Open-Source Windows Mobile: Is Microsoft's Current Licensing Model Dated?

Windows Mobile has long been an "open" and extensible platform built upon the Windows CE core, but openness doesn't translate to open-source, and that might mean adoption problems for the software maker in the future. We've seen some Windows Mobile licensees--both large and small--either defect from the platform or transform to incorporate other open-source OSes like Symbian (which has gone open-source) and Google Android into their product lineup. As manufacturers attempt to keep costs low and introduce powerful features at lower price points--a move ignited by the iPhone's cheaper, on-contract pricing--the licensing costs of Windows Mobile may not be viewed favorably by OEMs and may price the smart operating system out of the reach of consumers, a market that Microsoft is keen in courting.

Mobile Advertising as a Revenue Model
Unlike its competitor Google, Microsoft's platform is geared not to be based off of cloud computing, but rather reside mostly on the handheld. To go open-source and be able to monetize the platform, Windows Mobile would need greater integration with Bing and Live Services. In doing so, Microsoft's shift to cloud-based smartphone computing would enable the software giant to anonymously collect user's data and derive revenue. The mobile advertising market is still nascent, and Microsoft's move into this sphere could help the company take charge of a domain that is dominated by Google. While Google has the desktop search and advertising model down, Microsoft's svelte and quick maneuver into the smartphone space would give the software giant a lead into the mobile ad world.

Putting It Into Conext
The Redmond-based company can use anonymous user data to help place mobile advertising and work with developers and advertisers to place meaningful ads on Windows phones, whether it be on the OS experience or in a browser or application. While it is true that advertising in general is annoying to end-users, whether it be on a phone or on a PC, the rationale here is to make advertising relevant. Google's tactics on the desktop space with AdWords is to make advertising non-obtrusive, basically allowing advertising to disappear--a move that's good for end-users but not great for advertisers. However, Windows phones have long been powerful, connected devices. Coupled with GPS and location-based technology, WiFi and WiFi location trackers, and user data collected from online tools such as Bing. The potential for Windows Mobile here is to make advertising not disappear, but meaningful.

Meaningful ads will be beneficial to advertisers and consumers. If a user is shopping at a clothing retailer at 10 AM, Microsoft's smarter Windows Mobile would know that maybe a McDonald's Big Mac ad may not be the right one to display. If the ads are of value to end-users, perhaps advertising will be less annoying, and in fact, may be welcomed. If you're at your neighborhood market and Windows phone delivers a relevant coupon for juice that the clerk can scan at checkout, your grocery savings may be the saving grace that Windows Mobile may deliver to advertisers.

It Doesn't Have to Be In Your Face
Advertising doesn't have to be in your face. Huge banner ads, pop-ups, and obtrusive ads that appear when you hover need not be the norm on the mobile realm. Rather, by linking Windows phones with a Live ID, Microsoft could aggregate user data and create research and monetize information this way. A linked Live ID can mean that ads can be displayed instead when you log into your desktop computer. If you went shopping with your Windows phone and searched for hot dogs and soda, perhaps an ad and a coupon can be displayed the next time you log into your Live account on the desktop. This way, ads won't bombard Windows phone users on the small screen.

Marketshare for Manufacturers
The move towards open-source will create a larger Windows phone ecosystem. With an advanced mobile platform that is easy to use and attractive--at least from what we can see in the leaked Windows Mobile 7 renderings and shots--it will be hard for manufacturers to not put Windows Mobile on their phones, especially given the price: free. More OEMs and an open-source framework will create help to attract much needed developers to the platform. This will build an ecosystem around Windows phones and help to create value for partners and end-users--think accessories that help to personalize your Windows phones, applications that will deliver simplicity and ease of use, and programs to help you be more productive and kill down time with games that matter to you, the consumer.

Beyond the Phone
There's also a whole other world out there in the connected space besides smartphones, from connected wireless digital frames to car computers to smart refrigerators and other Minority Report-like technologies that have yet to surface. The embedded computing market was once dominated by Windows CE and is now shifting towards Android, with devices like cable boxes and the Barnes & Nable nook e-book reader running Google's OS. The move back to Windows CE and Windows Mobile can help to build momentum behind Marketplace for Mobile, which also helps Microsoft derive a revenue (not profit) stream of 30% per app sold.

The Microsoft Advantage
Unlike other unproven operating systems in the enterprise space, Microsoft can leverage the strengths of a secure Windows Mobile experience with enterprise users. Additionally, Microsoft already has the technologies needed to move towards a more advanced, cloud-computing platform. With its acquisition of the Danger Sidekick platform that is based off of servers in the cloud, TellMe's Internet search by voice, and the potential move of components of Office 2010 into the cloud, the missing piece here is Windows Mobile in the cloud. The platform already has a great start with Windows Mobile 6.5 with the introduction of Marketplace for Mobile and MyPhone, but more is needed to make the experience seamless, effortless, secure, and productive.

Conclusion
Much like how Windows Mobile helps to currently sell Exchange Servers to enterprise customers, the future "free" Windows Mobile OS can help drive users to other Microsoft products, such as Live Mail, Bing, search, and more. Apple has used the iPhone halo effect to make greater gains in the corporate sector as well as to push sales of its desktop and portable computing products. Google's attempting to leverage consumer data on the Android phones for other purposes while at the same time delivering value to everyone in the ecosystem--free turn-by-turn voice guided GPS, a robust smartphone platform that fits the needs of the average consumer, technology and design that blends, and a simplified connected experience through applications. Microsoft has the potential to be there. The focus should start not at the "Start" menu, but on search--aggregating user information and behavior in an anonymous fashion through its online services, delivering value to users, and creating enough buzz to regain hardware manufacturers. And Redmond can do all that, offer a free OS, and still be profitable through context-based advertising.