should MSFT have been willing to lose to become a strong (roughly 10% market share) mobile contender? I figure it would have cost them about US$20 billion (US$100 per phone for 200 million phones). When MSFT hadn't reached 5% worldwide by the end of 2014, the choices became little more than LOSE A LOT to gain user share or GIVE UP. We know which MSFT chose.

    • ponsaelius

      In reply to hrlngrv:

      Microsoft had a 10% market share in most of Europe. The USA was the weak market - the one they should have understood.

      Who knows what would have happened if they had let a small team develop just a couple of models of phone per year focussing on their strong markets.

      I don't know. It's an open question. What is sure is by a strategy of zero market share the ecosystem died too.

      • hrlngrv

        In reply to ponsaelius:

        Windows Phone had new phone sales over 10% market share in, IIRC, 7 European countries for a few months in 2013 or 2014, and it exceeded 10% user share in Russia at one point. It never came close to 10% market share nor 5% user share across Europe as a whole. Well, at least not if Spain, Turkey and former Warsaw Pact countries were included in Europe.

  3. Chris_Kez

    "Three years ago I would have rented video using my Windowsphone and watched it via an Xbox."

    This why I Vudu, which is platform-agnostic. If I were a big music listener I would use Spotify.

  4. Tony Barrett

    Your comments sum up Microsoft's position in the consumer market. Except for the Xbox - it's gone. I don't count Windows 10 as a 'consumer' device. It's just a PC, and a type of device that's getting used less and less in the consumer world. MS may be trying to stay relevant via the backdoor by trying to get their services onto Android and iOS, but that's not really going to gain much traction, except with MS fanboys. I personally think, whatever type of device MS comes up with next, it won't make any difference. Windows on ARM? Too little, too late. Mixed reality? The general populous just aren't interested. Invoke? What, seriously? MS are just done in the consumer space. They've been out-thought, out-maneuvered and out-gunned. Even the Xbox One X is just MS getting back at Sony. It's not an answer or a solution. It's just a p**sing contest. Playstation will still continue it's path, and Sony now know exactly what they need to do with the PS5. I doubt they're that worried.

  5. Jules Wombat

    Microsoft did not abandon the first party smartphone market, the consumers did it for them.