Windows Phone 7Windows Phone 7 is breathing life into Microsoft's (MSFT) mobile phone operating system efforts, but analysts across the board caution that it's too early to take the patient off the critical list. Microsoft unveiled on Monday its initial lineup of smartphones that will use the mobile OS.

Microsoft and CEO Steve Ballmer are betting big on Windows Phone 7. They have no choice. Over the past year, Microsoft has been pummeled by Google's (GOOG) Android, with the PC software giant's smartphone OS market share falling to 5% in the second quarter compared with 9.3% a year earlier, according to research firm Gartner. And earlier this year, Microsoft decided to kill the Kin, its teen-oriented mobile phone just a few weeks after its launch.

"Windows Phone 7 will help put Microsoft back in the game," says Ross Rubin, executive director of industry analysis for NPD Group. "It's a vast improvement over where they were before, and now their [operating system] supports modern hardware."

Leveraging Microsoft Office

Microsoft, which is keenly aware that consumers are increasingly turning to mobile devices in lieu of a computer, needs to keep its hand in the game to preserve its dominance in operating systems and lucrative business software suites.

Steve Ballmer, Microsoft CEO

It's that tie into Microsoft's Office software that will provide Windows Phone 7 an advantage over Research In Motion's (RIMM) BlackBerry and the many phones based on Android, says Rubin. He notes that while competitors use third-party software to transfer Word files between phones and PCs, Microsoft has the advantage of its intimate knowledge of the file formats.

Microsoft is also expected to leverage its relationship with its Xbox gamers when its Windows Phone 7 debuts on the HTC Surround, which will feature two Dolby surround-sound speakers.

The HTC Surround, one of five phones that are slated to debut in the U.S. for the critical holiday selling season, will retail for $199, putting it in competition with high-end Android phones and the 16-GB version of Apple's (AAPL) iPhone 4. Like its iPhone and Android rivals, Microsoft, which eventually expects to reach 30 countries with seven new phones, is also going after consumers.

The All-Important Marketing Message

"The focus is certainly on consumers from the pitch that Microsoft was giving today. I would think people with a busy lifestyle with an interest in social networking games and music" are the target market, says Gartner analyst Carolina Milanesi in an email interview. "But despite the focus on consumers, the devices will certainly appeal to business users."

She added that she doubts users will choose an HTC Windows Phone 7 purely for its gaming capabilities rather than, say, a Sony (SNE) PSP handheld gaming device.

One of the biggest challenges Microsoft will face in winning over consumers is delivering a compelling marketing message, analysts say. "A Windows Phone 7 looks the same as an iPhone and an Android Phone. The hardware is similar, and the technology is largely the same. What will matter is the marketing, and I've looked at the ads and they haven't done it for me," says Jay Goldberg, a Deutsche Bank analyst.

Gartner's Milanesi had a similar reaction. "It does seem more like catch-up rather than a leapfrog offering, although the demo today was very compelling," she says. "I couldn't help but think how long would someone spend in a store to get the full story. When it comes down to selling the message, I am not sure that 'wonderfully me' and 'always delightful' actually means something to consumers."

Gotta Grab Consumers' Hearts

Microsoft, indeed, faces an upward battle. In its September mobile OS report, Gartner said it expects Microsoft's worldwide market share to rise to 5.2% next year from 4.7% at the close of this year. But by 2014, Gartner expects Microsoft's share to fall to 3.9%. Gartner sees Microsoft's declining market share resulting from the overall pie getting bigger but Microsoft not being able to hold onto its slice, in part due to several issues it's tackling today.

Milanesi says Microsoft still needs to learn the art of grabbing the consumer by the heart, more than the brain. In other words: "I want it cause it's cool," rather than because I need it.


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joe

Microsoft treast their customers like $h|@!! Flakey O.S. after flakey O.S. backed by $250.00 an hour support for each incident (..AND THERE WILL BE A LOT OF INCIDENTS Lol!!!) ..Meanwhile Ballmer cavorts on stage like an a$$. I think Gates was the only reason they lasted as long as they did. SLACKWARE BABY!!! Buh-Bye Redmond, se ya in the funny papers! See full article from DailyFinance: http://srph.it/bpISxu

October 12 2010 at 12:09 AM Report abuse rate up rate down Reply
1 reply to joe's comment
themanindbox

250.00 an hour support? Really? Man i am getting raped at charging 50.00 an hour for full on windows server and desktop support. Although on a phone, symbian or another flavor of linux all the way..

