The Wall Street Journal reports that Microsoft is working with Verizon on a couple of deals worth more than $1 billion. According to the report, Microsoft is vying to make its Live Search the default search engine on Verizon phones, a deal that Google has been trying to strike as well.
To sweeten an ad revenue sharing deal with the carrier, Microsoft is reportedly offering $550 million to $650 million in guaranteed payments over five years, about twice what Google has offered. The company is also working on another deal to expand the number of Windows Mobile devices it supports.
The rumored deals clearly demonstrate that Microsoft has recognized Google, with its new Linux-based Android mobile operating system, as a rival in the mobile platform market, according to Bill Hughes, principal analyst for In-Stat. He said a deal for the default search engine on Verizon's phones is fairly routine, but Microsoft's doubling of Google's bid does show that it is determined to beat the search engine leader.
"When I've worked with [Microsoft], they are a very, very competitive organization," Hughes said. "They are very aggressive. When you get on the list of being a competitor, you never get off. Google is coming after Microsoft, and Microsoft is up for the challenge. It could be interpreted as a sign of desperation by Microsoft to maintain some sort of monopoly, but I don't see that at all. I see it as a routine effort to maximize the amount of Microsoft content for each of Verizon's customers, and enterprises shouldn't be swayed or excited if Google wins or Microsoft wins."
Enterprises might want to watch Microsoft's wooing of Verizon, however, as they form their corporate mobile strategies, according to Dr. Mike Jude, research analyst for Nemertes Research.
"If Verizon chooses Microsoft to be part of its global technology, then enterprises will look at that and say, 'That's the first step. What's the next one?' " Jude said. "If I were a Verizon customer, I would say, 'Where are things going to go next?' "
Enterprises that are devising a corporate mobile strategy look at Microsoft and Google as a stark contrast, he said. Microsoft's Windows Mobile ecosystem is proprietary, while Google's Android is a Linux-based, open platform. This is especially important to enterprises that are developing mobile applications.
"The whole point of having a mobile strategy is to have some maneuvering room going forward," Jude said. "And so, typically, you don't want to tie yourself down totally to a given carrier or platform."
He said enterprises that are investing resources in custom enterprise applications may be more inclined to develop them for open platforms like Android, presumably because they could then port those applications to other carriers or devices or other Linux-based platforms if the conditions dictate this. A proprietary platform like Windows Mobile isn't that flexible.
"Let's say an enterprise is thinking of deploying a field force management application, and they want to develop that internally," Jude said. "If you're writing to something like an Android platform, then presumably it would run on any Android-enabled device, no matter where it is. If you are writing to a Microsoft environment, beginning with Internet Explorer and Windows CE, then your choices are a lot more limited and your development costs are going to be a lot higher because you're not writing it to a standard platform. You're writing it to something with more variations, possibly even a closed interface. Technically, what you're doing is writing it in a custom code environment."
An open platform is also appealing to companies that want to keep mobile application development costs low.
"The [enterprises] we talk to that actually have mobility strategies, which is about 40% of companies, are very cognizant that mobile applications can be a relatively expensive proposition to develop and deploy, so they are looking to reduce costs," Jude said. "Some mobile applications cost upward of $6,000 per user to develop and deploy. So open platforms are on their radar screens. Open source is one way of reducing the cost to develop applications in the first place."
Despite the advantages of an open platform, enterprises can still see plenty to like in Microsoft's architecture as well. With its presence in everything from servers to desktops to business applications to mobile devices, Microsoft can potentially offer enterprise mobile strategists a seamless solution that starts from the desktop and runs to the mobile device, Jude said. Something as routine as winning a deal to be the default search engine for Verizon only enhances that message for Microsoft.
Let us know what you think about the story; email: Shamus McGillicuddy, News Editor