Microsoft's mobile fortunes tied to app developers

by Marguerite Reardon

PopCap Games doesn't usually race to be among the first to develop for a new platform of any sort, be it a console or a mobile operating system. But the company is breaking from its tradition and working hard on porting its popular Plants vs. Zombies game to Microsoft's Windows Phone 7 platform.

"With Microsoft and Windows Phone 7 we saw a strategic opportunity," said Garth Chouteau, vice president of public relations for PopCap.

Before you scoff, don't think the developers at Popcap have blown a gasket. Chouteau said that even though there isn't yet a large installed base of Windows Phone 7 devices on the market, he expects that there will be...in time. Microsoft has good relationships with developers, has historically worked well with them, and it's built a gaming ecosystem for its Xbox games, which could be important for Popcap's gaming audience.

What's more, Microsoft has recently struck a deal with Nokia, the leading handset maker in the world, to put its operating system on all future smartphones designed by Nokia. All this gives Popcap and other developers plenty of reason to view Microsoft as an important mobile operating system platform.

"We think it will be a popular mobile platform," he said. "And we like to have our games available in every appropriate place where our customers prefer to play."

When Microsoft decided to scrap its earlier mobile operating system to develop its revamped Windows Phone 7 platform, released in October, the software giant's goal was modest: simply getting back in the game. And if mobile developer interest is any indication, Microsoft has achieved that.

The company is already signing up big names to the platform, such as Rovio, which developed the popular game Angry Birds. Getting A-list apps is akin to scoring a Nordstrom or Macy's as an anchor store at a mall. It gives people a reason to come to that particular mobile platform, because they know they can get apps they've heard of or tried on other platforms.

There's other evidence that Windows Phone 7 is gaining traction among developers. The company Urban Airship, which helps develops mobile applications for some 7,000 brands, surveyed its customers early in 2011 to get a sense of their priorities in the coming year. According to that survey, which was done in January before Microsoft announced it would partner with Nokia, nearly 25 percent of its brand customers said they were planning to develop mobile applications for Windows Phone 7 in 2011. This is up from only 5.9 percent who actually said they developed apps for Windows Phone 7 in 2010.

But even though Windows Phone 7 is on the radar screen for many brands and developers, Apple's iOS and Google's Android development continue to dominate--by far--the world of mobile developers. According to Urban Airship's survey, 99.5 percent of brands last year developed apps for Apple's iOS and about 44 percent developed apps for Google's Android platform. In 2011, 90.5 percent of brands surveyed said they had plans to develop for iOS and about 74 percent said they planned to develop apps for Android.

Still, for a company that was all but forgotten in the mobile market a little over a year ago, growing interest from developers has to be taken as some glimmer of good news. And indeed it is at Microsoft.

"We have already had a lot of success so far," said Brandon Watson, director of developer experience for Windows Phone 7 at Microsoft. "Developers are making money. Some people may try to compare us to existing platforms. But you have to consider where we've come from in just a few short months."

Indeed, Microsoft only has about 9,000 apps in its Marketplace compared with Apple's 350,000 plus apps in the Apple App Store. But Watson said that Microsoft is adding at least 100 new apps a day, and it has already registered more than 32,000 app developers to create applications for its platform.

Quality vs. Quantity
The number and quality of mobile apps on any smartphone platform is absolutely critical in terms of attracting customers for devices. Smartphones today are less about voice communications and almost entirely all about apps and what people can do with these devices.

"Whether you're an operating system developer or you make mobile handsets or tablets or you're a connected-car manufacturer, what differentiates your product from someone else's are the apps and software," said Andrew Ianni, founder and president of AppNation, a conference and event company focused on the business app economy. "That is why all these companies are courting developers. It's why a thriving app marketplace is so critical. If these companies don't have that, then they're out of the conversation."

Microsoft understands the importance of the developer community in terms of the overall success of Windows Phone 7. And the company has devoted a significant amount of resources to getting developers on board with the platform.

"Honestly, it's the only thing that matters," Watson said. "That means we must give developers what they need to develop for our platform. And if we don't, we lose."

Many large to medium-size app developers are putting Windows Phone 7 on their roadmaps because they see the potential in the platform.

Todd Berman, CTO and vice president of engineering for the streaming media company Rdio, said that his company felt compelled to be a Windows Phone 7 launch partner because based on Microsoft's history of working with developers and pushing into markets it feels are important, it will eventually have a sizable customer base.

