Is it game over for Microsoft on consumer front?

One analyst says it is time for Microsoft to get out of the phone business, saying it is just not in the company's DNA. Is that true for the company's larger consumer effort?

With Microsoft's Windows Mobile unit having run in slow motion for the past several years, it doesn't surprise me that there are calls for the company to get out of the phone business.

The more interesting question raised in this New York Times blog, to me, is whether Microsoft flat out just doesn't get the consumer.

That, to me, is a much broader issue for Microsoft, given the fact that more and more parts of computing--even enterprise software--are taking their lead from consumer trends--think Facebook, Gmail and Twitter.

Microsoft certainly has its challenges on this front, and no business illustrates those challenges more clearly than the phone business, where Microsoft has squandered an early position in smartphones and now faces a massive task to catch up to Apple, Research In Motion, and even upstart Google, which has not been at the game nearly as long.

Luckily for Redmond, I don't think it is that they don't get the consumer at all. Products like Surface and Windows 7 and Zune HD show that Microsoft is thinking about the consumer experience and does have some sense of what appeals to the average user.

So it's not that Microsoft totally doesn't get the consumer. Rather, I would argue, the consumer it understands best is the nerd, as opposed to the mainstream user. That's why, from my way of thinking, its products tend to start as niche products for gearheads and work their way toward the average consumer.

And Microsoft's nerd focus isn't always a bad thing, particularly in the enterprise where it is nerds who tend to be making the decision. Windows has fared pretty well against the Mac, although the PC's lower cost also has a hand in that.

What's happened on the mobile side, though, shows that the focus of power is shifting. It's only a matter of time before similar trends more deeply affect the corporate desktop, whether it is e-mail, collaboration, or social networking.

The consumer business also represents a huge opportunity on its own for Microsoft. When it comes to connected entertainment, for example, Microsoft has what should be a big advantage. Because of its size and breadth, Microsoft's software powers multiple living room devices (Xbox, Windows Media Center, and Mediaroom digital TV) as well as devices that delver media onto phones, cars, and other portable devices.

And of course, a huge part of the battle has moved off of the PC or any single device and onto the Internet. That explains Microsoft's huge investment in Bing, but also its other online moves, including offering Office via the browser, and projects like Live Mesh that aim to bring together our myriad gadgets.

There is still a huge win to be had for the first company to allow people access to their media seamlessly in all these places. The best experience right now, I would argue, is taking one's iPod or iPhone with them into all of these different locations. That's a good experience, but not as good as being able to buy content once and have it automatically show up, on-demand in all of these places.

The company has shown glimmers of hope in some areas, though clearly there is more change that needs to happen. Its new retail stores, though similar to Apple, show Microsoft knowing how to highlight its coolest side. There are more products coming out with memorable names like Silverlight and fewer with mouthfuls like Windows XP 64-bit Edition for 64-bit Extended Systems.

There are pockets of understanding, particularly in the entertainment unit, which is developing things like the eminently cool Project Natal. But, then, as The New York Times blog points out, there is the Windows Mobile unit where it seems the phone has been ringing for years and Microsoft has yet to answer the call.

What's your take. Is it game over? Or does Microsoft have enough quarters in its pockets to learn how to play the table after all?

 

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