Microsoft's Windows Phone Optimism: Justified or Delusional?

Microsoft seems optimistic about Windows Phone's future chances. Is that optimism justified?

Windows Phone is set to outperform even relatively optimistic analyst projections over the next two or three years, Achim Berg, vice president of business and marketing for Windows Phones, said in comments reported by Bloomberg.

Specifically, he termed market forecasts of Windows Phone seizing 20 percent of the global smartphone market by 2015 as "conservative," according to that Sept. 1 report.

You'd expect a company executive to offer public optimism about a product. Nonetheless, the idea of Windows Phone seizing more than 20 percent of the market is a little bit startling, when you consider the aggressive competition offered by Google Android and Apple's iPhone-not to mention Microsoft's current smartphone market share, which most third-party analysts believe is on the decline.

According to fresh data from research firm Nielsen, Windows Phone owned 1 percent of the U.S. smartphone OS market in July, lagging Google Android, the Apple iPhone, Research In Motion's BlackBerry and even the increasingly antiquated Windows Mobile franchise.

Microsoft expects its upcoming "Mango" update to alter the game. For starters, the tweaked software platform offers some 500 new additions and features. Second, Microsoft has secured commitments from a number of manufacturers-including HTC, Samsung and LG Electronics-to build a new generation of high-end Windows Phone devices preloaded with Mango. In theory, Microsoft's partnership with Nokia, which has agreed to port Windows Phone onto all its smartphones, will also extend Redmond's global reach.

To conquer the lower end of the smartphone market, rumors suggest, Microsoft is prepping a streamlined version of Windows Phone code-named "Tango." This chatter stems in large part from an Aug. 23 posting on a Hong Kong-based Website titled "We Love Windows Phone," which described Tango as a version of Windows Phone for low-cost hardware, targeted at developing markets (such as China, India, etc.). According to a Google Translation of the Website, Tango "is not a major update." Supposedly, all this information was confirmed by speakers at a Microsoft seminar in Hong Kong, after which bloggers and journalists on this side of the Pacific quickly picked through the story.

Can all those efforts reverse Microsoft's stagnation in smartphones? Some recent industry turmoil could help boost Windows Phone's chances. Hewlett-Packard's decision to shut down its smartphone line eliminates a nascent competitor and potentially frees up a subset of developers to consider Windows Phone as their go-to platform. Google's intent to acquire Motorola Mobility for $12.5 billion could alienate Android smartphone manufacturers and drive them to Microsoft's camp. It's an open question, though, whether either situation will ultimate bend in Redmond's favor.

Whether Windows Phone ultimately ends up fulfilling Berg's predictions, the platform faces a long and hard road ahead.

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