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Is the Space Between Android and Apple Big Enough for a WinPho7 Hit?

Is the Space Between Android and Apple Big Enough for a WinPho7 Hit?

Microsoft is bucking its own trend in giving its hardware partners a more exacting list of tech specs they need to follow in order to make Windows Phone 7 handsets. That set of standards places it in the space between Android, with its wide variety of hardware devices and UI tweaks, and the iPhone, a centralized platform with a single company at the helm. Is there enough room in the middle for a WinPho 7 bonanza?

By Renay San Miguel
06/01/10 5:00 AM PT

It has become the PowerPoint slide seen around the world -- or at least the World Wide Web, and specifically those websites and blogs that pay close attention to technology and the smartphone market. A Microsoft presentation at the ReMIX trade show in France this week boasted a slide showing that tech market research firm IDC predicts 30 million Windows Phone 7 devices sold worldwide by the end of 2011.

Considering it took Apple nearly three years to sell 50 million iPhones, Redmond seemed to be setting its own bar at Olympic-style heights -- especially when you factor in the troubled history of Microsoft's attempts in the mobile phone space. Could the Windows Phone 7 OS really be that good?

Answer: Maybe, but the IDC data Microsoft was quoting includes sales of Windows Mobile 6.x phones, according to the All Things Digital blog. 451 Group research director Chris Hazelton suspected as much. "It's likely a misquote of data. It's got to be for Windows Mobile in general," Hazelton told TechNewsWorld. "That would include Windows Mobile 6 and 6.x. For just Windows Phone 7, that's unlikely to happen. It's not to say that Microsoft can't do that, but it shows how impressive Windows Phone would have to be to reach that goal. For someone to say 30 million devices, they either aren't that familiar with the competition or just how big this market is."

IDC did not respond to a request for comment by press time, but the new Microsoft Kin phones now on the market and the forthcoming first Windows Phone 7 handsets expected to hit stores late this year will likely obliterate sales of existing Windows Mobile 6/6.x phones. So let's rephrase the question: does Windows Phone 7 OS need to be that good? The unqualified answer: yes.

The Challenges for Redmond

Microsoft is preparing to meet these lofty goals as it looks for new leadership in its Entertainment and Devices division, where Windows Phone shares priority with Xbox 360 and Zune. The former division chief, Robbie Bach, announced his retirement this week. Bach's departure comes as Google's rival OS, Android, continues to gather momentum; many of Microsoft's OEM partners are also coming out with Android phones.

"This field is getting crowded fast and hard, and people are really trying to stake out their positions here," ABI Research chief analyst Michael Morgan told TechNewsWorld. "The partners are saying, 'How do we grow our ecosystem?' And Microsoft is saying, 'You'll do it the way we tell you to,'" referring to the restrictions the company has placed on hardware manufacturers using Windows Phone 7, such as a guarantee of at least an 8 megapixel camera in handsets. That's a departure for Redmond from previous Windows Mobile licensing deals.

"That goes against their corporate culture," Yankee Group analyst Carl Howe said. "Microsoft used to tell OEMs 'We don't care what you do with it, just license it and we'll be happy.' So that's a change. The restrictions make a lot of sense because you end up with a much more uniform platform base. For developers, it's easier to write software for that. That's a big justification for the restrictions."

While that might be more appealing to developers than the fragmentation of the Android platform, the perception is that Microsoft is playing from too far behind to make a dent in the consumer market, and that it still faces fierce competition in its traditional enterprise target market. "The growth potential is shrinking. That's why I say [30 million units] is going to be a close call. With Windows Phone 7, they better show me something. They better show the whole industry something," Morgan said.

The Prediction Game

Hazelton is reminded that Microsoft missed its 2008 goal of shipping 20 million Windows Mobile devices by June of that year. "In June 2008 Android was a very nascent OS. Today most of Microsoft's mobile hardware partners are also using Android. And while the total market for smartphones and number of shipments are going up, it hasn't gone up enough for Microsoft."

The company still hasn't proven it can make a popular consumer smartphone. "There are a lot of unknowns. You can't count out Microsoft because they are a very large company. They have the installed base of Exchange Server. But it's a much tougher market today and going forward than it was in 2008," he added.

Email is seen as being so 20th-century by the younger consumer market helping to drive smartphone sales, Howe told TechNewsWorld. "Email is something their parents do. For the younger people, it's all Facebook and IM and texting. The market moved. Enterprise sales don't help you with consumers. Microsoft is much more of a startup and less of an established player in the mobile phone market."


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