Windows Phone 7 could earn Microsoft significant market share against the iPhone and Android over the next few years, or totally fail--depending on which analyst you ask.
Will Windows Phone 7 fail?
That's the question likely keeping more than one Microsoft
executive awake late into the night. As the company prepares to launch its
newest smartphone platform Oct. 11, the stakes could not be higher: a
successful line of devices will give Microsoft some much-needed momentum in its
long-term smartphone battle against both the Apple iPhone and Google Android.
Failure, though, could reduce Microsoft to a bit player in one of the
fastest-growing tech segments.
Microsoft is betting that Windows Phone 7's unique user
interface will help differentiate it in a crowded marketplace. Unlike Google
Android and the Apple iPhone, which present users with grid-like screens of
individual apps, Microsoft's offering aggregates Web content and applications
into subject-specific "Hubs" such as "Office" and "People." Microsoft's
first advertisements for the platform
focus on its supposed ability to
streamline and speed users' interactions with their phone.
More broadly, Microsoft's smartphone strategy sits on three
pillars: design, integrated experiences-i.e., the "Hubs"-and a
"One of the problems the phones are going through right now
is fragmentation," Andy Lees, senior vice president of Microsoft's Mobile
Communications Business, told an audience during Microsoft's Worldwide Partner
Conference in July. "For developers and ISVs, it makes it very difficult. We're
making sure our software is fully optimized" to run with manufacturers' phone
Lees also suggested that, although Microsoft has bled
market share for the past several quarters, there was still a substantial
chance for the company to gain it back-because the smartphone arena itself is
still in a state of massive flux. "The phone is going through a massive
inflection point," he said. "There's immense competition, but in many respects,
things are just beginning."
Some research firms, however, think Windows Phone 7 won't
prevent Microsoft from continuing to lose market traction in smartphones. For
its part, Gartner predicts that Microsoft's share will drop from 4.7 percent in
2010 to 3.9 percent by 2014, following a brief uptick in 2011.
"Launches of updated operating systems-such as Apple iOS 4,
BlackBerry OS 6, Symbian 3 and Symbian 4, and Windows Phone 7-will help
maintain strong growth in smartphones in 2H10 and 2011 and spur innovation,"
Roberta Cozza, an analyst at Gartner, wrote in a Sept. 10 research note.
"However, we believe that market share in the OS space will consolidate around
a few key OS providers that have the most support from CSPs and developers and
strong brand awareness with consumer and enterprise customers."
But that contrasts with predictions by IDC, whose analysts
see market share increases for both Windows Phone and Google
Android between 2010 and 2014. The research firm predicts that "Windows
Mobile," which presumably groups the legacy Windows Mobile with Windows Phone 7
and any successive versions, will grow from 6.8 percent to 9.8 percent of the
smartphone market during that period.
"IDC believes the market with comfortably support up to five
OS players over the next five years," Kevin Restivo, an analyst with IDC's
Worldwide Quarterly Mobile Phone Tracker, wrote in a Sept. 7 statement.
"Shorter replacement cycles and an ample feature phone to smartphone upgrade opportunity
means the smartphone OS market will remain fragmented but healthy for the
foreseeable future." Within that context, no smartphone platform will dominate
Microsoft realizes the stakes: Its board
recently paid CEO Steve Ballmer only half of his potential bonus for fiscal
2010, in part due to the "loss
of market share in the company's mobile phone business"
under his watch.
The question is whether its strategy-backed
by nearly a half-billion dollars' worth of marketing muscle
-will succeed in
a rapidly evolving landscape. The analysts themselves seem divided on that