The smartphone market is slowing, and it spells opportunity for Microsoft.
Verizon is on the hook (http://online.wsj.com/article/SB10001424127887324694904578602030343942560.html?KEYWORDS=verizon+iphone&cb=logged0.2764256768859923) for roughly $23.5 billion in payments to Apple for iPhones it can't sell, suggesting that the talismanic smartphone is losing some of its allure. Meanwhile, AT&T and T-Mobile have rolled out new programs to incentivize customers to upgrade their phones early and often, as consumers trend toward a more leisurely pace of smartphone upgrades (http://online.wsj.com/article_email/SB10001424127887323664204578610233963082210-lMyQjAxMTAzMDEwNjExNDYyWj.html).
(http://readwrite.com/files/Screen%20Shot%202013-07-18%20at%206.23.31%20AM.png)
With more consumers trading in and out of phones more often, Microsoft's opportunity to hook new users increases. Given Windows Phone's still anemic market share, the window of opportunity—as it were—is slim. Rather than compete on equal terms, therefore, Microsoft should exercise an unfair advantage to leapfrog its competitors.
It's called Skype.
Improving Skype's Mobile Experience... Skype already runs fine on Android and iOS, of course. But the experience is a bit disjointed. It remains very much an app that you run on your phone, rather than an integrated element of the phone itself.
I felt this pain while traveling in London a year ago. I needed to do a conference call but didn't want to pay AT&T's punitive roaming charges. So I ran into St. Pancras Station, which offers free Wi-Fi, and dialed into the call using Skype. I paid exactly $0.00 for the call, and the call quality was surprisingly excellent, given the quality of the Wi-Fi.
Unfortunately, at the time Skype didn't support Bluetooth, so I found myself moving my iPhone to my ear and back to a position where I could check calendar, a presentation, etc. While Skype Mobile now supports Bluetooth, it continues to lag in other ways.
...Especially For Windows Phone Particularly if you're using Windows Phone 8. Ironically, while Microsoft calls (http://blogs.skype.com/2013/05/29/skype-and-windows-phone-8-a-match-made-in-heaven/) Windows Phone 8 and Skype "a match made in heaven," the Skype experience is actually better on iOS, Android and even Blackberry because Skype Video, among other things, is available on these platforms, but not Windows Phone (http://www.engadget.com/2013/06/17/skype-video-messaging-launches-free-unlimited/).
Yes, you read that right. Microsoft's Skype is better on every platform other than the one it actually owns. That's sad.
It's also a missed opportunity. As much as Microsoft may pledge (http://blogs.skype.com/2013/07/01/skype-passes-100m-android-installs-and-launches-redesigned-4-0/) to deliver a "common set of experiences across multiple platforms and devices" for Skype, the reality is that it needs to provide an even better experience on its home turf. No, I'm not arguing for Microsoft to cripple Skype on rival platforms. That would be counterproductive as the Skype network becomes more valuable the bigger it becomes.
But imagine a Windows Phone experience with Skype completely integrated into the address book, dial screen, etc. Suddenly Skype isn't merely an app that runs on your phone, but actually becomes your phone.
Would The Carriers Go Along? Microsoft has stated (http://blogs.skype.com/2013/06/28/skypes-mobile-future-a-few-thoughts-on-the-road-ahead/) its intention to keep a consistent Skype experience across devices, but surely Microsoft could make that experience deeply integrated into the Windows Phone UI? Users would love this, as it would allow them to "make a call" and not worry about whether it were going out over Skype or a carrier's network. In areas rich with wifi but poor on cell phone reception, it would be a huge benefit, as Tom Barber notes (https://twitter.com/magicaltrout/status/357507993379684354).
Some, however, worry that the telecom providers would never buy in:
@mjasay (https://twitter.com/mjasay) The telecomms hate, hate, one more time with feeling, hate this kind of VoIP idea. They wouldn't sell phones with it.
— sjvn (@sjvn) July 17, 2013 (https://twitter.com/sjvn/statuses/357514990644756481)
It's a valid point, but it may be a few years too late. After all, carriers no longer look to voice to pay the bills, and instead seek to monetize data. Skype now powers a third of global voice traffic (http://readwrite.com/2013/03/08/microsofts-skype-now-commands-1-3-of-a-dying-market#awesm=~obTraAGfzvKLm9), and there's reason to believe carriers will happily offload more of that traffic to make way for more profitable data services.
Even if they were inclined to quibble with Microsoft building a Skype-centric Windows Phone experience, surely Microsoft is less of a threat than Apple and Samsung's mobile dominance has been, and potentially offers a hedge against these leading vendors. Microsoft, for all its problems, has shown a willingness to share success with its partners.
Microsoft needs to place some big bets to take share in mobile. An integrated Skype experience for Windows Phone 8 feels like a smart move, and a bet worth making.
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