iPhone take a hike – business users still love us more: Microsoft

Companies – lots of them – are still buying Windows Mobile smart phones, and Microsoft Corp. doesn’t want to let iPhone mania make them forget.

During Microsoft’s most recent fiscal year, 325 enterprises purchased at least 500 Windows Mobile phones, with many buying many more, said Scott Rockfeld, group products manager for the mobile communications business at Microsoft, in an interview.

“From the armed forces to the U.S. Court System, people are not just trying Windows Mobile, they are buying them,” Rockfeld said, in apparent reference to a statement by Apple Inc. CEO Steve Jobs last month that 35 per cent of Fortune 500 companies were beta-testing the iPhone.

Moreover, seven of the 10 largest companies in the world, as ranked by Fortune magazine, bought Windows Mobile phones, including one enterprise that bought 100,000.

Rockfeld declined to name the company or even its line of business.

“That would give it away,” he said. One possibility is Wal-Mart Stores Inc. Microsoft has long had close ties with the retailing giant, such that its former CIO, Kevin Turner, is now Microsoft’s chief operating officer.

And Microsoft-based devices, going back to the era of Pocket PC and Windows CE handhelds, have long been popular tools for retailers and warehouses to help manage their inventory.

And this trend shows no signs of abating. In fact recently we’ve witnessed some large-scale deployments of Windows Mobile handhelds among field workers.

Food delivery goes [Windows] Mobile

In May 2007, for instance, Lance Inc., a Charlotte, N.C.-based snack foods company, completed an upgrade to new handheld computer hardware and software for its 1,500 snack-food delivery and sales workers.The rollout that took less than four months.

Mark Carter, vice-president of strategic initiatives at Lance, said the company was able to finish the upgrade project quickly because it decided not to make any significant changes to internal business processes for the time being. Instead, Lance plans to make incremental changes over time, Carter said.

“We were anxious to replace the old hardware, and it was important to make it happen quickly,” he said. “So we basically replicated the functionality of the old system in a new environment and did not change the way things worked for the end user.”

New Devices, Same Steps

The field workers, who take snack-food orders from retailers and then deliver the goods to stores, were given ruggedized Motorola Inc. handhelds running Windows Mobile 5.0 and a mobile sales and distribution application developed by Apacheta Corp. in San Diego. Lance’s delivery workers now carry ruggedized Motorola handheld devices.

Communication functions have been changed somewhat on the Motorola MC9090 devices, Carter said.

But business tasks are processed using roughly the same steps as they were on Lance’s older handhelds, which ran Windows 95 and had been in use since 1998. Those devices were made by the former Norand Corp., which is now part of Intermec Technologies Corp.

Taking a phased rollout approach, Lance distributed the Motorola handhelds to 150 users each weekend. The sales and delivery reps can use a Bluetooth connection and put the handhelds in a cradle connected to a small printer to create invoices and related records, Carter said.

The cradle can also be used to exchange data with sales and inventory systems at retailers.

Bob Egan, an analyst at TowerGroup in Needham, Mass., said delaying business process changes until after new hardware is deployed lets end users get “the latest and greatest handheld devices” without having to learn an entirely new environment. “And it allows a company to ramp up and rely on the skills of the workers,” Egan said.

Lance does plan to eventually change the way its sales and delivery workers do things from a business process standpoint. “We’re looking at ways to simplify their jobs and to bring standardization to the methods we use,” Carter said.

He noted that the company is continually adding new delivery routes and drivers and that it wants to use its supply chain technology to provide “predictive” ordering capabilities.

That way, even an inexperienced worker could quickly supply a retailer with the correct types and amounts of snack foods based on its actual inventories, Carter said.

Such changes should be simple to implement, according to Carter, because Apacheta’s RouteAce software is based on pre-built components that can be altered easily. He said it took only a month for Lance and the software vendor to build a prototype implementation for the new handhelds.

Lance spent “millions of dollars” on the upgrade, Carter said. He hasn’t calculated an exact cost-savings figure, but he said the time that sales and delivery workers spend transferring data has been cut by more than half.

Out-shipping the iPhone

Windows Mobile smart phones – including the hot HTC Touch, the Samsung BlackJack, Motorola’s Moto Q and 150 or so other models – actually out-shipped iPhones by a margin greater than 2 to 1 in the first quarter of 2008, according to Gartner Inc.

For the fiscal year that ended June 30th, Microsoft sold nearly 20 million Windows Mobile licenses, according to a letter last month by Microsoft Vice President Andy Lees (download PDF).

And despite the iPhone 3G’s strong opening-weekend sales (download PDF), Rockfeld noted that technology research firm IDC predicted that Windows Mobile will continue to outsell the iPhone 2 to 1 in the consumer market by 2012 and in the business space by 9 to 1.

“So you can see the hype versus the reality,” he said. Rockfeld claimed businesses prefer the stronger manageability and security of Windows Mobile phones, especially those that have been upgraded to the 6.1 version released this spring.

For instance, on Windows Mobile phones, data on removable storage cards can be encrypted, he said. And finely tuned access privileges can be imposed on devices based on the user’s Active Directory rights in combination with Microsoft’s new System Center Mobile Device Manager server software.

SCMDM, which is Microsoft’s competitor to Research In Motion Ltd.’s (RIM) popular BlackBerry Enterprise Server (BES), offers 125 built-in policies and lets IT managers create their own.

“This makes Windows Mobile phones first-class citizens on the network, as easily managed as desktop or laptop PCs,” Rockfeld said.

He took another shot at RIM, claiming that of the 325 companies buying Windows Mobile in large quantities, about a third of them also “decommissioned” BES servers at the same time.

While Windows Mobile may be growing, the same Gartner figures showed BlackBerry sales skyrocketing. Independent software vendors that create software for both BlackBerry and Windows Mobile report the same thing.

“We’ve seen some uptick in Windows Mobile, but BlackBerry remains more popular by far,” said Rob Woodbridge, CEO of Rove Mobile Inc. Microsoft’s success has long relied on its strong partner ecosystems. Rockfeld was not shy about criticizing Apple’s strategy for building an application ecosystem around the iPhone.

Apple’s decision to limit the initial number of developers able to sell their wares through App Store to just 4,000 is “not very open,” Rockfeld said. “I’d hate to be the 4,001st developer in line who didn’t meet some subjective bar Steve Jobs set.”

Microsoft doesn’t forbid anyone from developing for Windows Mobile, nor does it charge any royalties. It also has no plans to start selling Windows Mobile apps. “Once we become a retailer, then we’d have to become more closed,” he said.

There were 500 mostly consumer applications available at the iPhone 3G’s launch last week. In contrast, there are more than 18,000 publicly-available applications for Windows Mobile, including the just-released Guitar Hero 3 and thousands of custom business apps, Rockfeld said.

“There are tons more Windows Mobile apps than iPhone [ones],” noted Scott Gode, vice president of marketing and product management at server management outsourcer Azaleos Inc. “The true test will be to see three to five years from now.”

Despite his criticism, Rockfeld didn’t rule out Microsoft making software to run on the iPhone.

“Our Live Search team has a cross-platform strategy, so I can definitely assume that group is exploring the iPhone, though there are no announced plans yet,” he said.

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