Windows Phone 7 Sales, Motorola Lawsuit Dominated Microsoft Week

Microsoft's Windows Phone 7 launched, and with it the company's hopes for the smartphone market. Microsoft's legal battles with Motorola also escalated.

Microsoft's week centered yet again on Windows Phone 7, which the company hopes will allow it to reclaim mobile market share from the likes of Google Android and the Apple iPhone. The smartphones officially launched in the U.S. market Nov. 8.

The first three Windows Phone 7 smartphones include the Samsung Focus and HTC Surround, which AT&T offers for $199 with a two-year contract, and the HTC HD7, which retails through T-Mobile for the same price with data plan.

Meanwhile, Microsoft has already kicked off its massive marketing campaign with a series of television and Web ads, which emphasize the devices' unique-and supposedly time-saving-interface: six subject-specific "Hubs," such as "People" and "Games," which aggregate applications and Web content. In a bid to avoid the fragmentation that gripped its previous smartphone platform, Windows Mobile, Microsoft has imposed fairly strict hardware requirements on its manufacturing partners, including a 1GHz processor and a generously sized touch-screen.

Early reports hint that Windows Phone 7 has been selling strongly in international markets, with DigiTimes reporting in a Nov. 3 article that sales of HTC-build Windows Phone 7 smartphones are better than expected in Europe and Australia. In the U.K., news outlets reported a lack of available phones through carrier Orange.

"Early supporters of the new operating system such as South Korea's Samsung Electronics and LG Electronics are also experiencing rising demand from carriers," suggested the DigiTimes article, which sourced its information as unnamed "Taiwan-based handset makers.", citing an unnamed "market research source," reported some 40,000 Windows Phone 7 devices sold in the United States on the first day of release. Neither Microsoft nor AT&T offered exact figures when contacted by eWEEK, although an AT&T spokesperson said the carrier was "encouraged by early demand from customers in stores and online."

Microsoft's back is against the wall with regard to smartphones. Recent smartphone market-share figures from Gartner indicate that, in the 12 months leading to the third quarter, the company's portion of that market declined from 7.9 percent to 2.9 percent.

By comparison, Google Android saw its market share during that period rise from 3.5 percent to 25.5 percent-while Research In Motion's BlackBerry franchise, Apple's iOS and Nokia's Symbian all experienced market-share dips of varying severity.

"Smartphone OS providers have entered a period of accelerated platform evolution, stimulated by more regular product releases, new platform entrants and new device types," Roberta Cozza, principal research analyst at Gartner, wrote in a Nov. 10 research note. "Any platform that fails to innovate quickly-either through a vibrant multiplayer ecosystem or a clear vision of a single controlling entity-will lose developers, manufacturers, potential partners and ultimately users."

Although Microsoft has promised to update its Windows Phone 7 software with features like cut-and-paste, questions still remain over how much influence carriers will have on the software-updating process. "Carriers could in fact block updates to sell you a phone," Joe Belfiore, corporate vice president and director of Windows Phone Program Management, told Paul Thurrott's SuperSite for Windows. "That can happen. But we don't expect that to happen ... Microsoft is being very trusting of the carriers here."

Analysts remain divided on whether Windows Phone 7 will ultimately succeed in the marketplace. IDC suggested that Windows phones will see their market share increase to 9.8 percent by 2014.

Speaking of smartphones, Microsoft this week found itself embroiled in a series of court actions with Motorola. On Nov. 10, the latter filed patent-infringement complaints against the software giant with the U.S. District Courts for the Southern District of Florida and the Western District of Wisconsin.

In court documents, Motorola claimed that Microsoft's PC and Server software, Windows Phone software and Xbox products violate 16 of its patents.

Pundits widely regarded Motorola's lawsuit as a response to Microsoft's Nov. 9 lawsuit against the manufacturer, which alleged that it violated agreements to license at "reasonable rates" patents related to H.264 video compression and wireless LAN.

Microsoft is claiming that Motorola had made patent-related commitments to both the IEEE-SA (Institute of Electrical and Electronics Engineers Standards Association) and ITU (International Telecommunications Union)-and then promptly went against them by demanding patent royalties adjusted to the retail price of products such as the Xbox 360, as opposed to those products' component software.

"Motorola broke its promise to IEEE-SA and its members and affiliates by refusing to offer Microsoft a license that is consistent with Clause 6 of IEEE-SA Standards Board Bylaws, instead demanding royalties that are excessive and discriminatory," reads a section from Microsoft's lawsuit, which was filed with the United States District Court for the Western District of Washington at Seattle. "Motorola broke its promise to ITU and its members and affiliates by refusing to offer Microsoft a license that is consistent with the Common Patent Policy of the ITU, instead demanding royalties that are excessive and discriminatory.

Despite the questions around its mobile initiatives, Microsoft can perhaps take comfort in one thing: a new analyst report suggests that businesses are giving Windows 7 generally high marks. Microsoft has also announced a series of tools for those companies interested in building and deploying a private cloud.