Microsoft has reportedly changed its policy for reimbursing employees' monthly data service charges, and will now only do so for employees who use Windows Mobile devices. This isn't just an example of Microsoft's cost-cutting efforts; it's also a sign of Microsoft's intention to stop subsidizing sales of other vendors' products and services.
Frankly, it's surprising that Microsoft has ever allowed employees to use iPhones and BlackBerries. Microsoft is well known for "dogfooding" its own products and services, and Microsoft CEO Steve Ballmer has said that his own children aren't allowed to use iPods or Google.
What's even more shocking is that until recently, Microsoft offered financing to channel partners for large, multivendor deals that involved as little as a single Microsoft product license. This channel gravy train ended late last month, however, when Microsoft started requiring VARs seeking financing to include at least 35 percent Microsoft product in deals.
Like most of the IT industry, Microsoft has been hard hit by the recession. In April, Microsoft reported its first-ever year-on-year quarterly revenue decline, and the company has laid off 5,000 employees this year, with more possibly to come. So it's unlikely that many employees will complain about having to pay for their own non-Windows Mobile data plans.
Microsoft can hardly say, however, that Windows Mobile devices are up to par with the likes of the iPhone, BlackBerry and Palm Pre. Windows Mobile has a reputation as a serviceable but unspectacular operating system that's quickly falling behind in the red-hot mobile industry. Microsoft last month finished work on Windows Mobile 6.5, but devices won't arrive until this fall. Windows Mobile 7, which Microsoft says will put it on equal footing with the rest of the smartphone market, isn't due until at least early 2010.
It makes perfect sense for Microsoft to avoid subsidizing sales of competitors' products, especially when several of its executives have said they don't expect any semblance of a near-term economic recovery. But the more Microsoft employees are pushed to Windows Mobile, the more light gets shined on just how far behind their employer has fallen in the mobile market.