Microsoft: Global Smartphone Adoption Could Push Windows Mobile Sales 50 Percent

Microsoft (Nasdaq: MSFT) believes it can grow the market for its Windows Mobile operating system by at least 50 percent in each of the next two years as the market for smartphones explodes globally.

The software giant could sell as many as 20 million copies of Windows Mobile during the soon-to-end fiscal year, almost double the 11 million it shipped last year, Eddie Wu, Microsoft's managing director of OEM (original equipment manufacturer) embedded devices in Asia, told Reuters during a conference in Taipei.

Fifty percent growth would be the minimum the company expects to see for 2008 and 2009, he reportedly said. Microsoft believes most of the growth will come from overseas markets, including the Asia-Pacific and Middle East region, and from emerging markets such as Brazil, Russia and India.

Microsoft did not immediately respond to a request for comment on the report.

The optimistic outlook for Windows Mobile comes just days after Microsoft promised to make major advances in mobile advertising, launching new ad services for Web-enabled devices and previewing a marketing program that will run on the Zune media player.

An Apple a Day?

Several smartphone makers have embraced Windows Mobile as their operating system of choice, including Samsung, Motorola (NYSE: MOT) and Asus, but top mobile phone maker Nokia (NYSE: NOK) and others still use the Symbian operating systems on their devices.

Meanwhile, newer competitors have stormed the smartphone world in recent years, most notably BlackBerry maker Research In Motion (Nasdaq: RIMM) and iPhone maker Apple (Nasdaq: AAPL).

Apple moved into third place behind Nokia and Research In Motion in worldwide smart device market share, according to research firm Canalys. In the U.S., Apple did even better, placing second behind RIM and grabbing more market share than all of the top Windows Mobile device makers.

Linux-Based Competition

Microsoft is also no doubt eyeballing the arrival of the Google (Nasdaq: GOOG) Android Linux-based mobile platform, which is still some time from being available. In fact, within five years, Linux will power 20 percent of the smartphones sold each year, predicts ABI Research. The firm cited Android and the purchase by Nokia of Linux software maker Trolltech as major developments in the space.

Linux may hurt Symbian more than Windows, which is likely to gain favor among enterprises that already have Windows running on their networks, ABI analyst Stuart Carlaw told the E-Commerce Times. Symbian has already seen its market share take a hit, from a high point of more than 73 percent in 2006 to 65 percent in the fourth quarter of last year, he noted.

Symbian market share could fall below 50 percent in as little as three more years, Carlaw added. "Device makers are shifting in response to their customers' demands, and the direction is away from the Symbian dominance of the past."

Waiting on 7.0

Still, the 50 percent growth rate would be a surprise since Windows Mobile is between major releases, with version 7 not due to be released to handset makers until early next year, meaning it may be late in 2009 before the platform appears on the shelves. The growth rate also comes on top of relatively modest sales compared to those of rivals, Carlaw noted.

While the iPhone is edging into enterprises more and more over time, Windows Mobile may be gaining from the iPhone indirectly, since the platform appears to work well in touchscreen devices, said Gartner (NYSE: IT) analyst Todd Kort.

"The overall direction of the market is dramatically higher, and Microsoft is riding that wave very well in key markets," Kort told the E-Commerce Times. The overall smart device market is expected to grow by close to 20 percent for each of the next two years, the research firm predicts.

Microsoft is also benefiting from the growing importance of the platform on devices. Though the iPhone is a breakthrough in many ways, rivals have already released a slew of copycat devices, and the gap between Apple and others -- a touchscreen BlackBerry is in the works -- will continue to shrink, Kort said.

"If the devices are largely the same, the focus of enterprises in particular turns to the platform and what that can do for them," he added. "Microsoft has a significant advantage when it comes to convincing enterprises that their platform will work for them."