Windows Phone 7
Windows Phone 7 Even as it figured out a tablet response, Microsoft spent the bulk of its year gearing up for the release of Windows Phone 7, which it publicly touts as a revamp of its smartphone franchise. In the face of fierce competition from the likes of the Apple iPhone and Google Android, Microsoft had seen market share for Windows Mobile decline over several quarters; with its remaining customers largely concentrated into an Alamo of sorts in the enterprise, company executives decided it was time for a total redo.First announced during February's Mobile World Congress in Barcelona, Windows Phone 7 doesn't seek to replicate the grid-like screens of apps that define both the iPhone and Android. Instead, the smartphones aggregate Web content and applications into six subject-specific "hubs," including "Office" and "Games."Over the summer, Microsoft began encouraging third-party developers to build apps for the platform, recognizing that a robust apps ecosystem was an essential part of the smartphones' eventual success. By August, Microsoft had issued a series of online tutorials demonstrating the best practices for game- and app-building, and announced plans to debut the Windows Phone Marketplace in October. That same month, Deutsche Bank analyst Jonathan Goldberg estimated that Microsoft would push nearly $400 million toward Windows Phone 7's promotional efforts, underscoring the importance of the initiative's success to the company's future and bottom line. "We missed a generation with Windows Mobile. We really did miss a release cycle," Ballmer told the audience during his July 12 keynote address at July's Worldwide Partner Conference in Washington, D.C. "We will give you a set of Windows-based devices that people will be proud to carry." In its all-consuming desire to reset the phone game, however, Microsoft pushed Windows Phone 7 out the door without certain features in place, including cut-and-paste. The company is reportedly planning a series of updates, the first as early as January 2011, to introduce some of this functionality. Microsoft has been reluctant to discuss early sales for the first Windows Phone 7 devices, which went on sale in the United States in early November on T-Mobile and AT&T. "We're not talking about numbers yet," Joe Belfiore, Microsoft's corporate vice president and director of Windows Phone Program Management, told Mossberg during a Dec. 7 talk at the D: Dive Into Mobile conference in San Francisco. "It's just too soon to talk about numbers." But a report from TheStreet.com, paraphrasing an unnamed "market research source who tracks phone sales," suggested that some 40,000 Windows Phone 7 devices had sold Nov. 8, the first day of U.S. release. Meanwhile, international news outlets such as DigiTimes have reported strong Windows Phone 7 sales in parts of Europe and Australia. A late-November report from U.K. retailer MobilesPlease indicated that Microsoft's smartphones were being outsold by Google Android and Symbian rivals in that country. Microsoft has previously referred eWEEK's queries about Windows Phone 7 sales numbers to AT&T and T-Mobile. When questioned in November, an AT&T spokesperson declined to cite exact figures, but offered a statement: "While we won't disclose specific sales figures, we're encouraged by the early demand from customers in stores and online." Microsoft has little choice but to succeed. Its Kin initiative-a pair of phones with social-networking applications, aimed primarily at teenagers and young adults-was a miserable failure when released in the spring. That spectacular crash-and-burn, paired with Microsoft's eroding smartphone market-share, led Microsoft's board to deny Ballmer his full potential compensation for 2010. But that's nothing compared to the lost revenues and profits if Microsoft finds itself an also-ran in the mobile category, which has mushroomed over the past several quarters.