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Updated: despite the Business Insider claims, the list of motives is actually a perfect copy of those mentioned by Steve Ballmer in a CNN interview, and I also found that the list of motives for the claimed inferiority of Android is actually from 2008, as can be found here. I found quite funny that basically the same motivations apply two years later for a different OS (in 2008 it was Windows Mobile 6.5, a totally different operating system), and are quite similar to the list of motivations from MS to avoid open source – namely, inferior user experience, hidden costs and IPR risks. Maybe Microsoft has not changed so much as it would like to claim.

A recent Business Insider post provided, other than a nice retouched photo of Google’s Schmidt with menacing red eyes, a snippet of conversation with an anonymous MS employee that claimed that Android “free” OS is not free at all, and its costs are much higher than the $15 asked by Microsoft as licensing fees. Having had my stint on mobile economics, I would like to contribute some of my thoughts on what is actually implied by the MS employee, and why I believe that some parts of it are not accurate. Before flaming me as a Google fanboy, I would like to point out that I am not affiliated with Google, MS, anyone else (apart my own company, of course), and my cellphone is a Nokia. Enough said.

OEMs are not using the stock Android build. All Android OEMs are bearing costs beyond “free.” That goes with the definition of OEM – it is hardly a surprising idea. My gripe with the phrase is that the author had, conveniently, conflated the concept of “free” as “freely available operating system” with “free as in I have nothing to do, everything is done for me for free”. The second concept is actually quite uncommon, and I had never met an OEM product manager that believed in something like that. It reminds me a lot of the old taglines used in the infamous MS “comparisons”, that were – with blessings from all – sacked from Microsoft web site. So, in conclusion: yes, you will bear costs other than downloading Android from GIT. And – surprise – I am sure MS will ask for engineering costs for adapting WinPhone7 for any adaptation outside the stock image.

Lawsuits over disputed Android IP have been costly for Android OEMs. (See Apple/HTC, as just one example.) Microsoft indemnifies OEMs who license Windows Phone 7 against IP issues with the product. That is, legal disputes over the IP in Windows Phone 7 directed at OEMs will be handled by Microsoft. This goes a long way toward controlling legal costs at the OEM level. Ah, please, Microsoft – you are so friend of OSS, and you still drum the “IPR violation” song? Anyway, I am quite sure that indemnification can be quite easily acquired, probably from Google or from a third party. It depends on the kind of IPR that the OEM itself does have; in some cases such a patent safety scheme is uneconomical. It is, in any case, a business decision – Symbian did not had indemnification either (or only as an additional product) but that did not stopped Symbian from becoming the most widely used mobile OS.

Android’s laissez faire hardware landscape is a fragmented mess for device drivers. (For background, just like PCs, mobile devices need drivers for their various components—screen, GPS, WiFi, Bluetooth, 3G radio, accelerometer, etc.) Android OEMs have to put engineering resources into developing these drivers to get their devices working. The Windows Phone 7 “chassis strategy” allows devices to be created faster, saving significant engineering cost. It’s essentially plug and play, with device drivers authored by Microsoft. This (apart from the use of the clearly pejorative mention of “fragmented mess” is naturally true. It is also – another surprise – the reason of Windows success, namely the external ecosystem of hardware devices, mostly unpredictable, that were basically developed and managed outside of Microsoft control. After much bashing of Apple’s “walled garden”, now Microsoft seem to imply that the same model that brought them success is now useless, and that to win in mobile you have to adopt Apple centrally managed hardware experience. It may be true, or not – but I suspect that hardware manufacturers will be more happy to create many permutation and device models, designed for different price points and different users, in a way that would be incompatible with MS central control and central device driver development. What happens if I need to push on the market a device that deviates from the MS chassis? Will MS write the driver for me, for free? What if it doesn’t want to write it? The chassis model is nice if you are Apple, and are selling basically a single (or a few) models; if you are going to market with many hardware vendors, you are forcing the same, undifferentiated hardware on all OEM – and this is a great no-no. How are you going to go against competitors that do employ exactly the same model, bill of material, same procurement channel?

Also, this phrase is a clear indication that someone inside of MS still don’t understand what (real) open source is about. The amount of engineering necessary for creating a complex product out of OSS is substantially lower than proprietary alternatives, as I demonstrated here and here; the driver development effort can easily be shared among many different projects that use the same component, lowering the development costs substantially.

Windows Phone 7 has a software update architecture designed to make it easy for OEMs to plug-in their custom code, independent of the OS code. We’ve seen the delays due to Android OEMs having to sink engineering resources into each and every Android update. Some Android OEMs skip updates or stop updating their less popular devices. Because of the unique update architecture, Windows Phone 7 OEMs don’t need to roll their own updates based on the stock build. Costs are reduced significantly. This is another part that is, until Phone 7 is out, difficult to judge. It is a part that I believe stems from an underlying error: OEMs add code to differentiate and to push branded apps and services, not because they have to compensate for an OS missing functionality (especially now, with Android 2.2; Android 1.5 and 1.6 needed some addition from third parties because of lack of features). Carriers, once sold a device, are not that interested in providing updates – after all, you are already locked in a contract. I had seen no official documentation on why Phone7 can be so modular that no engineering is needed even for custom layers on top of the user interface – we will see.

Android OEMs need to pay for licenses for many must-have features that are standard in Windows Phone 7. For example, software to edit Office documents, audio/video codecs (see some costs here), or improved location services (for this, Moto licenses from Skyhook, just as Apple once did). Of course, all of these license fees add up. I like the concept of “must have” – it is widely different for every user and company. For example, I am sure that using Google Docs or Zoho (or Microsoft Web office, that is quite good on its own) would go against the “edit Office documents” part; as for the audio/video codecs, of course you have to license them… unless you use WebM or similar. Or, like many OEM, you are already a licensee for H264 and other covered standards-  in this case, you pay around 1$ per device. As for other services: I found no mention of location services from MS, at least not in the public presentations. If anyone has more details on them, I would welcome any addition.

Windows Phone 7 supports automated testing. Android doesn’t. When OEMs hit the QA phase of the development lifecycle, it’s faster and less expensive to QA a Windows Phone 7 device than an Android device. Again: if you have a single chassis, or a few of them, testing is certainly easier. However, there are quite a few testing suites that allow (through the emulator) to provide a very good automated testing facility.

Finally, Windows Phone 7 comes with great user experiences in the Metro UI, Zune, Xbox LIVE, Exchange, and Visual Studio for app development. Creating these experiences for Android is costly. They’re not baked into the stock build of Android. Well, there are quite a few tools for app development on Android as well. How, exactly, Exchange should be counted as a great user experience is something I am not understanding well, but that is probably a limit of mine.

In synthesis, the new MS concept is “we do it like Apple”. I am not sure that this can work for anyone that is not Apple, though; first of all, because up to now product engineering excellence was not among MS most touted virtues, and because this will in turn go against the differentiation trend that OEM and telcos are pushing to make sure that their brand lines remain unique and appealing enough. How many Phone7 devices can a telco carry? 1? 2? It is possible to imagine a custom Android device for every price point instead – some carriers like Motorola and HTC are already pushing 5,6 devices and more, and low cost handsets are adding even more to the segmentation mix.