Windows Phone 7 is a new beginning for Microsoft, and at the same time, an ending. The epoch of the "slap our software on any old hardware" open platform is dead.
There's a spectrum of hardware and software integration. At one end, you have the likes of Apple, RIM and Nintendo who create software and design the hardware that it runs on. It's controlled and tightly integrated top-to-bottom. At the other end, you have the classic Microsoft model—they just create the software, and a hardware company like Dell or HTC or Joe's Mom buys a license to install it on their machine, which they sell to you. (FWIW, Microsoft would argue they're in the middle, with open source, that is, "unstructured openness," down on the other, wild 'n' crazy end.) In the center, you have a mix—there's still a split between software and hardware, but one side dictates more stringently what's required of the other side, or they work more closely together, so it's sorta integrated, but sorta not.
The Philosophy of Sorta Open vs. Sorta Closed
The integrated philosophy is summed up pretty nicely by the legendary Alan Kay, "People who are really serious about software should make their own hardware." It's about a better experience. Granted, today that mostly means "design their own hardware," since very few companies actually make the hardware they sell. Take a MacBook or iPhone—sure, Apple made it pretty, but it's actually manufactured by a company like Foxconn to Apple's specifications. HTC and Asus, on the other hand, do design and build their own hardware, not just for themselves, but for other companies. (For instance, HTC built Sony Ericsson's Xperia X1 and Palm's Treo Pro.)
The other side is typically couched as a kind of openness offering choice which drives competition, and therefore, pushes innovation, as Steve Ballmer puts it: "Openness is critical because it is the foundation of choice for all of our customers…choice, which will drive competition, which is ultimately the engine of innovation and progress." The other argument is that it creates a bigger platform for more innovation to happen on, since more stuff's running the same software. It's the benefit of there being hundreds of different PCs that run Windows, versus a handful that run OS X: Sheer numbers.
As for the nasty things they say about each other, the top-to-bottom guys say that the hardware-software split leads to a crappier product, because one single company's not in charge of the experience, making sure every little bit works. Like how multitouch trackpads universally blow goats on Windows laptops. Who's fault is that? Microsoft's? The guys who built the laptop? Advocates of choice say that top-to-bottom integration kills innovation and hardware diversity, all the while making systems way more expensive. If you want a laptop that runs OS X, I hope you like chiclet keyboards and paying out your gnads.
Those are the basics. Microsoft, throughout its history, has mostly made software for other people to stick on their hardware. Apple has, one dark period aside, basically always designed the hardware for its software, and sold them together. Yin and yang.
The Coming Change
The Entertainment & Devices division of Microsoft, with its "Chief Experience Officer" J. Allard, is different from the rest of the company. It made the Xbox. The Xbox had—waitaminute—Microsoft software running on Microsoft hardware, which you bought together as a package. Why? Because a gaming console wouldn't work very well as an open system, sold like a desktop computer. People buying a gaming console expect a single, integrated experience that just works. This is a historical truth: Since the NES, Nintendo, Sony and anyone else entering the business who you've actually heard of will only build closed boxes.
E&D also made the Zune. Why? Well, Because Microsoft's open hardware approach bombed in the portable media player business. Miserably. The PlaysForSure ecosystem was totally schizo—effectively a multi-layered DRM released by a group whose responsibility was media formats and players for the PC. Microsoft handed out DRM, codecs and syncing software, and a partner would (pay to) make the media player, typically with third-party firmware in the middle. The players never "played for sure." They worked, but only if you were lucky and managed to sacrifice the proper number of goats under the correct cycle of the moon on the first Saturday after the second Thursday of the month. At the same time, the iPod's top-to-bottom, seamless ecosystem proved itself: It owns 70 percent of the MP3 player market. Microsoft realized the only way to compete was to make the software and the hardware—alienating all of their so-called "hardware partners" in the process. So, Zune. Which single-handedly slew the undead remnants of PlaysForSure and its ilk, when it wasn't compatible with Microsoft's own ecosystem.
But these were exceptions. They're consumer products. Entertainment experiences. Niche products, in Ballmerspeak. Not computers. Windows Mobile started life as Pocket PC because it's a computer you shove in your pocket. So Microsoft played it like it played the computers on your desk, an approach that worked pretty gosh darn well for 'em there.
The Long Death Spiral of Windows Mobile
You can't really exaggerate how PC-minded Microsoft's approach to mobile was. The ecosystem was wild and messy, getting a little more organized with the Pocket PC 2000 OS. Pocket PCs actually did adhere to a generic set of hardware specifications put out by Microsoft (not terribly unlike their Project Origami for UMPCs some years later), but there were tons of devices from tons of manufacturers, along with multiple editions of the Pocket PC software—like the Phone Edition, which tacked phone powers onto PocketPC's PDA core. With Windows Mobile 6, Microsoft stopped calling the devices Pocket PCs. And you know where things went from there.
