iPhone Undermining Microsoft in Enterprise?
Microsoft best get Windows Mobile 7 to market, and soon, because its delay may be causing the company to lose traction in the enterprise market. In a note to clients Thursday, UBS Securities analyst Maynard Um noted that Apple's (AAPL) …
Context & Ripple Effects
The enterprise iPhone thesis has been building since 2007, when Gartner told CIOs to expect one and Canalys/Symbian numbers already showed the device outselling all of Windows Mobile in the US by Q3 2007. In March 2009 Steve Ballmer conceded publicly that Microsoft needed to make faster Windows Mobile advances — an admission that the roadmap itself was the problem.
What changed this week is the framing: UBS's Maynard Um put it in a client note that the iPhone is actively undermining Microsoft in its home territory, with the delay of Windows Mobile 7 cited as the reason enterprise traction is slipping. The note lands just as Microsoft prepares to open its first retail stores in Scottsdale and Mission Viejo this fall.
First-order effects
- Microsoft's enterprise mobile base is exposed now: IT buyers evaluating refreshes through the Windows Mobile 7 delay have a credible alternative in the iPhone, and Um's note signals sell-side analysts are treating the loss of accounts as a live risk rather than a hypothetical.
- Apple gains a sales channel into corporate fleets without changing anything about the product — enterprise adoption follows the device employees bring in, which is the dynamic Gartner flagged back in September 2007.
Second-order effects
- Microsoft's handset and carrier partners shipping current Windows Mobile hardware face shrinking enterprise demand while they wait on a next-generation OS, pressuring them toward Android or other platforms for business lines.
- Apple's App Store ecosystem becomes a hiring ground for enterprise software vendors deciding where to spend mobile development budgets, compounding the platform advantage beyond handset counts.
Third-order effects
- If the pattern holds, the smartphone OS market consolidates around platforms that ship on a fast consumer cadence, and Microsoft's historical enterprise lock-in — built on Exchange and IT procurement inertia — stops functioning as a moat for mobile.
- Microsoft's first retail stores, opening this fall, become a test of whether direct retail can rebuild consumer mindshare fast enough to slow the enterprise bleed, though store openings address perception more than the missing OS.
The trend: Enterprise mobile computing is shifting from IT-procured Windows Mobile fleets toward employee-driven iPhone adoption, with Microsoft's release cadence — not Apple's pricing or features — setting the speed of the transfer.