Why Windows Mobile Is In Trouble

Recently it was revealed that the newest version of Microsoft’s mobile operating system, Windows Mobile 7.0, would be delayed until as late as 2010. The updated version, which the company’s partners had reportedly been hoping to have by early 2009, was aimed at giving Microsoft a bigger presence on the mobile stage. But delay or no delay, I don’t think it would have been enough. With competition from a resurgent BlackBerry platform from Research in Motion, Apple’s iPhone and most importantly, the Google Phone platform (I will analyze Nokia’s Symbian platform in a separate post at a later date), Microsoft’s mobile platform is facing its toughest environment yet.

I’m not saying that Windows Mobile is no longer relevant. What I am saying is that Microsoft’s grand mobile ambitions might have to come down a few notches. Just like open-source server software made it impossible for Microsoft to extend its stranglehold to servers and the back-end infrastructure business, these newer mobile platforms will act as speed barriers to Microsoft’s mobile ambitions.

Research firm Gartner recently released smartphone market share data for the second quarter, and some of the numbers were pretty astonishing. RIM’s market share surged 126 percent over the second quarter of 2007, to 17.4 percent. For the same year-over-year period, Apple’s OS X platform rocketed higher by 230.6 percent to encompass 2.8 7.3 percent of the worldwide market. Symbian was flat, and Windows Mobile market edged up a mere 20.6 share to stand at 11.5 percent for the period.

Notably, this was before Blackberry figured out its game and announced a slew of devices, among them its new flip phone, aimed at higher-end consumers. A bunch of others, like the Bold and the Storm, will soon be released in the U.S. as well. And Apple continues to wow with its iPhone. But none of those present the most immediate threat to Microsoft’s mobile platform — that comes from Google’s Android.

Over the weekend, rumors began surfacing that T-Mobile USA had pre-sold nearly 1.5 million units of the Google Phone, the G-1, made by handset maker HTC. After seeing the phone up close and personal, I’m not at all surprised.

A few weeks ago, I moderated a panel in Boston that included Rich Miner, group manager of mobile platforms at Google and one of the co-founders of Android, a startup that Google acquired in 2005. Android, of course, has become the underpinning of Google’s assault on the mobile industry.

Miner, who was a keynote speaker at our Mobilize conference, let me play around with his Google Phone. Since I wasn’t able to attend the launch event in New York, it was my first interaction with the device whose existence and emergence over the past few years we have closely followed.

It didn’t take long for me to conclude that the device was well designed, sturdy, fast, easy to use and very intuitive — many of the same sentiments already expressed by experts such as Walt Mossberg of The Wall Street Journal and über gadget blogs Engadget and Gizmodo. (Of course, we share similar concerns as well.)

What I don’t believe is that the device will have a major impact on Apple’s iPhone. The two have a lot in common the way a Mercedes and a Toyota truck have a lot in common: While they contain some of the same basic features — in this case a touch screen, an application framework that draws inspiration from their web peers and a near-identical Webkit browser — the user experience on the two devices is markedly different. In other words, the companies are going after different market segments.

Google’s Android, in my opinion, is a direct competitor to Windows Mobile. Put another way, it’s Windows Mobile done right. I say this because I have tried dozens of Windows Mobile-based phones and their user interface always leaves me feeling like someone with multiple cuts being submerged in salt water. Don’t get me wrong – I think Windows Mobile as an OS has come a long way since its early, awkward roots. It’s just that the new guys are better. A lot better.

In fact Miner, when he used to work at French-owned mobile carrier Orange, was one of the people who helped introduce a customized version of a Windows Mobile-based HTC device there. The experience with Windows Mobile left him so frustrated that he convinced Andy Rubin to team up and build the Android OS.

Sometime later this month, the G-1 will go on sale and people (at least those in the U.S.) will be able to experience the difference between a Windows Mobile- and an Android-based phone for themselves. Of course, some will find the shortcomings of the Google Phone — and according to Mossberg, there are many — grating. Others, like me, will be suitably impressed. And if they’re impressed enough, most handset makers will want to join the party.

So is Windows Mobile a lost cause? Absolutely not: Microsoft still sells millions of devices based on this platform, has brand-name mobile phone makers as partners and, most importantly, the ability to spend seemingly endlessly. They could start by buying browser maker Cellfire Skyfire to make up for Internet Explorer Mobile. And they could hammer home the advantages of Mobile, like how easy it to run VoIP and other applications such as Skype, or how it can work seamlessly with Microsoft Exchange. That will at least keep them on par with their upstart competitors.

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