Windows Phone 7 Needs Apps, Price, Marketing to Succeed

Windows Phone 7 offers users a unique take on the smartphone. But Microsoft still needs ideal marketing, apps development and price to create a hit.

Microsoft launched Windows Phone 7 with a New York City event Oct. 11 and hopes that the smartphone platform will attract customers who would otherwise gravitate toward the Apple iPhone or a Google Android device. As opposed to those platforms, which offer grid-like screens of individual apps, Windows Phone 7 aggregates Web content and applications into six subject-specific "Hubs," such as "People" and "Games."

A shiny user interface, however, won't be the sole determinant of whether Windows Phone 7 succeeds in the marketplace. If Microsoft wants to reverse its steadily declining share of the smartphone market, it will need to rely on some key factors swinging in its favor.

The Apps

It's the apps, stupid. At a time when Apple's App Store is reportedly coasting toward 300,000 apps, with Google's Android Marketplace making some substantial gains of its own, Microsoft will need a robust apps ecosystem with Windows Phone 7 if it wants the platform to prosper. 

Microsoft realizes this. Throughout the summer, various executives touted the virtues of Windows Phone 7 at developer events. "Give us your games, your productivity programs, your mobile business apps yearning for a new audience," went the message, "and we will give you a new channel from which to profit." For any developer still unconvinced, it seemed, Microsoft was also reportedly willing to offer hard, cold cash.

"We are investing heavily in the developer community by offering as many resources as we can to help them be successful on our platform," a Microsoft spokesperson wrote to eWEEK July 14, in response to questions about whether the company was paying third-party developers for apps. "Where it makes sense, we do co-fund strategic projects on a limited basis."

On Aug. 17, Microsoft posted a series of online training sessions, hosted by Microsoft MVPs Rob Miles and Andy Wigley, intended to help developers create applications for the platform. The 12, 50-minute sessions covered topics such as "Advanced Application Development" and "Marketing Your Windows Phone 7 Application."

Microsoft has specific internal targets for the initial size of its application storefront, but remains reluctant to share those numbers publicly. "We're really focused on quality; we have pretty lofty aspirations," Brandon Watson, Microsoft's director of developer experience for Windows Phone 7, told eWEEK in a Sept. 15 interview. "We have to show developers that they can build applications, that they can make money. So we're really focused on the quality of the applications."

During Windows Phone 7's Oct. 11 launch event, Microsoft highlighted apps from big brands such as Netflix. But the smartphone's ultimate fortunes could rest more on whether smaller developers decide to port their wares over, as well-a handful of killer apps could make the platform that much more enticing. On the plus side: Windows Phone 7's Xbox Live integration could help attract users, which in turn could entice games-centric developers.  

The Marketing Push

Microsoft already seems to have this one in hand. Deutsche Bank analyst Jonathan Goldberg previously estimated the initial cost of the Windows Phone 7 marketing campaign at $400 million, and carriers' own advertising initiatives would only add to that amount. While Microsoft itself remains tight-lipped about any numbers, it's unlikely that the company will skimp on its marketing dollars-especially with so much at stake.

The first advertisements for Windows Phone 7 seem to focus on a singular theme: hordes of zombie-like smartphone users wander the streets, hopelessly absorbed with whatever's happening on their devices' screens, even as they collide with street signs, random objects, and each other. "It's time for a phone to save us from our phones," intones the narrator. Will that be enough to convince potential smartphone owners to side with a Windows Phone 7 device, instead of a Google Android smartphone or Apple iPhone? Time will tell. 

The Price

As Windows Phone 7's premiere U.S. carrier, AT&T will introduce three devices in November: the LG Quantum ($199), which features a slide-out QWERTY keyboard; the HTC Surround ($199), with a slide-out speaker and kickstand; and the Samsung Focus ($199), which the carrier claims will be the thinnest of the initial Windows Phone 7 devices.

In total, Windows Phone 7 will appear on nine devices during its initial release period. Although Microsoft has tried to impose strict hardware requirements on its manufacturing partners-all Windows Phone 7 devices are supposed to have three mechanical buttons, for example-those OEMs have evidently pushed back a little, adding features such as the aforementioned speakers and sliding keyboards. Microsoft is likely anxious to avoid the fragmentation issues that plagued its Windows Mobile franchise, which confused potential buyers with a wide variety of phones and operating-system versions.

But any concerns over hardware could be moot if the price isn't right. While AT&T's prices seem comparable to competing devices, Microsoft will need to ensure that hardware and data-plan costs remain competitive as more carriers introduce Windows Phone 7 devices in the months ahead. As Microsoft's Kin debacle demonstrated earlier this year, an overpriced product is quickly doomed.

Business Users

Business users constituted one of the hardcore segments for Windows Mobile, even as Microsoft's share of the smartphone market began to precipitously decline. And while Microsoft is touting the consumer-centric aspects of Windows Phone 7, it will still need to pay attention to those enterprise and SMB customers-lest they gravitate towards RIM's BlackBerry, or the increasingly business-robust iPhone and Google Android.

However, it could prove a hard road. "Business users [are] the core of the previous Windows Mobile constituency, but many have defected over the past year," Jack Gold, primary analyst for J. Gold Associates, wrote in an Oct. 11 research note. "It is unclear whether Microsoft can win them back, or even keep the existing, albeit significantly diminished, base of enterprise users."

Microsoft's Windows Phone 7 strategy for business centers on its "Office" hub, which features SharePoint integration along with a variety of mobile-productivity apps. The company is also rushing to build out the smartphones' user interface with more productivity elements. "Pretty much in the next round they have to deliver cut-and-paste, multi-tasking and allow developers to get at the database inside the devices now," Al Hilwa, an analyst with IDC, wrote in an Oct. 11 research note. "This will be important as they fold the enterprise strategy back into [Windows Phone 7], which was clearly where Windows Mobile was successful."