In an unprecedented move, Bill Gates, the founder, and ex-CEO of Microsoft admitted that Microsoft losing the smartphone war to Android was its biggest fault. Bill Gates was talking to Village Global, a venture capital firm when he conceded that letting Android take over the non-Apple mobile operating system market was Microsoft’s biggest failure.
Android was acquired by technology giant Google in 2005 for just $50 million. Former Google CEO Eric Schmidt admitted that Google’s primary motive was to beat Microsoft’s early Windows Mobile ventures. “At the time we were very concerned that Microsoft’s mobile strategy would be successful,” Schmidt confessed during a legal fight with Oracle regarding Java back in 2012.
Ultimately, Window Mobile was brought down by Android-equipped smartphones and Android dominated the non-Apple operating system smartphone market.
Bill Gates said that it was easy for Microsoft to beat Android but that poor management allowed Android to dominate the smartphone market. Windows Mobile preceded Android by 10 years but it was never Microsoft’s priority to develop for mobiles. Microsoft simply focused on the desktop market which allowed Android to grow. And now Android is the leader in the non-Apple operating system market.
“You know, in the software world, in particular for platforms, these are winner-take-all markets. So, you know, the greatest mistake ever is whatever mismanagement I engaged in that caused Microsoft not to be what Android is, [meaning] Android is the standard non-Apple phone form platform. That was a natural thing for Microsoft to win,” Gates was quoted as saying by TechCrunch.
Gates estimated Google’s dominance was worth 400 billion dollars and said that this amount would have been with Microsoft, had they focused on smartphones.
“It really is winner take all. If you’re there with half as many apps or 90% as many apps, you’re on your way to complete doom. There’s room for exactly one non-Apple operating system, and what’s that worth? $400 billion that would be transferred from company G [Google] to company M [Microsoft],” Bill Gates said.
Bill Gates maintained that he himself is surprised at the survival of Microsoft even after committing such grave mistakes as to ignore the smartphone market.
“And it’s amazing to me, having made one of the greatest mistakes of all time — and there was this antitrust lawsuit and various things that, you know, our other assets, Windows, Office, are still very strong. So we are a leading company. If we got that one right, we would be the company. But oh well,” Gates stated.
However, Bill Gates’ confession is a bit surprising as it was assumed that the mistake of ignoring the smartphone market was committed in the era of Steve Ballmer. Steve laughed at the iPhone calling it the “most expensive phone in the world and it doesn’t appeal to business customers because it doesn’t have a keyboard”.
Although Steve Ballmer agreed that the iPhone was going to sell a lot, he ridiculed it for not having a keyboard. He was unable to appreciate the touch-friendly era which was coming. This was the key mistake made by Microsoft officials. They spent months to take a decision about scraping Windows Mobile. It was in the emergency meeting of December 2008 that Microsoft decided to scrap Windows Mobile and to reboot it as Windows Phone.
In his interview, Bill Gates noted that for a business with ordinary services or products, committing small mistakes do not make a difference. These businesses keep on going well after that. But for the software businesses, a small difference can cause a huge loss with the lapse of time. And this is what happened with Microsoft when it didn’t realize the importance of mobile phones.
“So this idea that just small differences can magnify themselves doesn’t exist for a lot of businesses. You know, if you’re a service business, it doesn’t exist. But for software platforms, it’s absolutely gigantic. And so that’s partly where you have the mentality of every night you think, ‘Am I screwing this up?’ And eventually, we did screw up a super important one,” Bill Gates concluded.