Microsoft's Windows Phone Challenge: Cheaper and More Powerful, Or Die

Microsoft is betting that cheaper phones, the Mango update, and more partners can help it succeed in the smartphone space. Is that possible?

Could a cheaper Windows Phone change the mobile game for Microsoft?

During his July 12 keynote speech at Microsoft's Worldwide Partner Conference, in Los Angeles, Windows Phone Division president Andy Lees suggested that advances in technology would put the price of a smartphone capable of running Windows Phone software somewhere between $100 and $150.

"We're at an inflection point in Moore's Law where you can put everything needed to run a computer on a single chip," he said. "We can take the advantages we provide the PC and immediately provide them across devices."

Microsoft has already begun leveraging the rest of its technology stack to build out the capabilities of Windows Phone. The version of Internet Explorer 9 running on Microsoft's smartphones, for example, has the same software underpinnings as the browser that runs on PCs. With devices across the spectrum capable of swapping key pieces of technology, Lees added, "there won't be an ecosystem for PCs and an ecosystem for phones, then one for tablets; they'll all come together."

Windows Phone needs all the help it can get, at least in terms of establishing itself in the ultra-competitive smartphone arena. For the three-month period between the end of February and the end of May, research firm comScore estimated that Microsoft's U.S. share dipped from 7.7 percent to 5.8 percent. During the same period, adoption of Google's Android platform rose from 33 percent to 38.1 percent, while Apple enjoyed a slight uptick, from 25.2 percent to 26.6 percent. Research In Motion continued its market slide, declining from 28.9 percent to 24.7 percent.

During his July 11 keynote speech at the WPC, CEO Steve Ballmer conceded that Windows Phone's market presence is "very small." Nonetheless, he went on to insist that other metrics bode well for the smartphone platform.

"Nine out of 10 people who bought Windows Phone would absolutely recommend it to a friend," he said, reiterating a talking point voiced by many a Microsoft executive over the past few months. "People in the phone business believe in us."

He also referred to Microsoft's deal with Nokia, which will see Windows Phone ported onto the latter's devices. "Nokia could have bet on themselves, bet on Android or bet on Windows Phone," he said, suggesting that the Finnish manufacturer went with Microsoft after "they saw our roadmaps and saw what we did."