This week, the first devices to use Microsoft’s long anticipated Windows Phone 7 (WP7) platform were officially unveiled, with the anticipated partners (HTC, LG and Samsung, joined by Dell), set to ship a number of devices which add a range of differentiating features to the core OS. With handsets set to reach customers later this month, there is one question that will soon be answered: is it any good?

Judging by the demonstrations and videos, Microsoft has achieved what it needs: not only does WP7 look fast and slick, it is also different. Rather than playing catch-up with an OS that looks like Apple’s all-conquering iOS, Microsoft has created something unique, with a number of well thought-out features that may enable it to move the smartphone game forward.

By using the icons which represent apps to present information, and by sending alerts and notifications to the ‘lock’ screen of handsets, the company has turned ‘dead’ screen real estate into another opportunity to engage with users. Speaking at the UK launch event, Ashley Highfield, MD of Consumer and Online for Microsoft UK, said that the platform is the result of a “renewed focus by Microsoft on the consumer…a relentless focus on the user.”

Not aping its main rival is a sensible strategy: whatever it may be, Microsoft is not Apple, and attempting to mimic its somewhat unique strategy may well have proved to be a significant mistake for the senior company. Although Microsoft is taking a tighter control of the Windows Phone ecosystem than Google has with Android, the company is steering clear of Apple’s one-size-fits-all approach, in terms of form factors and feature sets. At its press conference, the company also played-up the importance of operators – a strategy that has served Microsoft well in the past. For the latter group, this may make Microsoft seem a significantly more attractive partner, especially if WP7 can bring the same high-value subscribers to the network that iPhone has.

It is perhaps this level of flexibility that has enabled Microsoft to undertake the WP7 launch on the scale that it has achieved. While nine devices from four vendors (including two of the top-five global handset makers) is impressive enough, it is the 60 operators in 30 countries that is the kicker. This will give it access to a massive customer base, with the potential for significant operator sales and marketing support – the kind of reach that many other industry participants would kill for.

The shock of the new
There is no doubt that Microsoft needs WP7 to be a success. After several years in development, and countless millions spent in the process, the company has pinned all of its mobile hopes on the platform – and the future of its CEO, Steve Ballmer, is also likely to be defined by the impact of WP7. With recent reports indicating that Ballmer lost part of his bonus due to the failure of the Kin social networking phone, he will be keen to ensure this does not happen again – not because of the money, but because of the loss of face this would entail.

Based on the early looks, it seems as though Microsoft’s strategy of effectively dumping all that has gone before in order to create a new platform has paid off. It is perhaps worth noting that the preceding Windows Mobile (WM) platform was not always a failure: in July 2006, Canalys gave Microsoft second place in the smartphone OS market, with its 15 percent market share more than double that of RIM’s 6 percent, although well behind Symbian’s 67 percent. But this was before the launch of the iPhone, and way before Android reached the market, at which point the smartphone sector was transformed to leave WM (and Symbian) as the big losers.

Being bold is sometimes the right thing to do. Motorola has followed a similar strategy, by axing its Symbian OS devices, ditching its own MOTOMAGX platform, and turning away from Windows Mobile, in order to focus its efforts on one new platform – Android. This was also accompanied by something of a geographic retrenchment to focus on a number of strategically important markets. And while Motorola is still a shadow of its former self, it is in recovery, and now looks well positioned to capitalise on smartphone growth.

It is this type of bold move that Nokia has so far been unprepared to make. While it is generally agreed that Symbian OS needs to improve dramatically to be able to deliver a more compelling user experience, the company has opted to take a path of evolution rather than revolution, which has led to improvements which at best can be described as incremental. At Nokia World last month, the company claimed that its new devices offer “the familiarity of the new,” although the old adage is that familiarity breeds contempt. In order to provide continuity, it is attempting to build on top of what has gone before, when a more dramatic change may well be what is needed.

The motivation for Nokia to change is somewhat dimmed by the fact that it remains the smartphone market leader by device shipments. But with WP7 being an unashamedly high-tier proposition, the Finnish company does face being marginalised further into the mid-tier smartphone market, where volumes are high but margins are tight, with the company lacking a flagship device to create a halo effect over the rest of its range.

Of course, Nokia (and Intel) have MeeGo in the works, although it seems unlikely that this will be used in volume devices until the first quarter of 2011 at the earliest. This gives WP7 a probable six-month head start, and with a number of vendors and operators supporting the Microsoft platform, the potential to have created a significant installed WP7 user base by this point is huge – before MeeGo is even off the blocks.

Again, while it is early days for WP7, there is a very real possibility that Microsoft may have moved the goalposts, before MeeGo has found its feet. While Symbian OS’ position is assured in its role as Nokia’s mid-tier platform of choice, Apple’s iOS already has a striking user experience and massive developer support, and Android has a momentum that is lacking in rival platforms, WP7 will certainly make the battle among the ‘best of the rest’ much tougher.

 

Steve Costello

The editorial views expressed in this article are solely those of the author(s) and will not necessarily reflect the views of the GSMA, its Members or Associate Members