Oh my. No Plan B? Are you nuts?
Microsoft's Chief Financial Officer Peter Klein said at the annual Goldman Sachs Technology and Internet Conference in San Francisco that the company has no "Plan B" regarding the its mobile strategy. The news is surprising given that the Redmond company has yet to take a bite out of Apple and Google's slice of the mobile pie despite its efforts.
Sales of the Surface RT tablets have reportedly been lackluster since its debut in Q412, and the just-released Surface Pro may be slow to adopt due to its hefty price. Compared to Apple which sold 23 million iPads in the fourth quarter, Microsoft only sold an estimated 900,000 Surface tablets, if not less. The company hasn't released any real figures, but also hasn't disputed the current estimates.
If anything, Microsoft has seen a positive response from Windows Phone 8 which will likely drive Microsoft's mobile revenues for some time. But according to Gartner (which provided the Surface numbers), Windows phones only account for 3-percent of the global smartphone market. Google commands 70-percent with Android while Apple falls in a distant second with 21-percent via the iPhone.
That said, it's understandable why anyone would ask Microsoft if the company has a backup plan in case its current strategy fails. "It's less 'Plan B' than how you execute on the current plan," Klein said when asked about a backup. "We aim to evolve this generation of Windows to make sure we have the right set of experiences at the right price points for all customers."
Klein said that Microsoft is working with hardware vendors to make sure Windows software is available on all form factors ranging from smartphones to tablets to hybrids to desktops. "It's probably more nuanced than just you lower prices or raise prices," Klein added. "It's less a Plan B and more, how do you tweak your plan, how do you bring these things to market to make sure you have the right offerings at the right price points?"
Microsoft made a smart move by bringing Windows 8 over to ARM's architecture which currently dominates the mobile sector. The drawback is that consumers can't install their favorite PC programs on an ARM-based tablet, but Windows RT devices will likely be cheaper than their x86-based counterparts. However what Microsoft needs to do now is bring the Surface and/or Windows brand into the 7-inch tablet market, and promote it as an extension to the desktop.
Klein also briefly talked about Microsoft's investment in Dell, saying that the Redmond company was merely supporting the PC ecosystem which is currently being led by Lenovo, HP and Dell.
"We have a long history of participating and supporting the ecosystem and that takes different forms. Oftentimes it takes the form of co-marketing, sometimes in helping with development," he said. "In a very dynamic industry, our ability to support the ecosystem - particularly the ecosystem that is innovating on our devices and platforms - is a good thing and something we will continue to do."