Microsoft Corp. has made a big splash in its attempt to make a comeback in the smartphone business, with coordinated events worldwide touting Windows Phone 7. But will the operating system make a big enough dent to matter to marketers?

Microsoft revealed nine new Windows Phone 7 handsets that will be available this holiday season from carriers in Europe, North America and Asia Pacific. However, until the OS proves itself in the highly competitive smartphone space by taking market share away from Google?s Android, Apple?s iOS and Research In Motion?s BlackBerry, brands and publishers may not rush to develop content and campaigns targeting the platform.

?For advertising, [Windows Phone 7] may not have a big impact,? said Ken Dulaney, vice president of mobile computing at Gartner, San Jose, CA. ?The key for advertisers to be aligned with an ad feed such as those owned by Apple and Google.

?Once they align with one of those feeds, their ads are formatted and streamed to a variety of devices, depending on the business of the advertising feed-holder,? he said. ?Then it is up to the app developer to figure out what kind of space they want to give to the feed?then money and other issues come into play.

?So fragmentation [of smartphone operating systems] hurts advertisers a bit, but not as much as for the applications space, where the developer has to learn many tools and environments.?

Windows Phone 7 is finally here, after what seems like a very long wait and after witnessing the premature departure of its younger sibling Kin (see story).

Carolina Milanesi, Milan, Italy-based vice president of mobile devices, technology & service provider research at Gartner, posted a blog asking, Windows Phone 7 promises to help do things faster and better, but is that enough?

Ms. Milanesi said that she does think that this is a marked improvement over previous versions of the OS, and she thinks that it will have a positive impact on sales this year and next year.

However, Ms. Milanesi is not so sure that Microsoft has done enough to establish itself as a key OS in five years? time.

Gartner?s OS forecast ?Mobile Communications Devices by Open Operating System, Worldwide, 2007-2014? predicts a nice volume increase for 2011, but then share decreasing as volumes grow, but not enough to keep up with the market.

There are many factors that need to come together for Gartner?s forecast to prove conservative, per Ms. Milanesi:

Microsoft-based products need to move from hitting consumers at a functional level to hitting consumers at a visceral and reflective level. It basically needs to get to the ?I want it ?cause it?s cool? stage.

The Windows Phone brand needs to be seen as a cool consumer brand rather than something that only a business user would find interesting.

Microsoft needs to make sure that its Marketplace offering stand ups to the ?number game? where ?mine is bigger than yours? seems better.

Saying that having the right applications is more important than having more applications, although true, might be seen as a statement coming from someone who knows they will not compete.

Lastly, Microsoft needs a wider ASP offering than was initially announced.

At launch, starting out with high-end devices will guarantee a higher level of appeal and help drive the visceral appeal.

However, in order to grow share, Microsoft will have to come down on ASP to be able to compete more directly with Android-based products.

?So I suppose this can be summed up with: good effort, Microsoft, but we need to see more evidence that you will be able to deliver on the points listed above,? Ms. Milanesi said. ?On paper Kin had a lot of potential but ended up not going anywhere.?

Will Windows Phone 7 bring the heat?
Microsoft?s Windows Phone 7 will be available in a variety of form factors from device-makers such as Dell, HTC Corp., LG and Samsung.

Carriers offering Windows Phone 7 handsets include América Móvil, AT&T, Deutsche Telekom AG, Movistar, O2, Orange, SFR, SingTel, Telstra, Telus, T-Mobile USA and Vodafone.

In the U.S., Windows Phone 7 handsets on AT&T will include the HTC Surround, Samsung Focus and LG Quantum.

Windows Phone 7 handsets available on T-Mobile USA will include the HTC HD7 and Dell Venue Pro.
A broad selection of phones will begin shipping in holiday 2010 with more arriving in 2011, including phones from Sprint and Verizon Wireless.

