Microsoft – HERE today, gone tomorrow

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All is not well in the consumer ecosystem.

• HERE has severed the last link with its old owner in deciding to pull its app from Windows 10 rather than develop it again from scratch.
• This is a sign of the malaise that currently grips the Microsoft consumer ecosystem as users of that ecosystem have been in decline for some time with no reverse in sight.
• HERE was deeply integrated into Windows Phone 8.1 due to being owned by Nokia at the time.
• In order to get this to run on Windows 10, HERE implemented a workaround that would allow the Windows 8.1 app to run to Windows 10.
• However, that workaround will cease to function at the end of June and rather than redevelop from the ground up, HERE has decided to pull its support all together.
• Although the economics to cease development make sense, I suspect that the real reason behind this decision is Microsoft Maps.
• Microsoft Maps is Microsoft’s own implementation of the HERE map and it has two significant advantages over the HERE app for Windows.
  • First. It is installed at the factory.
  • This ensures that the app will perform better and consume less resources than anything that has been downloaded and installed.
  • Second. It is the default option on a Windows 10 device.
  • This means that links in other apps will open Microsoft Maps by default, giving it a big advantage when it comes to usage.
  • This is exactly the feature that has enabled Apple Maps to gain significant share of usage against Google Maps on iOS despite being an inferior product.
• Consequently, from HERE’s perspective, the economic return of re-writing its app for Windows 10 makes no sense and instead it will be concentrating on making its experience on iOS and Android better.
• For Microsoft, this yet another worrying sign of the deteriorating health of its consumer ecosystem.
• RFM believes that at this point in time only the experience on the smartphone and the tablet matter when it comes the user’s decision about where to live his Digital Life.
• Consoles and PCs where Microsoft has millions of users are still not important when it comes to this critical decision which is why this deterioration is particularly worrying.
• Microsoft is doing an excellent job of developing its Digital Work ecosystem with over 200m downloads of Office on Android and iOS but consumer is another matter entirely.
• This is why if Microsoft wishes to remain a player in the consumer ecosystem, it must reverse this trend but of this there is still no sign.
• Consequently, I see the possibility of Microsoft focusing on the Digital Work ecosystem and offering Digital Life services to entice these users to spend more time with Microsoft.
• Unfortunately, this typically works the other way round with Digital Life having an impact on defining Digital Work not the other way around.
• This means that Microsoft has to do something very different and very special in order to be able to buck that trend.
• Microsoft still has some time to act but with every quarter that passes it will become more and more difficult to mount a comeback.
• The good news is that Microsoft’s valuation does not demand any success in this arena.
• In fact, the consumer ecosystem could completely collapse and the shares would still be attractive.
• Consequently, I still like Microsoft as the momentum in Digital Work remains excellent with consumer being a free, long dated option.