Microsoft “Too Invested to Let Apple Win” Mobile Gaming

| Analysis

Microsoft isn’t planning to just let Apple walk away with the mobile gaming space, what with its iPhone and its iPad and iPod touch. No, Big Redmond is “very serious” about Windows Phone 7, and Kieran Connell, Development Lead for Microsoft Game Studios, said at the Evolve conference in London Wednesday that there are too many players in the market to let Apple take that market without a fight.

“I think there are too many people with too much money invested to let Apple win in terms of flooding the entire market,” Mr. Connell told listeners, according to a report from GameIndustry.biz. “You’d better believe Microsoft is very serious about Windows Phone 7, and protecting their part of the business. It’s going to be an interesting time - that’s for sure.”

What part of the smartphone business Microsoft has to actually fight for at this point wasn’t mentioned, but the company is trying hard with Windows Phone 7, which was released earlier this Fall.

At this point, however, Android is the largest smartphone platform (43.6% market share) in the U.S. in terms of of the number of devices being sold, while Apple has the single most popular smartphone device and a #2 position in operating systems (26.2%). Research In Motion’s BlackBerry is #3 (24.2%), while Microsoft is a distant #3 with 3% of the market.

On the global stage, Gartner said in September that Nokia’s Symbian is still the dominant #1 smartphone OS (40.1%), followed by Android (17.7%), BlackBerry (17.5%), and iOS (15.4%), in that order. Windows Phone (as a whole) is #5 with 4.7% of the market.

Those figures are for the entire year, however, and both Android and iPhone surged throughout the second half of the year. In the September quarter, for instance, Apple shipped 2 million more iPhones than RIM shipped BlackBerrys, That doesn’t change the fact, however, that Microsoft is all but a bit player in the smartphone market.

That means the company is not defending its turf, but trying to assault a market dominated by two other players, Apple and the Open Handset Alliance (an umbrella group for the Android platform). When it comes to apps and games, Symbian and Windows Mobilephonewhatever are hardly even also-rans.

Of course, it would be foolish to discount Microsoft from anything, especially the gaming market. Big Redmond has always taken care of developers better than every other company, both in computers and in the gaming console business. With the Xbox platform, for instance, Microsoft was seen as a longshot, but the company quickly established itself as a major competitor (thanks in large part to Bungie’s Halo, but that’s another story), surpassing Sony’s PlayStation platform.

At the same time, however, the company can throw all the money it wants at mobile gaming and it won’t matter much if no one buys Windows Phone 7 devices, and there’s simply no indication yet that this will happen. Zero. Nada. The rules of the smartphone market simply aren’t the same as for the computing or console markets, and Microsoft’s mobile offerings have never been taken all that seriously in this space.

The company is in for the fight of its corporate life if it wants to see the smartphone market become a four way race between itself, Android, iOS, and BlackBerry, and this could be one of the first major and irrevocable defeats Microsoft has faced. Android and iOS are that much better and that much stronger. Heck, Research In Motion has a better chance of gaining (back) significant market share than Microsoft does.

Comments

John Martellaro

Anyone remember this assessment from Steve Ballmer?

http://www.youtube.com/watch?v=BcUicfqelC8

“Let’s see how the competition goes.”

“I like our strategy.”

geoduck

there are too many people with too much money invested to let Apple win

He does know that the 1990s have ended doesn’t he? Apple isn’t their opponent any more. OpenSource and Android are.

When it comes to apps and games, Symbian and Windows Mobilephonewhatever are hardly even also-rans.

And I don’t see this changing. They can make all the flashy people-who-like-to-use-their-phones-are-pathetic commercials they want and it won’t change the equation. This ship has sailed and MS missed the portable boat. In 1995 MS could wait for a new market (the internet back then) to develop and then buy their way in. Those days are gone..

Big Redmond has always taken care of developers better than every other company

Not sure I agree with that. It’s what made Monkey-Boy’s “developers!” rant so funny. I’ve known many developers that got to dread even SP changes to Windows because they knew they’d have to rewrite stuff. MS has a history of making changes and then blaming developers for not updating drivers, code, devices,  etc.

