Digital Wars by Charles Arthur

Author:Charles Arthur
Language: eng
Format: epub
Publisher: Kogan Page

Chapter Five

Smartphones

Mobiles and Microsoft

Pieter Knook started working at Microsoft in October 1990. Previously he had been running a small business in the UK offering local area networking to let PCs (running MS-DOS; Windows 3.0 had only just been introduced, and wasn’t yet widely used) connect to each other. The business grew, and was sold: ‘I then had the choice of staying but I was attracted to Microsoft because of its crazily audacious goal at the time to put a PC on every desk and in every home,’ he says. ‘The “on every desk” seemed vaguely sensible, the “in every home” seemed completely stupid because at the time they were so expensive and it was completely unrealistic. PCs cost five thousand pounds; they were geeky tools.’ In addition, none of his friends had heard of Microsoft; they’d heard of Lotus, or WordPerfect, or the word processing program WordStar. ‘So I joined Microsoft, because I thought we could change the world.’1

In 1997 he went to run Microsoft’s Asia business, and lived in Tokyo for four years, where he was astonished by the impact mobile phones were having. Japan was embracing i-mode, which allowed rapid data transfer; for some Japanese, life revolved around constant internet updates on their i-mode phones.

Knook was an enthusiastic convert, and when he returned to Microsoft’s headquarters in 2001 Steve Ballmer gave him the task of creating a sales force to sell Microsoft’s mobile offerings, generically called Windows Mobile. The opportunity was clear: mobile ‘had the same attributes potentially as [the PC as] a platform – we’d sell a piece of software to run on a range of different pieces of hardware, upon which you would then layer other pieces of software, like Office for Mobile, or Database or whatever.’

Microsoft might have stumbled originally in getting on to the internet with PCs, but it was ready for the mobile internet.

The sales model for mobile phones is crucially different from that for PCs, because the infrastructure required for making mobile calls – the grids of cell towers, the authentication systems, the billing – have to be handled by a mobile operator. They are the gatekeepers of what gets on to their network: if your mobile operator blocks your mobile phone’s unique IMEI number, you’ll never be able to make a call. Similarly, for phone manufacturers, if mobile networks don’t take their products, they’ll never have a customer base. By contrast the PC model, where direct selling, retail sales and corporate accounts sit side by side, offers multiple ways to reach customers.

By January 2007, the company that was best at pleasing the mobile operators was Finland’s Nokia (pronounced, Finns insist, NO-kee-ya). It was the world’s biggest mobile handset maker, measured by revenue and volume: in the last three months of 2006 its mobile phone revenues were €7.1 billion, 60 per cent of the group’s total revenue, from selling 106 million handsets worldwide. For the year, it had sold 347 million handsets.2

It had also pioneered the idea of the ‘smartphone’ – a

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