In addition, select models will be available at Microsoft Store locations and from Amazon.
All Windows Phone 7 phones will include the Snapdragon processor from Qualcomm.

The new phones feature integrated experiences built from Microsoft?s portfolio such as Xbox Live, Microsoft Office Mobile, Zune, Windows Live and Bing.

The customizable Start screen with Live Tiles shows real-time updates from the Web such as news, appointments or the status of friends.

New Live Tiles can be created from whatever content a consumer wants such as applications, Web sites and music.

Windows Phone 7 is focused on mobile gaming, with Xbox Live integration and a lineup of game titles from various publishers.

Electronic Arts Inc. (EA) is launching Windows Phone 7 games this fall, including ?Need for Speed Undercover,? ?Tetris? and ?The Sims 3.?

As part of Microsoft?s managed portfolio of Xbox Live titles, all EA games for Windows Phone 7 will be Xbox Live-enabled.

Windows Phone 7 also offers the Zune music experience on a phone: Consumers can play their music collection, synced wirelessly from their PC, or stream or download new tunes from Windows Marketplace.

An optional Zune Pass subscription is available.

From the Start screen, the Search button delivers Bing for mobile, delivering Web results, local information, maps and directions.

The Windows Live platform is designed to help people manage pictures, Windows Live calendar and Office OneNote Mobile.

The free Find My Phone service new on Windows Live can remotely ring, lock, erase and show the location of a consumer?s phone on a map.

Will Windows Phone 7 be able to compete?
Microsoft has done a lot of work on the organization of the Windows Phone 7 experience, with tiles and hubs for key tasks as part of the default user experience of the devices.

It will be interesting to see how these scale as more applications come to the platform, assuming that they do, given Microsoft?s history of supporting developer communities.

But who will be Windows Phone 7?s core audience?

?Windows Phone 7 features far-reaching integration with other Microsoft products and services, some that have a lot of momentum such as Office and Xbox live, and in other cases not, for example, Zune,? said Ross Rubin, executive director of consumer technology industry analysis at the NPD Group, New York.

?To the extent that they have communities engaged in those other products and services, Windows Phone 7 will have more appeal to them,? he said.

?We may see a significant shift, because historically Windows Mobile has been an operating system with strength in the enterprise, and now particularly with Xbox Live integration, Microsoft has the opportunity to go after younger game players, which is one demographic that may find appeal in Windows Phone 7.?

The lingering question is whether or not Windows Phone 7 will be able to take away market share from Android, iPhone and BlackBerry.

Even if Windows Phone 7 handsets are eventually available on all of the ?big four? U.S. carriers, Microsoft?s new OS has plenty of catching up to do in the North American market.

Verizon Wireless getting the iPhone next year would not help much, either (see story).

?Clearly in the coming months we?ll see other platforms move forward?a new version of Android is in the wings and Apple is continuing to work on the iPhone,? Mr. Rubin said. ?Certainly over the past year, Windows Mobile has lost a lot of market share to Android.

?Windows Phone 7 will be launching at T-Mobile and AT&T, and [the latter] has a large enough customer base to drive market share, as it has for the iPhone and BlackBerry for that matter,? he said.

?Some [Windows Phone 7 handset sales] could come at the expense of Android, particularly the LG device launching on AT&T for customers wanting a slide-out keyboard, as AT&T doesn?t have a lot of high-end smartphone options with that feature, so it?s an opportunity.?

Microsoft has the opportunity to grab market share from other leading smartphone platforms at AT&T such as the iPhone and BlackBerry.

Android is now the market leader, so it has a target on its back, and certainly Microsoft would love to grab share from Google?s OS.

However, to do so, Microsoft better launch Windows Phone 7 phones on Verizon Wireless sooner rather than later.

?Windows Phone 7 won?t be on Verizon initially, so it won?t take significant share from Android during the first quarter of availability,? Mr. Rubin said.

Final Take
Dan Butcher, associate editor, Mobile Marketer

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