The rules of the smartphone market simply aren?t the same as for the computing or console markets

MS had a special environment and business model in the ‘90s with the desktop PC and Servers. That has failed to translate to any other market.

this could be one of the first major and irrevocable defeats Microsoft has faced

Has MS had any big wins since Ballmer took the helm. Maybe Gates saw this coming and got outta’ Dodge while he still looked like a genius.

honkj

“surpassing Sony?s PlayStation platform.”

you need to re-look at not only PlayStation 2,  but playstation 3 and Wii…

you are way off in terms of market share, 

http://www.gamasutra.com/view/news/28709/Analyst_PlayStation_3_Captured_31_Percent_Market_Share_In_Q1_Will_Grow.php

also MSFT had a lot invested in the Zune and plays for sure,  look how that is turning out…  they still are investing in Zune…  although no one knows what it is anymore..  ask a kid what a Zune is.

geoduck

IMO the big loser will be RIM and the BlackBerry. I work in a mostly Windows shop. A few years ago it was an all BlackBerry shop as well. (This is Canada, RIM is a Canadian company so there was a good deal of ‘home team’ bias.) In the last couple of years however, as they’ve come up for renewal most of the users have gone over to iPhones and a smaller number to Android. I can think of only a couple of people that have gotten a new BB.

In many ways I think RIM is in a worse position than MS. RIM was dominant and assumed they always would be. They missed the boat by years but don’t have the deep pockets of a Microsoft to try to catch up. They also don’t have the background infrastructure to try to leverage (MS desktops, MS servers, so why not an MS phone…) to hold onto market share. I wouldn’t be surprised to see in a couple of years the BB drop into the low teens, just ahead of WP7.

Daveb

I see RIM as the AOL of smartphone makers. They are too attached to the market as they invented it rather than the market as it is being reinvented. They are emotionally attached to making the market in their own image, rather than trying to understand where the users are driving it. This smug attitude has brought them down and it will continue to bring them down as they relent/reinvent too little too late. # 3 spot will become wide open as RIM declines and their are no guarantees for MS and RIM. I see a fragmented market for some time before a strong # 3 manufacturer emerges and the market matures into the classical big three pattern.

Bosco (Brad Hutchings)

He was obviously misquoted. He meant to say:

?I think there are too many people with too much money invested to let Apple win in terms of flooding the entire market that isn’t Android.”

There, that’s better.

Tiger

I for one say let them have it. Gaming for Apple is an unnecessary distraction. Their focus has been splintered many times over and they should leave it to other developers. Concentrate on your ecosystem, or it will get away from you altogether.

Martin Hill

Bryan,
I am surprised you’ve fallen into the same trap far to many other commentators have of not including all iOS devices in your numbers when you compare Android to iOS, particularly in an article about development platforms.

Here you are talking about Mobile Gaming and you ignore the 45 million iPod Touches and 7 million iPads sold?  That is just crazy!

As such, Apple has the largest share mobile operating system wise.  Commscore counts tablets like the Dell Streak and the Samsung Galaxy Tab, but does not include the iPod Touch or the iPad.

With an installed base of 157 million iOS device, Apple far outstrips Android’s 30-40 million worldwide. 

-Mart

Martin Hill

?I think there are too many people with too much money invested to let Apple win in terms of flooding the entire market that isn?t Android.?

There, that?s better.

Nope, Apple owns the mobile games market:


The Android OS is severely lacking in big name game titles released by all of the largest mobile game publishers:
* Gameloft ? 136 games for iOS vs 12 games for Android
* Capcom Mobile ? 27 games for iOS vs 4 games for Android
* EA ? 74 games for iOS vs 0 for Android
* Ngmoco ? 42 games for iOS vs 0 for Android
* Pangea ? 24 games for iOS vs 0 for Android
* Popcap ? 5 for iOS vs 0 for Android
* ID’s new game Rage is only being produced for iOS

And total number of games:
iOS = 38,000 vs Android = 13,000

Although Popcap and EA have said they will start porting some games to Android soon, this disparity is not likely to change much with iOS developers making 50x the income ($1 billion) compared to Android ($21 million) over a similar timeframe according to Larva Labs and with piracy ranging from 50-97% on Android.

