I'm wondering why Manjoo could come up with a crazy idea like this one, then I get to the part where he's using Henry Blodgett's columns to make his case. If you get any advice that is derived from comments or "analysis" from Blodgett, run. Run fast and far.

Palm's only hope for survival is the upcoming Pre. It looks like it will be a great phone, but even if it is successful, it will still just be one smartphone in a sea of Androids, Blackberrys, iphones, Nokias, and, of course, windows mobile phones. I do agree with Manjoo that winmo phones are lacking (I'm being generous), but the reality is that the carriers sell lots of them (due to inertia and brand name, but they sell them). I don't see MS abandoning WinMo because they could own the linux-based Pre any more than I see them discontinuing IE because firefox and chrome and Opera are better. They are persistent, and they will try to improve WinMo, just as they improved windows to 3.1, and are now renovating Vista to W7.

When the smart-phone market matures, I doubt that any one vendor will have more than 30% of it. Because enough of them will be relatively open platforms (open enough for 3rd party apps to be ported and sold easily), these phones will not give any of them the dominance over the users that MS has (had?) over desktop users, regardless of what apps get developed. And as the phones will be more internet-centric, proprietary apps will become less important. If no mobile device gets more than 30% of the market, then developers will have lots of incentive to have their apps run on as many platforms as possible. MS isn't going to like that.

I'm not saying that buying yahoo is a good idea, but unless MS wants to embrace linux and become a phone vendor - there isn't MS-scale money in licensing mobile OS's, even though they have been doing that - they will gain very little by buying Palm.

And the idea that because internet advertising is down that investing in that business is a bad idea is short-sighted. All businesses are down. In case you haven't noticed, the value of every asset has been reduced by at least 25%. MS can't ignore advertising, because their competition will be funding their products with advertising. Search is a valuable app, and it is paid for by advertising. Maybe not all apps will get financed this way, but enough of them will, so MS can ignore this model at its peril, like the mini-computer manufacturers ignored the PC.

I think that leveling of the market with no more than 30% of the market owned by any manufacturer would be fantastic for MS since they aren't tied to any specific manufacturer. Already WinMo is really the only cross-platform smart-phone OS (at least in the US). So if you want apps compatible across platforms, WinMo is your choice right now (ignoring the Java and Brew on lower-end phones). Plus if there really is a move to internet based apps (which I highly doubt for security and reliability reasons) it doesn't affect WinMo at all since WinMo is the OS and an OS would be required of every smart phone.

so let's say Apple's iphone has a 20% share, and android phones get 15%, and nokia gets 15%, and blackberry gets 15%, and palm gets 15%. that's 80% of the market for smartphones that do not run winmo. How is that fantastic for MS?

I don't understand your last comment, every smart phone has an OS (actually, every phone has an OS, only a few of them leave it open to third parties).

There really is a move to internet-based apps on phones. There's the App Store from Apple, plus itunes, both which sell directly to the phone. Amazon sells songs directly to android phones. There are internet-based apps that run on the blackberry, which is more secure and reliable than winmo (actually, I think every smart phone is more secure and reliable than winmo). Nokia has already addressed the concept of internet applications on phones. Google and a bunch of their apps run on mobile devices.

A single binary for an app doesn't have to be compatible across different hardware platforms to make it successful; given the above distribution of the smart-phone market, developers would offer their apps for all platforms.

kgsbca:

so let's say Apple's iphone has a 20% share, and android phones get 15%, and nokia gets 15%, and blackberry gets 15%, and palm gets 15%. that's 80% of the market for smartphones that do not run winmo. How is that fantastic for MS?

With 80% non-WinMo, that's 20% WinMo - or as good as Apple. However, those numbers are based on Palm getting 15%. Palm's market share is more likely to drop from its current 2% to 0% than it is to go from 2% to 15%. I also doubt that android will get 15% of the market - at least one tied to T-Mobile's lack of a good 3G network in the US.

kgsbca:

I don't understand your last comment, every smart phone has an OS (actually, every phone has an OS, only a few of them leave it open to third parties).

This comment was directed at the idea that once we move to cloud-computing, software apps would be OS independent and MS couldn't sell their own software apps. Since MS sells the OS only, rather than the apps themselves, they can make money even if everything goes towards cloud computing. The same thing holds for OSX, Symbian, etc. In the context of phone manufacturers, MS is the third party. So this model is already out there and with several manufacturers on board (HTC, Motorola, etc.).

kgsbca:

There really is a move to internet-based apps on phones. There's the App Store from Apple, plus itunes, both which sell directly to the phone. Amazon sells songs directly to android phones. There are internet-based apps that run on the blackberry, which is more secure and reliable than winmo (actually, I think every smart phone is more secure and reliable than winmo). Nokia has already addressed the concept of internet applications on phones. Google and a bunch of their apps run on mobile devices.

A single binary for an app doesn't have to be compatible across different hardware platforms to make it successful; given the above distribution of the smart-phone market, developers would offer their apps for all platforms.

Downloading an app to your phone is not what I meant with internet-based apps. I should have called it cloud computing where you only run a web-based interface to the app that runs on a server. In that context, the App Store is not an internet-based application the way that I used the term. The App Store is not revolutionary in any respect other than Apple actually allowing 3rd-party apps to be developed. This capability to download and install 3rd party apps via the web or via a dedicated program has been around for years with winmo.

On what basis do you think that every smart phone is more secure and reliable than winmo? I've had reliability problems with 3rd party software on winmo, but no problems with winmo itself - particularly winmo 6.1.

Sure, an app can be successful even if it's locked to one OS. But why limit your market or have to invest in producing an app for each segment of the market? Some developers already offer their binaries only for certain OSs - like Adobe Flash (Symbian, WinMo, but no OSX). With winmo, you write an app, then if a manufacturer comes out with a new product that runs winmo, your app is instantly ported to that new device. If you write it for the iPhone, then a new phone with a killer hardware feature (e.g. wimax capability) and its not an iPhone, you have to port the application to the new phone's OS.

I was just coming up with an example for market share. While Palm may not achieve 15%, I think it's likely that Apple or Nokia will have larger shares. And you sell Android short, it's only on t-mobile now, but there is no reason why it can't be on every network in the next year (remember, the smart phone market is still in its' infancy, so it will be a at least a few years before it matures). I will be shocked if there are no android handsets out this year that will work on verizon's network, and they are committed to opening it up.

I am not a believer in the idea that everything will move to cloud computing. There are some apps that make sense being served by the cloud, but many don't. Also, there is no reason why apps have to be software-independent; I'm sure the developers would like that, but if the OS market is fragmented into enough desirable markets, the apps will get ported.

If you think the future for mobile apps are browser-based ones, then the phones with the best display and performance will win. And all of the alleged advantages of winmo will be irrelevant.

I've never read of anyone unconnected to MS saying that winmo is more secure and reliable than other phone OS's - and I have heard claims to the contrary (blackberry, for example).

Your last argument is only pertinent if WinMo has a huge share of the market, and it doesn't. WinMo is just another OS, so writing an app for it provides no broader availablity than choosing one of the more popular platforms.

If the web and broadband was widely available in the 80s, I don't think that windows would have achieved the dominance it has today, as the web abstracts a lot of the OS. It is available today, though, and I think it will preclude any one vendor from grabbing a big share of the smartphone market, as long as they do a good job of designing and marketing their products. Which is great for us consumers.