Windows Phone 7 Threatens Android, but How Much?

Given the disruptive precedents set by the Apple iPhone and Google Android, analysts are sure smartphones based on Microsoft's Windows Phone 7 will slow sales of Android phones.

Smartphones equipped with Microsoft's new Windows Phone 7 operating system aren't on the market yet, so it's best to curb any enthusiasm until consumers vote on them with their wallets.

Even so, analysts who have seen or used the phones are saying they believe Windows Phone 7 could cool the red-hot rise of handsets based on Google's Android operating system.

Unless the phones AT&T and T-Mobile deliver in November fail to wow consumers, there's no reason to think Microsoft's new smartphones won't hurt Android in time.

Consider that Google just two years ago launched Android as an open-source operating system, supported initially by the T-Mobile G1, a clunky device that amused people with its accelerometer and 50 applications from a raw Android Market.

Two years, more than 60 handsets and 90,000 applications later, Android has captured almost 20 percent of the U.S. smartphone market, according to ComScore, taking share from Microsoft Windows Mobile and Research In Motion's BlackBerry platform and slowing the growth of Apple's iPhone.

This is growth not seen since, well, Apple's iPhone launched three years ago. Now the iPhone commands about 25 percent of the market despite the arrival of Android.

If Android can do it, there's no reason to believe Microsoft can't replicate this success, thanks to Windows Phone 7's improved user experience over Windows Mobile, Microsoft's quality control standards and the software giant's existing relationships with carriers and the tech world at large.

Industry analyst Jack Gold told eWEEK:

"I expect that of all the systems out there, WP7 would have the most impact on Android. Any marker share gain would likely be at the cost of Android, and not Blackberry or iPhone.

Of course, the impact will likely not be great as I am pessimistic that WP7 can gain much market share in the short term and Android is surging. So it remains to be seen what overall effect WP7 will have on the market."

Gartner analyst Ken Dulaney, who has used a Windows Phone 7 device for several months, said Windows Phone 7 will impact Android to some degree.

However, he cautioned, it's new and has the legacy of Windows Mobile behind it, which turned off the masses. Dulaney also sees other market dynamics at play here. He told eWEEK, "Android is most feared by Nokia and RIM because it can reach into lower price points. MS is a high price-point system targeted mostly at Apple."

And while some might be encouraged to think Windows Phone 7 could take some share from RIM as it's supposedly more enterprise-centric, Dulaney isn't so sure.

"It doesn't support background processing and thus you cannot do encryption. Also RIM are the king of keyboards and this isn't that good in that area," he said. "The key challenge is whether you can walk up to an iPhone user, show them the WP7 phone and get them to convert. That test, MS cannot pass yet."

Clearly, the iPhone is still the smartphone standard bearer in the United States. But as Android and Apple have shown the market, upstarts can swoop in to take share from the incumbents in the evolving mobile phone segment with relative ease in just a few short years.

Windows Phone 7 will try to follow in the footsteps of those platforms, capitalizing on the platform's quality gaming functionality and new applications. Plus, there's still plenty of room at the table, according to Gartner analyst Roberta Cozza.

"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," Cozza wrote.

"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."

Microsoft has strong support in all of those areas, making Windows Phone 7's prospects look bright.