-Mart

Bosco (Brad Hutchings)

Mart, 6 of those iOS devices in the installed base are sitting in my drawer. And to counter your numbers… Rovio has an ad run rate of $1 million/month on Android. Sony’s upcoming PSP phone? Android, with a slide-out game-pad. Also, your number count apps in the online stores, and not the thousands of Flash games that are available for Android users to play without stepping through the lines monitored by app bean counters.

In reality, 13-1/2 months after being basically unknown, Android has reached parity (within a factor or who gives a flying &^%$) with iPhone on most anything you want to measure. Its continuing to zoom past and not looking back.

palenoue

So microsoft is paying for a big ad campaign that portrays people who focus on their smart phones for more than ten seconds as pathetic losers.  Now microsoft is saying they’re going to get aggressive in the mobile game market, which will make people focus on their phones for more than ten seconds.

I expect this type of inanity from microsoft, but what amazes me is how much these idiots get paid to sabotage their own efforts.

Martin Hill

Android has reached parity (within a factor or who gives a flying &^%$) with iPhone on most anything you want to measure. Its continuing to zoom past and not looking back.

Considering Commscore states that in the USA alone (Android’s biggest stronghold), Android still hasn’t passed the iPhone alone - how much larger must iOS be considering that almost as many iPod touches get sold for every iPhone?  Then there are the 2 million iPads sold every month which Commscore also fails to count despite counting the Dell Streak and Galaxy Tab.

Your post just does not hold water.

-Mart

Bosco (Brad Hutchings)

300K daily activations of Android phones (tweeted by Andy Rubin today) is 27M phones per quarter. Where is Apple, 13M iPhones per quarter?

My post holds more water than (insert yuk worthy analogy here) and I’ve been all over this trend since last November grin. Ask the many here who are annoyed that I have been right and have now retreated to “it’s OK that we’re just a niche”.

Martin Hill

Also, your number count apps in the online stores, and not the thousands of Flash games that are available for Android users

Brad, are you seriously trying to say that crappy Flash games are the equivalent to ID’s Rage or the hundreds of top tier games from EA, PopCap, Gameloft etc?

Rovio’s $1 million worth of advertising in their launch month is impressive.  However, when you consider that just one of their games “Cut the Rope” had 1 million sales on iOS in ten days priced at between 99c and $1.99 each, that figure just demonstrates how much less advertising pulls in even on the most popular games compared to app sales.

-Mart

Martin Hill

Rubin did indeed just tweet that Android is now activating 300,000 activations per day, up from 200,000 in early October.  Back then Apple was seeing 275,000 iOS device sales per day, hitting 300,000 on some days.

Considering Apple’s iOS sales always surge in the lead-up to Christmas, we will just have to wait and see if daily unit sales of all Android devices have actually managed to surpass iOS device sales from Apple won’t we, but I wouldn’t bet on it.

As far as whether raw unit sales actually means anything, that is indeed another story.  Android may indeed surpass iOS in unit sales sometime in the future and maybe eventually in installed base, but whether anything useful comes out of that is a different question.

Symbian’s vastly greater marketshare than either Android or iOS has not lead to greater profit share (Apple holds 48% of the entire cell phone industry’s profit compared to Nokia’s 17% and Samsung’s 2%).  It has also not lead to a greater share of the hardware peripheral market (The iPod/iPhone dock and steering wheel integration is standard or an option in over 70% of all new cars, 99% of all audio systems, GPS amplifiers, car kit docks, aircraft docks etc).  And it has certainly not lead to more software with Apple holding the lead with over 300,000 curated apps.

iOS continues to be far more lucrative for developers.  Possibly 1 billion apps have been downloaded from the Android Marketplace since it launched in Oct 2008.  The iOS App Store gets that every 2 months.  Likewise, because Google lets any junk into the Marketplace without review, there are over 45,000 spam apps and all sorts of malware clogging that store making that 100,000 total look decidedly less impressive.

