February 24, 2014 was not a good day for news about Microsoft. Ford announced its intention to stop using the Windows Embedded Automotive 7 technology. On the same day, Dave Their published an article on the Forbes website, Xbox One Gets Its First Price Cut. Just 5 days earlier, February 19, 2014, Farjad Manjoo wrote a critical review of the new high end Nokia Lumia Icon Windows Phone in an article titled This Phone Is Great, Till It’s Time to Add Apps.
On the loss of Ford as a customer for Windows Embedded Automotive 7 Technology
I think this loss is a very big deal. While I’ve held onto a skeptical position on the safety of the consumer demand for internet-connected automobiles, I don’t doubt the very high level of consumer interest in these features. One way or another the consumer will drive manufacturers to maintain Internet connectivity features already in place in automobiles (mostly luxury brands, though the features are sure to trickle down to economy models, sooner or later), and demand the set be expanded. NVIDIA is doing well in this market. Google wants its share, too, and recently announced a joint marketing effort with NVIDIA for smart car technology development. Finally, Microsoft’s platform was displaced, by QNX from Blackberry. With this win, Blackberry looks to be making good on comments by its new CEO, John Chen, to get business back on track around its “enterprise” software products.
Xbox One Price Cut
I’m afraid Microsoft has not done a good job of promoting the Xbox One to the consumer Home Entertainment Center market. The device looks, to me, to be all about gaming. Home entertainment market consumers respond to a different type of market promotion, which, in the case of the Xbox One, appears to be largely non-existent. The Xbox One may be a great home entertainment center, but the marketing communications team for the product needs to do a better job communicating this message to the market.
Hobbled Launch for Yet Another Nokia Lumia Windows Phone — This Time the Icon
The key handicap plaguing the Nokia Lumia Icon, noted by Farjad Manoo, is nothing new. The “lack of Apps” story has been going on for far too long. Perhaps Paul Allen was right, back in November, 2013, when the Chief Investment Officer of Mr. Allen’s Vulcan Capital was quoted, by Dara Kerr in an article titled Microsoft co-founder Paul Allen likes idea of company breakup, as recommending Microsoft spin off the its “consumer businesses”: Xbox One business, Bing, and can we say, as well, its Windows Phone effort? If financial incentives are required to get the App developer community going building Apps for Windows Phone, then shouldn’t Microsoft either provide them, or retreat from the market?
Each of the above points may foretell declines in sales, as well as profit margins, for Microsoft’s consumer market offers over the next few quarters.
Disclaimer: I’m long Microsoft and NVIDIA.
© IMB Enterprises, Inc. & Ira Michael Blonder, 2014 All Rights Reserved