Windows Mobile's future laid out by Microsoft's Robbie Bach

Microsoft’s Analyst Day is underway right now and Robbie Bach, President of the Enternaiment & Devices division just laid out the plan for Windows Mobile in the near futur. Here’s the full transcript (sorry it’s a bit long) :

Let’s move to question number two and talk about mobile and how we are going to make progress in the mobile space. Now, the slide that you see here, the marbles that you see on the fly depict volume for the latest quarter’s results based on the four or five largest guys in the marketplace. And the arrow across the bottom indicates sort of market position, let’s say, by who the target audience or the people who are generally buying those devices are.
The basic friends you have seen are Nokia has been leader in the space for a long time. As the market has shifted to smart phones, their share has declined in the smart phone space. They have particular challenges in the U.S. They have interesting things to work on and manage. Rim would have started on the left in the business space. It has actually grown their volume pretty successfully by expanding more into the customer space. Apple obviously relatively new, entered over the last 18 months but successfully building from the consumer side. And Google is small here because they only have one or two devices on the market. Plenty of rumors and announcements of things that are coming this fall. We will see how the marble grows in size over time.
For Microsoft, our success has predominantly been on the business side. And certainly we know that in the marketplace people no longer think about things as a business phone versus a consumer phone. They just want their phone, and the phone has to do very well for what they do in business and very well for what they do in their personal life. So our strategy has to be based on taking the success we’ve had in business and continuing to grow that and expanding that success across to consumer scenarios so we can both move that marble to the right as well as grow the size of the marble and gain share.
And when you think about this, this is not something that’s going to play out over three or six months. Smart phones today are about 15% of the total phone market. This is something that’s going to play out over the next three to five years. Certainly, there’s plenty going on now. I think there is definitely a lot going on next year, the year after that and the year after that. It will be a very competitive marketplace. One where we will have to work very hard to be successful but one that is very important to our strategy where we will invest to be successful in the future.
So let’s talk about the specific strategy itself. The fundamentals of our strategy are based on the idea of choice and selection. It is our view that one model, one type of phone is not going to build volume into that critical mass that we think we need to make the business successful. We have people who are going to want Qwerty keyboard, touch keyboard, big screen, people who want small screens. People who will make trade offs on battery life to do media. So it is our view we need to work closely with Samsung, LG, HP, HTC, Sony Ericcson and others to build a broad selection of phones with different price points and different functionality. You can see the phones on the slide here that we will be delivering in October when Windows Mobile 6.5 comes to market, you can see some of the that diversity. Different sizes, different screen sizes, different approaches for input. That’s the fundamental pillar of our strategy.
The second pillar of our strategy is around experiences. And if I have a critique of our phones today, it is that our experiences are very good in the business case. If you want to do email and outlook and connect to Exchange and move data around in that environment, we are actually quite good. But if you are in the consumer space, you want to do more browsing, more media, more video, our experiences aren’t as rich as they need to.
And starting with 6.5 and going forward we will expand dramatically and think about it as end-to-end experiences where Microsoft makes sure the experience starts from start to finish. So in 6.5, let’s just pick an example. You will see our browsing experience get dramatically better. You will have a very rich browsing experience on 6.5 devices that will give you access to more Web sites than you will be able to get to on an iPhone that will work actively and work well.
It really is a much better experience. We will have to continue to enhance that because the browser world is enhancing very quickly. That is an experience people expect to work and that’s just one example of many experiences that we’re building to expand in that area.
So choice inflection, great end in experiences. The third thing we will focus on is what I talked about in our core strategy around three screen and cloud innovation. Cloud innovation is very important in the space because people are always connected with their phone. And they always want to be able to have access to other things. And the cloud will be able to provide those capabilities.
The example in 6.5 is a new service we are providing called my phone which enables you to transfer media from your phone to the cloud and always have access to it. If you lose your phone, you haven’t lost all your data. Not only have you not lost your data but the cloud can help you find your phone. So there is a whole set of those types of services that we want to expand into and I think those cloud-based services brought to the phone as well as to the PC and the TV are going to be quite powerful.
Fourth element of the strategy is around the brand. And you will see on the slide it says Windows phone. We are going to invest and build on the brand of Windows phone. One of the challenges we had when we talk to consumers today is they see a Windows phone experience and they ask how do I get that and we haven’t had a — something to call it where we can say, go into the store and ask for a Windows phone. And that’s an area where we are going to invest in building. We will invest in that with our operators. We will invest in that with retail and invest in it with our own advertising money to make sure people understand when they see those types of experiences, that that’s a Microsoft experience delivered on a Windows phone. It may come from HTC, Sam sun, Sony Ericsson and others but they know it will be a great experience and they know what they will get.
The final part of the strategy is we have to do a better job executing and better job in operating our business. I think there is two areas I would like to highlight. The first of those is in our integration with hardware manufacturers. If you’re on a strategy that’s about choice and selection, you have to do a great job integrating with the hardware because all these experiences are about all the hardware and the software interact and then how that combination interacts with the cloud.
And to date we haven’t done as good a job as I would like in building the relationships and getting the right level of integration with our hardware and OEMs. So you will see us investing in that. We have already started that process. Obviously phones take time to develop, so that won’t happen overnight. But you are going to see a dramatic improvement between the integration and what we do in the software and what our hardware partners do on the hardware side.
The better part of the execution is strengthening the work. We have over the last 12 months done a significant investment from a people perspective. I am not talking about head count. I’m talking about quality talent of moving quality talent onto the team. People who have built successful businesses and Exchange. People who build successful businesses in our keyboard division, as part of Windows and moving them to Windows Mobile to make sure we have the best quality talent in the company working on this key initiative.
And those people are now in place. Windows Mobile 6.5 shipped within four days of its original ship date when we sent it to the hardware manufacturers. That’s a great performance in any market, and market where you are talking about phones, which is a very complicated release process, we are quite proud of that. I think you will see as we go forward into the future, see our execution rich both pick up and the quality of that execution rhythm improve. That’s the Windows Mobile strategy. It is about great experiences and selection. Those experiences will include connectivity of the cloud, connectivity to the PC and to other things and it is going to be about building the brand and better execution.
Now, in a way, you could think about that as bringing innovation certainly to the mobile phone. And we are definitely going to do that starting with 6.5 but in particular going forward. But we’re also doing that in other areas. When we think about innovation, we think about it in three parts. We think about it from a business perspective. So we want to innovate in the business model. That means figuring out how we build a better subscription business. Xbox love has done that well and we built it from scratch. How do we expand and broaden that. How do we do a better job in advertising on our properties and platforms? We have started that on Xbox. We need to do a better job of that across the rest of the business.