No, basing any trend analysis only on the iPhone completely misses the big picture.

-Mart

Martin Hill

ps.  Commscore’s figures measure the installed base (not quarterly unit sales) - that is why the iPhone’s share alone is still larger than all Android devices combined.  It proves that the total iOS installed base even in the USA vastly outnumbers Android.

-Mart

Stoneguy

First
Steve/apple blew the whole Market away with the iPhone
Everyone else is still playing catchup
Second
How about this crazy idea?
Microsoft should write software/games for iPad and iPhone
They are a software company and gaming company

C’mon they could write halo for iOS and clean up!!!!

Am I the only taking crazy pills here? Seems so obvious to me

daddy

Research In Motion?s BlackBerry is #3 (24.2%), while Microsoft is a distant #3 with 3% of the market.

So two firms are tied at #3 with a 21 point spread?

aardman

@Stoneguy Microsoft developing iOS games and apps is not a crazy idea.  In fact my guess is they’ll probably end up doing that in hmm, 3 to 5 years.  Aside from games, Office on iOS would be the cash cow for Microsoft.  Let’s face it, Word, Excel and Powerpoint are just too entrenched.

geoduck

Let?s face it, Word, Excel and Powerpoint are just too entrenched.

Not in my house or company it isn’t. All OpenOffice around here.

But then I may not be typical.

Bryan Chaffin

Bryan,
I am surprised you?ve fallen into the same trap far to many other commentators have of not including all iOS devices in your numbers when you compare Android to iOS, particularly in an article about development platforms.

Here you are talking about Mobile Gaming and you ignore the 45 million iPod Touches and 7 million iPads sold?? That is just crazy!

Hey Martin,

Re-read my opening sentence: “Microsoft isn?t planning to just let Apple walk away with the mobile gaming space, what with its iPhone and its iPad and iPod touch.”

In my head, I was definitely including the whole platform when writing this. smile

mrmwebmax

+

Bryan,

So the iPhone’s the #1 smartphopne in the US? But how can this be? It’s a closed platform. It doesn’t support Flash. There are no porn apps. Yet it’s still #1?

I’m confused. Bosco, please explain.

Bosco (Brad Hutchings)

Imagine that a (mad) Danish scientist figured out a cheap way to clone human beings. Being Danish, he is surrounded by beautiful women. They are freakin’ everywhere, and while they have a rather distinct Danish look, they are all different. Well, his daughter, unfortunately, is just kinda blah for a Danish girl. And this makes him angry. So he creates about 1.5 million copies of her and claims she is the most popular Danish girl.

For years, men from around the world have gotten word that the women of Denmark are quite remarkable, but our mad Danish scientist decides to market these clones of his daughter, calling them *magical*. In fact, she isn’t half bad compared to the median in other countries, pretty good even! But she’s not nearly as hot as the typical Danish woman, and there is only one model of her. And her Dad won’t let any of them smoke, drink, wear a bathing suit, or gods forbid, pose for Page 9.

While his daughter becomes very popular, word gets out that there are other Danish girls, and they are hotter, quite a bit more diverse, and way more adventurous. Within a year, 2x as many men come calling for those other Danish girls as for the cloned daughter. And while the men who carried away one of the daughter clones worship the scientist, many other people think he’s a creepy douchebag.

Still confused?

mrmwebmax

+

Did anyone else get a headache trying to wrap your brains around that analogy?

Bosco (Brad Hutchings)

And the winner for best iPhone of 2010 goes to… (drum roll). The iPhone 4. Second place goes to… (drum roll). The iPhone 3GS.