Smartphones—of which about 180 million were sold last year according to Gartner—are what Steve Ballmer calls a "non-niche device," which to him, are things like TVs, PCs and phones. So the Windows model still applies, right? That's the approach Microsoft took for years. So, just about anybody who could pay for the license could shove Windows Mobile onto their phone. Some people did great things with it, like HTC's HD2. Other people did less awesome—okay, shitty—things.
What's amusing is that, despite the Windows Mobile model clearly not working that well, Google came in with Android and applied basically the same strategy, except Android's actually free to vendors—and if they agree to certain conditions, they can include Google's applications and be branded as "Google" phones. Not surprisingly, the same strategy's leading to the same outcome—some people do awesome things, like the Hero. Some people commit atrocities. Some software works on some Android phones and not on others. Fragmentation amok.
The philosophy at play is the same: Open platform, device choice.
Windows Phone 7 Series ends all of that for Microsoft. (Not so coincidentally, it comes out of E&D, the same division that created Xbox and Zune.) Other people still make the hardware, but Microsoft's got an iron grip on the phone, and how software and hardware come together, more so than ever before.
When An Open Door Closes, Someone Pries Open a Window
Ballmer phrases it as "taking responsibility for the experience." What does that entail? A Windows 7 Phone Series…phone must have a high-res capacitive 4-point multitouch display, 5-megapixel camera, FM radio, accelerometer, Wi-Fi, GPS, set CPU and GPU benchmarks, and even a particular button set that includes a dedicated search button. Very little is left to the hardware guys. The shape of the phone, and whether or not it has a keyboard, basically. And Microsoft's only partnering with a select group of OEMs—Joe's Mom can't build Windows Phone 7 Series phones. (Yes, I'm going to keep writing the OS's entire name out because it's a dumb name)
This level of involvement is a radical break for Microsoft. It's them admitting that the old way wasn't good enough. That it was simply broken. That their partners effectively can't be trusted. They have to be told exactly what to do by Microsoft, like goddamn children. It's Microsoft finally saying, "While we can't make our own hardware"—since phones are a mega-category, that could limit growth and once again piss off partners—"we're serious about the software." Coming from Microsoft? That's huge.
It's a necessary step, because Microsoft's position in mobile is way different from its position in desktops, way different from the position it expected to be in. They're not the dominant OS. They don't lord over a vast ecosystem, commanding 90 percent of the smartphones on the planet. They're just another competitor. Meaning they have to be different, and compelling, in a much different way than if their expectations had played out. If Microsoft was in the same position in mobile as they are on the desktop, do you think they'd be shitcanning the entirety of their mobile platform? Nope. They'd be expanding the ecosystem, working to make it more ubiquitous, more entrenched. Not a breath of fresh, rainbow-colored air.
Still, Microsoft isn't exactly alone. Google may be shedding Android licenses like cat hair, but they're covering their asses by following this same tack, too. I'm talking, of course, about the Nexus One. Heralded as the Google Phone. It's the Anointed One, the truest of all Android phones. And you know why? Because Google told HTC how to build it. Google designed the phone themselves to be the exemplar of Android. It's basically saying no other phone was good enough. Not even the Droid, released just two months before it. Google had to make it them goddamn selves. That was the only way to achieve Android perfection.
An interesting side effect is that it puts the company who made that phone, HTC, in a fairly awkward position. HTC and Asus, as I mentioned earlier, are unique: For years, they slaved in near-anonymity, making phones and PCs for the brands you're familiar with. HTC, at one point, made 80 percent of the Windows Mobile phones out there, which were sold under monikers like the T-Mobile Dash. Now, they're busting out with huge campaigns to be on the same brand level as the Dells and Palms of the world. They even design their own software, which is increasingly how these companies distinguish themselves, since everybody's using basically the same guts in everything, from laptops to phones. While they obviously still make money, these OEM superstars are effectively re-marginalized, hidden by the bigger Windows brand.
Worse off, still, it would seem would be the brands who don't make the hardware, the Dells of the world. They're a middleman in the worst sense—their brand is squeezed, and they're passing on guts made by another company entirely. It's almost like, "Why do you even exist?"
Assuming Microsoft does get a toehold with Windows Phone 7, the ecosystem might loosen up. It might have to, in order to expand outward. Meanwhile the march of random third-party Android phones will keep on stomping through, but make no mistake: Microsoft and Google, former champions of the open platform, have basically admitted that the only right way to build a phone is to do what their chief rivals Apple and RIM already do: Design the software and hardware yourself. Now, they're serious.