CNET is reporting how Microsoft is setting up a "club" for users on AT&T Wireless of an MS-powered Motorola smartphone. AT&T are being used for all those messy, capital intensive businesses here: network buildout, customer acquisition, billing and care.
You don't need to be a genius at business strategy to see the Redmond play here. Build up a useful user base, and have marketing access to them, with or without the carrier's permission. Then float on the rising IP tide: sell these people nicer IM clients (tied into MSN, naturally); sell them an enhanced push-to-talk client (would Sir care for a Passport account?); and then onto wireless VoIP somewhere later in the decade. Just wait for networks to get better and Moore's law to take care of smartphone handset costs.
I'm looking forward to seeing the carriers sweat when MSN users magically seem to be able to make unmetered phone calls to each other. At each stage, people pay a bit more Gates tax for the device and it's OS. In return they get free service over IP, bypassing the carrier's toll booth. And the carrier gets all the cost of increased usage of its all-you-can-eat wireless data plan.
Microsoft needs a plan to replace the inevitible decline in growth of Windows and Office revenues. As has been noted elsewhere, horizontal moves into related platforms (phones, XBox, interactive TV, embedded, etc.) have failed to turn a profit. But sucking the remaining profit pool out of the trillion dollar telco industry just by turning out some nifty software sure looks like a juicy target. They have the patience. Do any of the carriers have the guile to deal with the threat?
UPDATE: Similar thoughts over at Techdirt.
Posted by Martin Geddes at 11:27 AMTrackBack URL for this entry:
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