It’s fortunate that we all have the ability as humans to grow, mature and learn from our mistakes and the mistakes of others. We wouldn’t be where we are today without the ability to adapt and learn. This fundamental principle not only applies to “macro” topics like culture; it applies to the little things as well. Cellular technology and its uses are one such example.

When cell phones first came into existence, there was essentially one use for the new technology – to make and receive phone calls. Time passed, and the emergence of the Personal Digital Assistant (“PDA”) eventually merged with the cell phone to create what came to be known as the “smart phone” – a cellular phone that could also be used to digitally maintain and manage your life. While this technology evolved, something else evolved. People began to use the technology and evolve in the ways we use the technology, as well as what we expect from the technology. As we look at today (2010) and compare how people view and expect to use smart phones to a decade ago, a lot has changed.

Ten years ago, we were all trying to figure out the best way to take advantage of smart phone technology. Not only the makers of the technology, but also the users of the technology. Different companies took different approaches. For Microsoft, the approach was simple – give users the ability to do many of things they did on a computer in a smaller, more mobile form. This is what led to the Pocket PC platform and eventually extended to the Microsoft Smartphone operating system. For the most part, no one really knew well (and could only assume) how user should interact with and experience working with a platform of this type – there really just was not enough information. Microsoft took a logical approach of familiarity; try to give users a look and feel similar to what they had on the Windows operating system. For a while, this approach worked and worked quite well. But time marched on, and along with it users comfort, experience and desires with regard to smart phones. As a result, the focus of expected user experiences also changed. This became strikingly apparent when Apple introduced the iPhone to the world.

Say what you will about Apple. Whether you like them or not, Apple does one thing as a company better than anyone in the technology sector – they research and understand targeting users and understanding their expectations for user experiences. Apple has made their living by identifying a market segment, intimately understanding how they interact with a given technology (or more importantly, how they want to interact with a given technology), and crafting a solution based upon those needs and desires. They had proven themselves time and time again with OSX as an operating system and the iPod as a media platform. While these technologies may not appeal to you or I, they did appeal to millions (I now explain to people regularly why I am not an iPod user or an OSX devotee as simply “I am not Apple’s target audience”). Apple’s next target was the cellular market – an we all know about the success of the iPhone. By identifying and understanding a user base of cell phone users, Apple created a user experience destined for success for that user base. While this was going on, Microsoft continued its focus on enabling users to do a lot of things with their now Windows Mobile devices. However, the user experience around Windows Mobile seemed to be secondary when it came to features. Which leads us to the present time.

Microsoft has shown in recent years that they are increasingly “getting it” when it comes to the user experience. While Windows Vista wasn’t the success Microsoft had hoped for, it was obvious that Microsoft was moving the desktop computing experience towards more “user-focused” features. Windows 7 has taken that design thinking to the next level, and early indicators are pointing to success in this regard. Microsoft has also shown their understanding of user experiences with both their Xbox and Zune platforms. While Zune has never achieved the sales numbers that people would have liked or expected, the customer satisfaction numbers for Zune prove that Microsoft is at least listening and responding to a targeted user bases’ needs (I think it is easy enough to argue that while their technology focus has improved, their marketing strategy still leaves much to be desired). Now, Microsoft has turned its “user experience crosshairs” on the area where they most critically need it – their mobile phone business.

If you look closely at the announced KIN platform and first devices, you can see that Microsoft has targeted a very focused user segment. This audience is all about the phone being used for connecting with friends, be it by call, email or social network. They also created very useful user experiences around all of this functionality. In the KIN, Microsoft has designed not only to do things, but to do things in a fun and efficient way.

Microsoft has taken this same approach with Windows Phone 7. They have looked at a targeted user base and focused on creating both fun and efficient user experiences to match up with user’s needs. In this respect, I am excited about Windows Phone 7. Not so much the “fun” side (although I do like fun) of the platform, mind you; I am looking forward to the efficiency. In this way, I too have evolved as a user of smart phones. While I enjoy the amount of control I have with a current Windows Mobile device, I have come to realize that is not what I really crave. I crave the ability to do the things I do on the phone in an efficient manner. I now leave the control and customization part of technology to my desktop and notebook computers. By the way – I’ve come to recognize this in my use of netbook computers as well. I craved the form factor, but the restricted power of a netbook was too hindering for me. I now realize that I am not the “target audience” for a netbook. Instead, I am the target audience for a small form-factor notebook.

KIN and Windows Phone 7 are not for everyone – I realize that. I know first-hand many existing Windows Mobile users who are upset with the decisions Microsoft has made in their mobile phone strategy. For Microsoft to succeed (or even survive) in this market, however, Microsoft has had to evolve along with users of the technology. Unfortunately, targeting certain user segments also leaves others out of the equation. From working in this segment on a daily basis, though, I can safely say the “old” market segment is much smaller than the “new” and “evolved” segment. In the end, it is about business.

