Is Windows 10 Continuum the Key to Microsoft’s Smartphone Strategy? (Updated)

Source: Microsoft.

Update 7/14/2015: As Windows Central reports, Microsoft CEO Satya Nadella (speaking at Microsoft’s Worldwide Partner Conference) seems to agree with my position here:

When I think about our Windows Phone, I want it to stand for something like Continuum.

The bottom line is, Nadella is no idiot, and Microsoft’s strategy is indeed deep and compelling. Read the entire interview (with ZDNet’s Mary Jo Foley) here.

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For a few years now, technology writers and pundits have chronicled a general transition away from traditional desktop and notebook PCs towards tablets and smartphones. Certainly, there’s plenty of evidence that demonstrates a significant and portentous drop in traditional desktop/notebook market share and a concomitant climb in the number of mobile devices–tablets and smartphones–being sold.

There’s evidence as well that many people are using smartphones as their primary devices, and increasingly using other devices–and in many cases tablets–only for certain kinds of work where a larger screen and keyboard is required. It’s conceivable that one day, a smartphone-sized device, possibly a phablet, will be the only computer used–and owned–by a significant percentage of the market. Indeed, IDC has this to say:

“Ultimately, for more people in more places, the smartphone is the clear choice in terms of owning one connected device,” (Tom Mainellis, program vice president for devices at IDC) said in a statement. “Even as we expect slowing smartphone growth later in the forecast, it’s hard to overlook the dominant position smartphones play in the greater device ecosystem.”

At the same time, a great deal has been made about the threat that such a transition represents for Microsoft, with the company’s traditional Windows-based PC market losing traction to iOS- and Android-based mobile devices. That’s the “post-PC” world that Apple announced with the launch of the iPad 2, and which has been depicted as a death knell for Microsoft and its OEM partners that have historically produced systems based on Microsoft’s Windows ecosystem.

If a smartphone as a person’s only computing device is the industry’s endgame, however, which company is actually doing the best job of preparing for it?

The short answer is: Microsoft.

Out of Many, One
Apple is tying their various devices together through Continuity, and making OS X look and act more like iOS (and iOS 9 to look and act more like a “real” operating system). Google has Android and is pushing ChromeOS and Chromebooks while working feverishly to allow the latter to run apps written for the former. In both cases, disparate platforms are synced and made to work in tandem, but they remain just that–disparate platforms that must be learned, supported, and developed for separately.

Microsoft, on the other hand, is merging devices, first through a single OS, Windows 10, that runs on every platform imaginable, and then more deeply through Continuum, technology that adjusts the user interface and app experience based on the device being used. Windows 10 runs differently on traditional desktop and notebook machines with keyboards and mice than it does on touch-only devices, and hybrids can switch back and forth as needed.

Windows 10 Mobile takes Continuum a step further, by allowing a smartphone to act one way with apps using the small screen, onscreen keyboard, and touch, and then simultaneously adjusting the UI and app behavior when a large monitor, full-size keyboard, and mouse are attached. Continuum allows smartphones to act as larger devices, so long as they have the required specifications and the right peripherals.

Simply put, a properly-designed smartphone running Windows 10 Mobile will serve not merely as an extension of another, primary desktop or notebook machine, it will function as one. Connect a large monitor, full-sized keyboard, and mouse to the right Windows 10 Mobile device, and you’ll enjoy the functional equivalent of a larger machine. You’ll be able to run apps on the large screen as if on a desktop–not full-on X86 apps, mind you, but the increasingly full-featured universal Windows apps that likely meet the needs of many if not most users. Eventually, universal Windows apps will likely evolve to meet the needs of even the majority of power-users, and “real” PCs could finally be relegated to tasks such as hardcore gaming and advanced graphics and video editing.

Think about that for a minute: within the next six months or so, a person will be able to possess a single device that morphs into whatever format that person needs at any given time. Have a home office and a cubicle at work? Fine–keep a large monitor (or monitors) in both places, along with a full-size keyboard and mouse, and carry a Windows 10 Mobile smartphone from one location to the other. Start work on a Word document at home, continue working on the same instance of that document on the train, and then keep working on it at work. The device will morph from a desktop to a smartphone and back to a desktop with little or no intervention on the user’s part other than plugging it in (or connecting wirelessly) to the appropriate accessories.

Making Post-PC Into a Windows OEM’s Dream
At Microsoft’s Build 2015 event, where they introduced Continuum for smartphones, notebook shells were demonstrated (a la ASUS with their PadPhone, only with access to all the usual Windows resources) that could provide the complete Windows notebook experience in exactly the same way. Take only the smartphone with you when portability is of the essence, carry the shell around when you need to get real work done, and keep a full-size monitor, keyboard, and mouse in various locations for when the “desktop” experience is required. In other words, buy as many accessories as you need to turn your one core computing device–your smartphone–into whatever other format(s) you require.

Source: tomshardware.com.

It’s a powerful concept, indeed can be considered the very definition of “post-PC”–and only Microsoft has anything remotely like it. I’m not saying it’s likely that many people will switch entirely to a Windows 10 Mobile device anytime soon, but rather that the capability–or the promise–will be there sooner than anyone imagined. With Windows 10 Mobile and Continuum, Microsoft is not just hastening the post-PC era, they’re creating it.