“Quel surprise!” as Jean-Louis Gass?e would say…

mrmwebmax

+

The fact that there is only one model of iPhone does nothing to refute that it is the #1 smartphone in the US. Nor does Apple’s having only one model of iPhone have any direct relationship to the quality of the product, regardless of your “blah daughter” analogy. And as for creating clones, when you think about it, that’s much more like what Google and Android did: They saw the iPhone with its touch screen and apps and cloned it with their own OS.

And there are how many Android phone models out there? Well over a hundred? Yet not a single one of them is as popular as the iPhone, and it takes the entire Android army (multiple manufacturers, carriers, and models) to effectively compete against one company, one phone model, and one carrier?

If Android is so superior to iOS and iPhone, with so many manufacturers, carriers, and models, why aren’t they crushing iPhone into dust? Why is iOS becoming the #1 hand-held gaming platform, and not Android? Why isn’t a single Android model as popular as the oone-and-only Apple iPhone? After all, they run Flash and porn and stuff and are “open” and all.

Yet iPhone is still #1. And when it comes to Verizon, Android beware. Oh, and one Wall Street analyst is now predicting Android and Windows Mobile 7 will engage in a “race to the bottom,” leaving iPhone as the last man standing:

A Smartphone Race to the Bottom

Bosco (Brad Hutchings)

Well, considering that Android has gone from about zero to near double the units of iPhone while iPhone unit sales have also grown in about 13-1/2 months, I don’t know how anyone calls it anything other than a swift ass kicking.

I will concede that the iPhone is a good phone, just like the Danish clone daughter. Probably pretty good as a starter wife. I think most guys would grow tired of banging the same genetic material as everyone else on the block, though. So they seek out something different and unique. And what I found was something that was actually *better*.

I can’t wait to drop this analogy on MG Siegler at TechCrunch. It will get me at least 50 likes and 100 replies. It is just about the perfect analogy for smartphones.

Martin Hill

@Bryan,
Thanks for the reply.  I did indeed read your mention of the other members of the iOS family at the start.  My beef is that when most commentators start talking numbers, they always seem to suddenly ignore those other devices which represent half of the iOS platform and Android as a result is crowned the number one mobile OS as your article strongly implies.

You then have people like Bosco crowing that Android is No.1 when that is patently not the case in either installed base or quarterly unit sales.

-Mart

mrmwebmax

+

Well, considering that Android has gone from about zero to near double the units of iPhone while iPhone unit sales have also grown in about 13-1/2 months, I don?t know how anyone calls it anything other than a swift ass kicking.

Yes, Bosco, Android is delivering such a swift kicking to iOS that—wait for it—God I love these moments:

Android’s weak sales drive Verizon toward Apple’s iPhone

wab95

Android is delivering such a swift kicking to iOS that?wait for it?God I love these moments

mrmgraphics, many thanks for the link. Very nice analysis - both the link and its parent source. This report mirrors current discussion among market analysts featured on Bloomberg’s Stock Watch and others. Google’s Android OS performance has thus far failed to excite investors, some of whom are already looking beyond the smartphone OS to see if the tablet OS can do any better.

No individual handset manufacturer has been able to keep pace with Apple, and it is interesting to see that, among similar demographics, the combined lot of handset makers using Android on Verizon’s system were outpaced 2.5 to 1 by the iPhone on AT&T in Q3 2010. That level of a ‘shellacking’ for an individual handset maker is simply not sustainable, and does not bode well for the platform.

Even if Google can raise its game on the OS side, will the handset makers or Verizon accommodate and respond in kind, providing a richer end-user experience? With these margins, the incentive to do so is not obvious. More worrisome for handset makers is what will happen to Android sales once the iPhone comes to Verizon. If they plummet, then not only consumers but developers could bail, sending the platform down the path of the Palm Pre. 

For the sake of a competitive market, my hope is that this does not occur, nor do I expect it to, at least not immediately. Nonetheless, if these data are correct and predictive, the trajectory for Android is not optimal. Google, however, are far from finished.

Then again, there is always Windows Phone 7.

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