Microsoft smart guy takes on smart-phone business
With Windows devices lagging behind the Palms and BlackBerrys, Microsoft enlists an electrical engineer from China.
He is Ya-Qin Zhang (pronounced yah-CHEEN jong), 39, an experienced computer systems researcher who helped start Microsoft's Beijing research laboratory in 1999. He was tapped in January 2004 to come to Redmond, where Microsoft is based, to lead the turnaround of the Windows Mobile software business, which has hemorrhaged money for years.
Microsoft's chief executive, Steve Ballmer, first discussed the job with Zhang while he was on a trip to China in 2003 and the two men were in the anteroom of the state guesthouse, waiting for a meeting with the Chinese prime minister, Wen Jiabao. "This is really important to the company," Ballmer said, as Zhang recalls it. Now the first results of Zhang's efforts are scheduled to be unveiled at a conference May 9-10 in Las Vegas at which Microsoft plans to introduce the next version of its Windows Mobile software, code-named Magneto, with new productivity and multimedia features.
Industry speculation is that Microsoft has been fashioning the software as a " RIM-killer," a reference to Research In Motion, the Canadian company that dominates the corporate handheld computing market with its BlackBerry.
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Magneto will test what Zhang said was his attempt to create a new focus on quality software--a break from the Microsoft practice of emphasizing a cascade of new features in each successive product release.
"Now the first thing is quality," he said, adding that his second priority is building partnerships for the Windows Mobile business, which has so far failed to replicate Microsoft's impact in the desktop computer world.
To his task he brings the mind of an inveterate player of Go, the ancient Chinese board game, in which he can hold his own against professionals. Far more complex than chess, it is a game that requires patience, the weighing of trade-offs, and the ability to make moves that are startlingly indirect.
He will need all the skills at his disposal if Microsoft is to prevail in the mobile software arena. Although revenue from its mobile and embedded software--that is, software for devices other than PCs--increased last year by 58 percent, to $247 million, over 2003, Microsoft nonetheless lost $224 million in the category last year. That was the third consecutive year of losses.
Microsoft has made inroads into the software market for handheld devices and more limited progress in finding customers to use its software in so-called smart phones. They include Motorola and Samsung, along with some lower-profile handset makers that allow cellular carriers to brand their own phones. But Microsoft faces challenges in trying to replicate the PC business model in the world of mobile devices.
It must contend with cellular telephone operators who control sales channels as well as technical specifications for products. And it is coming late to the software market for smart phones--cell phones with PC functions like e-mail, multimedia, Web browsing, instant messaging and games. On that front, it faces powerful competitors like Symbian, owned by a consortium of cellular handset makers, and PalmOne and PalmSource, the scrappy Silicon Valley companies behind the hit cell phone organizer called the Treo.
Symbian, whose partners include Nokia and Sony Ericsson, had 80.7 percent of the smart phone software market in the third quarter of last year, compared with 8.4 percent for PalmSource and 7.3 percent for Microsoft, according to the market research firm Gartner Dataquest. (Most of Symbian's market share comes from the Nokia Series 60 phone, which is more phone than organizer.)
Moreover, Microsoft's strong suit--software--has yet to prove that it is the defining factor in consumer preferences for mobile devices, particularly cell phones. In contrast to personal computers--which by and large were simply beige boxes, not fashion statements, when Microsoft came to dominate the PC industry--cell phones are seen as an extension of the consumer's personality.
"I haven't seen anything out of Microsoft that makes me believe that they're going to have any magic sauce," said Andrew M. Seybold, a veteran industry wireless and mobile consultant who publishes Outlook 4Mobility, a newsletter.
Several industry executives said that even if Microsoft did everything right, its fate in mobile phone software might be largely beyond its control. Consider the plight of Nokia, which failed to anticipate consumer tastes in 2004. Caught without a clamshell cell phone, the company issued a profit warning last April.
"In the cell phone industry, success has more to do with market structure than technology," said Michael Kleeman, a
telecommunications industry consultant who is a policy researcher at the University of California, San Diego.Yet others argue that despite the fact that Microsoft has made only limited progress so far, the industry is now changing and becoming more open and increasingly similar to the PC world, a shift that should play to the software firm's favor.
"Microsoft will bring an army of information technology people into this game," said Paul Mercer, a software designer at Iventor, a firm in Palo Alto, Calif., that develops mobile software applications. "They are the guys who have the muscle."
Microsoft, of course, also has a reputation of continuing to invest in a business or technology until it becomes a force in the market, frequently long after other companies would have backed away from a money-losing effort.
Asked to compare the company's cell phone software to the evolution of its Windows operating system, Zhang said he saw his group at a stage comparable to Windows 95 in the evolution of PC software--far from the starting point, but with much room for improvement.
"This is going to be a turning point," he said.
The choice of Zhang is also an intriguing window into the strategy and values of Ballmer and Bill Gates, Microsoft's chairman. In contrast to many of its competitors, Microsoft is a company that values I.Q. points over years on the job.
"We're more likely to take a chance on someone who is really smart rather than someone who is an experienced manager," said Richard F. Rashid, Microsoft's senior vice president for research.
And there is no doubt that Zhang is a brilliant computer researcher.
"Ya-Qin is a certifiable smart guy by any measure," said Curtis R. Carlson, the chief executive for SRI International of Menlo Park, Calif., the consulting firm for which Zhang worked as a researcher, at Sarnoff Labs, before joining Microsoft. "He's also a really solid human being. He has all the right qualities, and he's savvy."
While at Sarnoff, Zhang worked on a range of advanced video compression technologies, including the MPEG-2 standard, now used in wide range of computing applications and television set-top boxes.
He joined Microsoft in January 1999 when another well-known Microsoft researcher, Kai-Fu Lee, tapped him to help establish a research laboratory in Beijing. In 2002, he took command of the laboratory after Lee returned to the United States.
Several Microsoft employees who work with Zhang said that after he arrived in Redmond last year, he had to be gently reminded that staff meetings that carried on well into the evening interfered with the ability of his co-workers to get home to dinner with their families.
He has since taken those considerations into account. And in his own home, he says, phones powered by the new Microsoft software have received favorable reviews from an influential tester: his wife. "When my wife uses the phone, my life is a little better," he said, with his usual penchant for understatement. "I get better meals."
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