Windows Phone 7 Sales, ARM and Nokia Rumors Dominated Microsoft Week

By Nicholas Kolakowski  |  Posted 2010-12-26

Windows Phone 7 Sales, ARM and Nokia Rumors Dominated Microsoft Week

Microsoft's week was filled with rumors about its announcements at the upcoming Consumer Electronics Show.

On Dec. 21, Bloomberg reported that Microsoft would use the show to debut a version of Windows that leverages ARM Holdings technology. ARM chip designs currently dominate much of the mobile market, particularly in smartphones. That report, citing unnamed sources "familiar with Microsoft's plans," suggested that the new Windows software "would be tailored for battery-powered devices, such as tablet computers and other handhelds."

Microsoft and ARM declined to comment to Bloomberg, but such an arrangement between the two companies would certainly be possible. Earlier this summer, the pair announced "a new licensing agreement for the ARM architecture," which led to speculation that a deeper collaboration was in the making over mobile devices such as tablets.

Rumors about a possible ARM collaboration over Windows would complement earlier ones suggesting that Microsoft plans to use CES to debut a line of Windows 7 tablets, including devices built by Dell and Samsung. Driving those rumors was a Dec. 13 story in The New York Times, whose unnamed sources suggested that Microsoft CEO Steve Ballmer would show off the tablets during his keynote.

An ARM collaboration on a tablet-ready Windows, though, would run a bit counter to earlier reports that Microsoft would use Intel's upcoming "Oak Trail" Atom chips to power its widely expected upcoming line of tablets. Throughout 2010, Microsoft executives emphasized that Oak Trail connection so often, and at such length, that it often seemed as if Intel would exclusively power any Windows tablets in the pipeline.

"I think we're laser-focused on tablets as an emerging category," Bill Koefoed, Microsoft's general manager of investor relations, said Aug. 10 at the Oppenheimer Annual Technology, Media & Telecommunications Conference in Boston. "Intel is going to come out with their Oak Trail chip around the first of the year and, we think, that's going to offer a lot of new capabilities. Whether it's better usage of battery life and the like, it's going to really help move the category forward."

But the Bloomberg report suggested that Microsoft's new Windows software "also will be able to work on Intel Corp. and Advanced Micro Devices Inc. processors," hinting that Microsoft's tablet and mobile-device strategy-at least in the Windows context-could involve multiple chip vendors.

Windows Phone 7 Sales


Microsoft (Kinda) Announces Windows Phone 7 Sales

In more concrete news, Microsoft announced that some 1.5 million Windows Phone 7 smartphones had sold during the platform's first six weeks of release, breaking company executives' previous reluctance to share any hard data on sales.

"We are pleased that phone manufacturers sold over 1.5 million phones in the first six weeks," Achim Berg, Microsoft's vice president of business and marketing for Windows Phones, mentioned in a Q&A posted Dec. 21 on the company's corporate Website, "which helps build customer momentum and retail presence." Those numbers apparently meet the company's internal expectations.

Microsoft hopes that strong Windows Phone 7 sales will allow it to reverse several quarters' worth of market-share declines in smartphones, where it faces fierce competition from the likes of Google Android and the Apple iPhone. However, those new sales figures represent sales from manufacturers to mobile operators and retailers, not customers.

In November, reported that 40,000 Windows Phone 7 devices sold on Nov. 8, the platform's first day of U.S. availability. That, combined with Microsoft executives' previous reluctance to share sales numbers, led a selection of pundits and analysts to suggest Windows Phone 7 was underperforming among consumers, especially in contrast with the hundreds of thousands of activations per day racked up by Google Android and Apple iOS devices.

However many customers are actually purchasing Windows Phone 7 devices, that 1.5-million sales figure suggests that mobile operators and retailers are taking a bet on the platform's appeal. In the meantime, some analysts are seeing Windows Phone 7's first weeks in a positive light.

"We can say that for a company that just a few months ago was an also-ran in mobile, having 10 smartphones released in 30 countries is not a trivial achievement," Al Hilwa, an analyst with research firm IDC, wrote in a Dec. 19 research note. "I would not be surprised if Microsoft had the third-largest app portfolio in the industry by the middle of next year." Windows Phone 7's Marketplace currently holds 4,000 apps.

Windows Phone 7 on Nokia?


Windows Phone 7 on Nokia?

Even as Microsoft finally announced those sales numbers, rumors suggested that the company was in discussions with Nokia over porting Windows Phone 7 onto the latter's mobile devices.

Russian blogger Eldar Murtazin, in an editorial published on Russian Website Mobile Review, suggested that Nokia and Microsoft had initiated those talks a month ago. "They are talking about the creation of a new line of Windows Phone devices," according to Unwired View, paraphrasing Murtazin's piece, "which could be sold under Nokia brand, via Nokia distribution channels and have some typical Nokia features."

In the past, Nokia has denied any intention of adding to its smartphone ecosystem. "This stance was strongly reinforced by our management during Nokia World, and we have no plans to use other operating systems," company spokesperson Leo McKay told Bloomberg in September, the last time rumors emerged that Nokia would integrate Windows Phone 7 into its offerings.

According to one analyst, though, adopting Windows Phone 7 could prove disastrous unless paired with a clearly defined strategy. "If this is the path, it could be beneficial to both companies," Rob Enderle, principal analyst of the Enderle Group, wrote in a Dec. 20 e-mail to eWEEK. "If it is yet another hedge in a massive bet that includes platforms from Nokia, Intel and Microsoft, it will spread Nokia's resources too thin for them to execute well on any of the initiatives."

In order words, Enderle added, "Nokia needs to pick a path and properly resource it." Nokia CEO Stephen Elop formerly served as Microsoft's Business Division president, another X factor in any negotiations.


In more desktop-centric news, Microsoft this week canceled Office Genuine Advantage, an anti-piracy measure that asks users to validate their copy of Office before downloading updates and add-ons. "The Office Genuine Advantage ('OGA') program has been retired," reads a note on the Microsoft Support Website. "For more information about the benefits of genuine Office, please visit the following Website." That link leads to a page describing the benefits of genuine Office.


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