"Our customers need to be able to use our service on whatever device they want whether that's a phone or a desktop or a tablet," Berman said. "So it's important for us to be on those devices. Microsoft is one of the more interesting players because of its ability to be in a lot of spaces."

But some developers are not ready to take the plunge into WP7 development just yet. For many, it's a chicken and egg problem. App developers have a finite amount of resources, and it's more lucrative for them target the platforms with the most users, which to date has been Apple's iOS platform.

"Collectively, I think app developers are taking a wait and see approach," Ianni said. "The developer community is impressed with the OS. It's reasonably easy to develop for, but there hasn't been a mass movement to develop for it yet because developers are still waiting for the tipping point in terms of device sales."

This is where Microsoft's deal with Nokia could help. Nokia announced last month that it will scrap its existing Symbian OS and base all future Nokia phones on Windows Phone 7. Even though Nokia has been losing market share over the past several quarters, the Finnish device maker still sells more mobile handsets than any other manufacturer.

"The deal between Microsoft and Nokia validated our original decision to support the WP7 platform," Berman said. "Nokia is still synonymous with cell phones. And they are the pre-eminent mobile hardware maker out there."

But it will take time for Microsoft to see the fruits of the Nokia deal. The first Nokia Windows Phone 7 device isn't expected to hit the market until late this year. And handsets won't ship in volume until sometime in 2012.

For smaller developers, this time line is too long to make Windows Phone 7 a priority. For example, FlatPack Interactive, which currently holds the No. 8 spot for paid apps in Apple's App Store with its game BallFallDown Deluxe, is not yet considering developing for Windows Phone 7. Currently, BallFallDown Deluxe is only available for the iPad. Paul Zimmer, founder of FlatPack Interactive, hopes to port the company's existing game to Android tablets soon. And he said the company also plans to develop new games for Apple's iPhone and Android smartphones as soon as it can free up resources.

"Given where we are in our business right now, Windows Phone 7 isn't even on our radar," Zimmer said. "Honestly, for something that won't have a reasonable installed base for a year, it's just not realistic for us. We could be out of business by then."

The race for third place
While it's clear now that developers must develop apps for iOS and Android, the decision of which platform to address next is still up in the air for many. Research In Motion's BlackBerry platform still has a large installed base. But developers complain that it's a difficult platform to develop for. Meanwhile, Hewlett-Packard's WebOS, which the company bought from Palm, is great software to develop for, but has a very small installed base.

To ensure that its platform is the "third OS," Microsoft has offered developers incentives to build apps for Windows Phone 7.

"There are rumors going around that Microsoft is throwing big bags of money at developers," he said. "I'm not sure if this rumor originated from the same place as leprechauns sitting at the end of the rainbow with a big pot of gold. But that's not really how it works."

Watson said there are deals that have been struck that involve monetary assistance for developers, but there are also marketing incentives that will help promote the apps in the Microsoft Marketplace. There is also technical assistance and help in merchandising apps in the Marketplace. And there will even be times when Microsoft seeks an exclusive for an app.

"We are figuring out what works and how to engage with developers so that they can be successful," he said. "We want to make them rich and famous. Microsoft can only be a success if our partners make money."

Watson wouldn't talk about specific deals struck with particular app developers, but he said the depth of engagement with developers varies. For example, the most successful app developers will get one-on-one interaction with Microsoft. The company will ensure there are sufficient monetary and technical resources to build the app. Because this is such an intensive process, Microsoft can't do this with every app developer. But he said that Rovio, the developer of Angry Birds, would likely fall into this category.

To scale the incentive program globally to include thousands and tens of thousands of app developers, Microsoft offers events for technical training. It also help developers better merchandise and market their apps. Microsoft carves out spots in the Marketplace to promote certain apps, which is huge especially for lesser name apps.

Google's Android platform, which is now the No. 1 mobile OS in the U.S., according to ComScore, had similar problems attracting new developers in its early days. But once big carriers, such as Verizon Wireless started pushing the platform as an alternative to AT&T's exclusive iPhone in the U.S., the Android platform gained steam. And as more Android devices were sold, more app developers created applications for these devices.

"It's hard sometimes to get the snowball rolling," said Ianni. "But once it gets going, then it's a virtuous circle that keeps building and feeding off each other. Android is in the middle of it now. Apple was there two years ago. And Microsoft could find itself there as well down the road."

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