October 12 2010 at 12:31 PM Report abuse rate up rate down Reply
Hector

IS TIME FOR OTHER PEOPLE IN AMERICA TO ENJOY A SHARE OF THE PIE. MICROSOFT BEGAN TRAINING INDIVIDUALS NOT ONLY HERE BUT ALSO FROM AROUND THE WORLD WHOM FORGOT THAT THIS NATION HAS VETERANS WHOM NEED EMPLOYMENT INCLUDING VETS RETURNING FROM IRAQ AND AFGHAN COUNTRY PLUS OTHER PARTS OF THE WORLD. THESE MICROSOFT EMPLOYEES TODAY CRUISE AROUND ON THEIR EXPENSIVE BMW'S AND OTHER VEHICLES AND LOOK DOWN ON THOSE WHOM SERVE THIS NATION AS TRASH. ANYONE CAN SEE SUCH FOOLISH TO DO SUCH THING WHICH IS THE RESULT OF FALSE PATRIOSTISM AND FALSE UGLY PRIDE. MICROSOFT BILL AND BELINDA GATES FOUNDATION APPEAR TO GIVE MONEY AROUND THE WORLD FOR VARIOUS CAUSES BUT IS JUST ANOTHER TYPE OF GIVE THEMSELVES FAMOUS WANNA BE GROUP. THERE IS NO REASON FOR PEOPLE UNDER A FREE ENTERPRISE SYSTEM TO ACCRUED OR APPEAR TO HOLD SO MUCH WEALTH. BILL GATES AND BELINDA GATES ARE NOT THE ACTUAL PEOPLE IN CHARGE BUT ALL THOSE YOU NEVER SEE ON THE WORLD SCENE AND HOLD THEIR STRINGS BEHIND CLOSE DOORS. IS THESE PEOPLE WERE REALLY SMART AS THEY CLAIM TO BE THEN THEY WOULD HAD EMPLOYED AND REHABILITATED THE HOMELESS AND NEEDY NOT ONLY HERE IN OUR NATION BUT ALSO IN MANY PLACES AROUND THE WORLD. THE STORY IS REPEATED OVER AND OVER AGAIN. THOSE WHOM APPEAR TO BE GIVEN SO MUCH STATUS OF PRESTIGE IN MY VIEW ARE MORE DIRTY THAN THOSE WHOM ARE REJECTED AND NEGLETED BY OUR SOCIETY. IN MY VIEW AND WITHOUT BEING IN PERSONAL OFFENSE AGAINST THOSE WHOM PRACTICE THE FOLLOWING. OUR NATION HAS A GREAT NUMBER OF MURDERERS FROM THE LEGAL SYSTEM TO THE LEVELS OF THOSE WHOM ACTUALLY PERFORM AND HAVE ABORTIONS. FOR IS NOT ONLY GUILTY THE FEMALE THAT HAS THE ABORTION BUT IS ALSO THE MAN WHOM IS ALSO GUILTY BESIDES THE SYSTEM AND THE NATION IN GENERAL. THE QUESTION IS AS FOLLOWS. IF WE HAVE SUCH SITUATION BEEN VIEWED LEGAL WHEN IN FACT IS FULLY ILLEGAL AND IS AGAINST THE CONSTUTION. WHAT CAN YOU EXPECT IN GENERAL WITH THE OTHER LIES BEEN PORTRAIT AS GOOD HERE IN AMERICA AND THE WORLD.

October 11 2010 at 11:55 PM Report abuse rate up rate down Reply
1 reply to Hector's comment
themanindbox

I busted my ass to get MS certified, i paid for all my MS certs. I paid to go to school, and i worked at 8 dollars an hour at 70+ hours a week to do it. We all have to pay our dues, so damn right i enjoy driving my 50,000 dollar mustang around on nice days, or my BMW in traffic. Because i paid my dues... So if you have people coming home from Iraq, or Afgan, then you write to your Government and tell them No one has a work, or you take a stand and make a motion. But you cant preach on the AOL site that this company did this or that, because they all do this or that, but the idiots in the US keep buying there stuff.

October 12 2010 at 12:43 PM Report abuse rate up rate down Reply
hemipwr54

I'll take 50 on it failing .

October 11 2010 at 9:06 PM Report abuse +1 rate up rate down Reply
ultraz2

Watch out, JOBS is going to pull a rabbit out of the hat, just waited to see Microsofts hand.

October 11 2010 at 7:40 PM Report abuse rate up rate down Reply
fmastx

Just a personal opinion - If Windows Phone 7 isn't any better than Windows 7 they might as well save some money and put it back in the lab. And I wouldn't feel the Microsoft Tablets won't be any better. They pushed the Windows 7 down our throaths and I hope it will experience the same fate as the Medicare lacking.

October 11 2010 at 6:35 PM Report abuse rate up rate down Reply
1 reply to fmastx's comment
themanindbox

Windows 7 is windows vista, the Kernel is the exact same, says it in the back end coding of the OS. Windows XP and 2k were about the same too. slight difference in the coding. But the real issue with Microsoft is not the virus issues, because honestly and i am still LMAO about this but macworld released a public anouncement about a growing virus issue on the MAC OS and to be honest since the Mac OS was technically stolen from the BSD days of ATT in the 1970's with the front end of the OpenView company software... Not a fan.. but the issue with windows 7 is that it is just way to bloated. There is no reason for code from windows 95 to be there, but it is..

October 12 2010 at 12:36 PM Report abuse rate up rate down Reply