Microsoft Eyes Apple for Cues as iPad Transforms Media, Pundits Say

SEATTLE -- Having made its name beating Apple in the desktop wars, Microsoft is now taking cues from its consumer-savvy Cupertino rival in more closely managing the various Windows platforms, tech pundits said late Wednesday on a panel hosted by the Puget Sound Business Journal’s TechFlash blog.

The pundits also predicted a steep climb for Google’s Android platform versus Apple’s iOS which is found in the iPhone and iPad. The tech community was gathering for TechFlash’s annual Flashies awards, in which readers voted for “do-gooder” (Northwest Entrepreneur Network), “newcomer” (Founder Institute, a startup and entrepreneur training program), “stunt” (T-Mobile’s designation of its HSPA+ network as 4G) and “debacle” (Microsoft’s short-lived Kin phone) of the year, among other categories.

Apple managed to resuscitate the tablet, a category pioneered by Microsoft but considered a dud, and spawned a glut of competition that’s now endangering low-end PC sales, said Nick Wingfield, a Wall Street Journal reporter covering Microsoft and digital media trends. The problem is the iPad, whose premium applications include Hulu Plus and Netflix, is also giving media companies a reason to re-negotiate their licensing structures, said Tricia Duryee, who recently joined AllThingsD.com from mobile news blog MocoNews.net. Depending on whether they consider the iPad a true mobile device that’s complementary to cable subscriptions, or something more likely to displace subscriptions, video providers might jack up licensing rates, she said.

There’s really no peer gadget for the iPad, a “relaxing device” not comparable to a phone or laptop, said Wilson Rothman, deputy technology and science editor at msnbc.com, which is part-owned by Microsoft. “The numbers game is misleading” between mobile application stores because developers are building the best applications for the iPad specifically -- not a blown-up iPhone version -- making use of its 10-inch screen over the 7-inch screens found on Android tablets like the Samsung Galaxy, he said. Recipe website Epicurious and casual game Angry Birds have improved functionality on the iPad, for example, he said. The iPad is teaching media companies how to improve what are now terrible interfaces for features such as video-on-demand, Wingfield said.

Windows Phone 7 shows that Microsoft has learned “hard lessons” from Apple, Rothman said. Microsoft’s new mobile platform doesn’t give much “wiggle room” for manufacturers -- an Apple trademark and contradiction of Microsoft’s open strategy that made Windows the desktop default, Rothman said. Users can have a “whole relationship with this device without going out and getting apps,” he said, calling himself initially skeptical of Phone 7 but eventually impressed. Licensing the Phone 7 OS is much less lucrative than Windows for the PC, showing Microsoft is “building a moat” around the Windows brand in a similar fashion to Apple’s unified ecosystem, Wingfield said.

That Apple CEO Steve Jobs criticized Android in Apple’s latest earnings call showed what a threat it’s considered to the iOS, Duryee said. Android and its partners such as HTC are also a litigation magnet for competitors, which is “partly about blunting Android’s ascendance,” Wingfield said. Android’s smaller application market, not directly managed by Google, isn’t necessarily a liability, said Matt Marshall, editor and CEO of VentureBeat.com, whose staff largely uses Android. Developers will be drawn to the platform because Android devices are selling at a brisk pace, he said: “After you get past 500,000 apps, how many do you really need?” Android’s ongoing problem will be malware, Rothman said, noting the popularity of a malware application scanner in the Android Market. “It only makes the ‘closed’ argument better.” The Android Market also suffers from using the unpopular Google Checkout as the default payment mechanism, no carrier billing and no in-app purchases, Duryee said. The iPhone still dominates in the “modern mobile browsing experience” despite its absence of Flash support, Wingfield said.

The meteoric rise of group-buying website Groupon, rumored to be in acquisition talks with Google for more than $5 billion, surprised everyone. “It may seem fairly mundane” considering the proliferation of copycat deal-a-day websites that followed, but Groupon “hit the trend spot of social” in e-commerce before others, Marshall said. In contrast, Facebook is drawing inordinate attention for ho-hum developments such as Facebook’s flattened communications platform, dubbed the “Gmail killer,” Wingfield said. What keeps it hanging on, as pioneers Friendster and MySpace fell to the side, is Facebook’s “network effects” coming from the wide use of Facebook Connect on other sites, he said. Despite huge mobile traffic, Facebook’s mobile team only has 15 staffers, Duryee said. The company will have to “grow up” in its cavalier attitude toward user privacy, Wingfield said, predicting young users will need digital “tattoo removal services” when they join the workforce.

The online publishers covering the tech space have something to fear from Facebook, Rothman said. “We're letting Facebook host all our conversations” as readers post articles in their news feeds and friends leave comments there rather than on the publishers’ websites, denying them ad revenue, he said. Small publishers are the losers amid the “massive consolidation” among online publishers like AOL, whose purchase of popular blog TechCrunch.com gave the site the traffic it needed to draw large advertisers, Marshall said. Ad agencies don’t want to deal with thousands of small publishers like VentureBeat, which gets ads through Federated Media, he said.