You can follow the live stream here

Intersting Q&A:

QUESTION: Thanks a lot. Robbie, on the mobile side, again, to come back there, two questions for you. Since you’re starting to see kind of PCs coincide with smartphone technology, MIDs and netbooks, and so on, does it make sense to have a mobile operating system to be part of an end-to-end Windows when you get to Windows 8? What do you think about that?

And then, second question, as 6.5 and 7 come out, clearly one of the weaknesses is, I think, it’s supporting too many platforms, so a real inconsistency of the user experience. Is there something you guys can do to focus the SKU count, for example, to stop that inconsistency?

ROBBIE BACH: Well, let me address the second one first, because it’s the more immediate question. Part of what I was trying to communicate in my strategy discussion in our work with hardware manufacturers, is that it’s not a SKU count problem in the sense that we actually do believe in diversity of phones. I actually like a lot of different styles and types of phones. It is: what is the underlying plumbing and architecture of each of those phones that we have to reduce?

Today there is just a plethora of diversity, much of which has nothing to do with what the user ever experiences. And so the focus with us with our OEM partners has been on really specifying what architectures we want to support, being very specific about what we want in the phones and want in every phone so that our software, instead of being lowest-common-denominator software, can be highest-common-denominator software because we know what’s going to be in every device. And you will absolutely see that show up in our devices going forward, and you will start to see consistency in what I will call architecture and plumbing.

Now, from the hardware manufacturers, this is actually a good thing, because it helps their cost base pretty significantly. And there are still tons of ways for them to innovate, so they can innovate on design. They can innovate on keyboards, they can innovate on graphics, they can innovate in a number of ways, so it’s a good thing for them.

Our operators actually like it as well because, from a testing perspective, today’s mobile environment is a real pain in the neck for them on their network because they have to test all these different configurations. But the core technology is the same. The testing goes faster. Products get to market faster. It’s better from a product support perspective. So, all that are things we absolutely are focused on and are driving and already well-engaged with both sets of partners on making that happen.

To your second question, today we actually already share components between what we do in the Windows space and the Windows Mobile space. You’re going to see more of that sharing continue over time, and you will see us accelerate that and do more of it as we can. Understand that historically that was tough, because the underlying architectures were actually quite different.

But to Craig’s point about GPUs and CPUs and the underlying chip architecture, as those get more similar, it absolutely makes it easier for us to share more. And you’ll certainly see that, whether it’s work we’re doing in a browser, work we’re doing on development tools, a number of other places where we will be able to do more of that sharing. That’s baked into our plan.