Is this Microsoft’s explicit strategy for contending with the decline of their traditional Windows market? I don’t know. If not, then perhaps it should be. I’d be willing to bet, however, that this is at least an important aspect of that strategy, bandied about internally by Microsoft executives even if they’re not ready to publicly state it. Microsoft CEO Satya Nadella has himself hinted at the strategy without explicitly defining it:

“We are moving from a strategy to grow a standalone phone business to a strategy to grow and create a vibrant Windows ecosystem including our first-party device family,” Nadella said in his memo. “In the near-term, we’ll run a more effective and focused phone portfolio while retaining capability for long-term reinvention in mobility.”

Regardless, Continuum remains the single biggest reason to conclude that Microsoft hasn’t given up on the smartphone market, even as they’re moving closer to their roots by scaling back their own production of Windows phones. Let’s face it: Microsoft has always been most successful and influential as a software company, and Continuum is precisely the kind of software innovation that can make them successful again.

Their relatively recent foray into hardware has only been successful where it was most limited, namely the Surface line, which continues to demonstrate Microsoft’s vision for Windows and to lead their OEM partners to offer their own products that enable that vision. Surface was never meant as a standalone product intended to take over the Windows PC market, and by its own limited standards, it’s turned out to be an unmitigated success. Certainly, Dell, HP, and Lenovo have produced some excellent machines post-Surface, after years of pumping out inferior products.

Obviously, at the same time, buying Nokia and attempting to build out a viable Windows Phone product line, with “viable” being defined as competing head-to-head with iOS and Android, was an utter failure. Microsoft’s decision to cut 7,800 employees and take a $7.8 billion charge on the Nokia acquisition, essentially completely writing it off, is evidence of that failure, and most important of Microsoft’s recognition of it.

Microsoft’s smartphone aspirations were always unrealistic. Source: Microsoft.

Not Leaving the Market–Leading It
Microsoft will now be doing what they should have done from the very beginning–applying the Surface model to smartphones, specifically by offering a line of visionary products to lead their OEMs in building out the same kind of ubiquitous ecosystem that Windows has enjoyed from the very beginning (and of which Google’s Android strategy is just a pale shadow). Anyone who believes that Microsoft has simply given up on smartphones is ignoring Continuum and the tools they’re releasing to make porting iOS and Android apps to Windows 10 (relatively) easy.

In a nutshell, what I think Microsoft is doing with Windows 10 Mobile is simply a direct extension of what they’re doing with Windows 10. That is, they’re creating a powerful, compelling ecosystem upon which their OEM partners can build products. Again, they’re returning to their roots. Meanwhile, they’re building a “side” business of cloud-based productivity services that run across all platforms, as a hedge against failure in cementing Windows 10 as a future platform.

If you’re Dell, HP, Lenovo, or Samsung, to name a few of the top-tier players, wouldn’t you be interested in offering a line of Windows 10 products that scale from top-end ultrabooks and hybrids, through tablets, and all the way down to smartphones? Particularly when you’re supporting exactly the same OS on each device? After all, the post-PC world is as much a threat to those OEMs as it is to Microsoft, and I’m sure they’re well aware of the potential repercussions.

Furthermore, compared to Android, Windows 10 Mobile is a more powerful and cohesive smartphone OS that’s mated directly to an integrated platform that these OEMs will already be supporting across their entire product lines. How hard will it be, really, for any of those companies to produce smartphone devices that mesh perfectly within their Windows 10 ecosystems? This is something that Android simply cannot provide, and has the added benefit of avoiding ongoing issues with fragmentation, privacy (Google depends on gathering advertising information, Microsoft does not), and even intellectual property disputes. And this discussion hasn’t even mentioned Intel, a behemoth that has a tremendous vested interest in the success of Windows 10.

Consider as well Lenovo’s upcoming customizations to Windows 10, called “REACHit,” that expands Cortana’s reach (no pun intended) on Lenovo machines. In general, Microsoft has relaxed the hardware and software requirements for Windows 10 Mobile devices compared to Windows Phone. OEMs will have more leeway in producing their own versions of Windows smartphones much as they do in producing Windows desktops, notebooks, hybrids, and tablets. Considering everything, I’m actually hard-pressed to imagine why OEMs won’t be excited to build Windows 10 smartphones.

Real Strategy As a Response to Real Uncertainty
Am I predicting that Windows 10 smartphones will catch up with iOS and Android devices anytime soon? I don’t think so, to be honest, and I don’t know if Microsoft thinks they will, either. Again, Microsoft is hedging their bets by simultaneously positioning themselves as a productivity solutions company running on all platforms at once. At the very least, by ensuring that anyone can use Microsoft productivity solutions on any platform, the company is implementing a delaying tactic to allow Windows 10 on smartphones to gain traction, if ever.

I think, though, that if Windows (not just on smartphones, but anywhere) has any chance of being successful, offering future-facing capabilities like Continuum and showing Microsoft’s OEMs that they’re not interested in competing head-to-head is the right way to go about it. Clearly, trying to build a Windows smartphone ecosystem all by themselves was never going to work, at least not without throwing untold billions at the attempt. In truth, Microsoft didn’t build Windows into the PC juggernaut that it’s always been by trying to fill market needs all by themselves, and they’d be idiots to think they could do so with smartphones against such entrenched competition.

No, Microsoft’s strategy now seems like this: make a compelling operating system/platform that runs on everything from desktops to smartphones, and make things easy and cost-effective for OEMs to build products around it. Lead the market with visionary but niche products like Surface and a limited line of smartphones, and then get the hell out of the OEM’s way. Let the Dells and HPs and Lenovos of the world carry the heavy load–and reap the benefits–of wide and deep product lines that can meet the needs of a large and diverse market.

If that isn’t Microsoft’s strategy, then nothing else could possible make sense. And Microsoft is doing too many smart things lately to imagine that they’re not doing the sensible thing here.