Both the KIN and Windows Phone 7 platforms truly have the tools to be a success. They address how users have evolved in their usage and expectations of mobile phones. If Microsoft can effectively market that point to the world, they have the ability to once again be a major player in this market. 

During last night’s monthly user and developer group meeting, we covered a number of items. Steve Hughes’ KIN presentation was great in providing lots of info. We also covered an overview of Windows Phone 7 development (SIDE NOTE: We are planning a number of focused developer presentations in the coming months on various aspects of Windows Phone 7 development. Stay tuned for more details…).

During the meeting, a recurring theme emerged. It spanned both the KIN and Windows Phone 7, and it is an area that is essential for both platforms’ success. It is also an area that has been a sore point for Microsoft and it’s partners throughout the life of the Pocket PC, Smartphone, Windows Mobile and now Windows Phone – price competitiveness. It is an area that if not addressed will potentially cause history to repeat itself and risk the failure of the platforms regardless of the the values they provide.

The cellular industry has a long history of product pricing through subsidies that reduce the cost of a phone for the consumer. While we all know that the physical phone is but one “cost” when combined with voice, data and additional services, the general consumer expectation has been that the cost of hardware should not be an obstacle in making a purchase. This has become a sort of “immutable law” for the average consumer when it comes to cell phones. For many of you reading this piece, this line of reasoning does not apply (and rightly so). Your love of “gadgetry” supersedes cost. But remember – you are the exception, not the rule. Just think about significant others, family and friends who have questioned your sanity about the amount of money spent on such technology :-) All this brings us back to the history of Windows Mobile in the cellular market space.

Traditionally, device manufacturers using the Windows Mobile operating system and mobile operators (the AT&Ts, Verizons, etc of the world) have chosen to brand these devices as “high-end” and often priced them closer to traditional computers than phones. At the same time, the industry still treats them as “disposable devices” in terms of shelf-life (translation – you, the consumer, are willing to upgrade to new hardware on a frequent basis at “discounted” prices in return for renewing service agreements). At prices that are often still $100 - $200 USD over other phones (even after subsidies and discounts), the perception to the average consumer is often “that’s an awful lot of money for something that I won’t keep forever.”

I will grant you that Microsoft is working hard with Windows Phone 7 to attempt to add long term value to Windows Phone 7 devices. But they are not the device manufacturer nor are they the mobile operator, both who see value in you not keeping a single device for long periods of time. That being said, what else will drive sales of new Windows Phone 7 devices. Ironically, the answer lies with Apple, AT&T and (of course) the iPhone.

While initial sales of the original iPhone were good, it was not until the iPhone price drop (remember the event that had many early iPhone adopters feeling foolish for paying so much?) that truly drove sales. Since then, there has been a continuous and very conscientious effort of Apple and AT&T’s parts to bring new devices to market at lower prices. The most recent example – the entry price for the iPad coming in at under $500 and resulting amazing sales numbers – shows that competitive pricing in this segment matters. Price matters. The iPhone and iPad have, in essence, revolutionized another aspect of technology (at least in the cellular space) – powerful devices at affordable prices (at least that is what the numbers show).

For both KIN and Windows Phone 7, price will matter. IN the case of KIN, which Microsoft themselves brand as a “feature phone with great features”, but not a smartphone, pricing this device significantly above other feature phones will likely be disastrous – history and the numbers simply don’t lie. Interestingly enough for Microsoft, this is the first phone for them in which they are actually closer to being the manufacturer than ever before (while Sharp was their hardware partner here, Microsoft really ran the design part of things). Such is not the case with Windows Mobile, nor will it be the case with Windows Phone 7; Microsoft is simply the operating system licenser. However, Microsoft has the most to lose or gain with it’s investment in Windows Phone 7 (keep in mind that most of the device manufacturers are currently hedging their bets on the operating system front with Android as well).

So, how does Microsoft ensure price competitiveness with Windows Phone 7 devices? I don’t know the final answer here. Some common sense possibilities include putting pressure on the device manufacturers and mobile operators to ensure cost competitiveness (although that really hasn’t worked out in the past). Perhaps Microsoft themselves stepping up (at least initially) to cover some of the subsidy cost in order to improve chances of success. Regardless – something has to be done here to make certain that Windows Phone 7 devices do not show up on mobile operators shelves with prices that induce consumer “sticker shock”.

“Those who cannot remember the past are condemned to repeat it.” - George Santayana

For Microsoft and it’s partners in the cellular space, these words have never rung more true. Regardless of capabilities or of “sex and sizzle”, KIN and Windows Phone 7 devices risk being relegated to inventory shelves if they cannot entice average consumers with effective competitive pricing.