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Windows Phone 7 Is Impressive, But 3 Challenges Remain for Microsoft

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Microsoft (s msft) unveiled the long-awaited upgrade to its venerable mobile operating system this morning, and — so far, at least — the results are pretty impressive. The company has finally scrapped the cumbersome look and feel of Windows Mobile in favor of a more intuitive, streamlined user interface, and — much like HTC — is focusing on consumers by emphasizing the personalized nature of mobile phones in addition to productivity features. (See video below.)

Windows Phone 7 Series, as the new OS is dubbed, is built on the Zune HD interface and enables users to navigate the device via a series of integrated “hubs” (Office, pictures, games, music and video) and widgets. And Microsoft has wisely enlisted the help of industry heavyweights such as Qualcomm (s qcom) and AT&T (s t) to help it regain its lost relevance in the ultra-competitive smartphone space.

But producing a knockout mobile operating system won’t be enough to get back in the game, as Palm (s palm) can tell you. For Microsoft to challenge platforms like Android (s goog) and iPhone (s aapl), it will have to address these three primary challenges before its new devices come to market in the fourth quarter of 2010:

  • Build a better app store. Smartphone users already have the luxury of browsing through tens of thousands of apps in the Android Market or Apple’s App Store, so Microsoft will have to quickly find a way to build an impressive library of offerings for its new Phone 7 Series. CEO Steve Ballmer today quashed speculation that the company might make its OS freely available to developers, so the company must find other ways to attract the attention of developers who already have lots of attractive platforms on which to build their mobile apps.
  • Build a better brand. Forrester’s Charles S. Golvin noted this morning that 24 percent of Windows Mobile users in North America say their phone was made by Apple or RIM (s rimm), and more than one-third of European Windows Mobile users said Nokia (s nok) made their phone. And the Windows brand isn’t linked to phones that use the OS on any carrier’s web site, Golvin said. So Microsoft will have to leverage its partnerships and invest heavily in promoting its brand if Windows Phone 7 Series is to be a hit with consumers.
  • Understand the mobile web. Microsoft’s inability to become a major player on the Internet is well documented, and is a key reason the company has failed to connect with consumers. Apps are great, and Microsoft’s apparent progress in tearing down the siloed world of mobile apps to create a more integrated experience is impressive. (That progress was illustrated this morning by the company’s success in integrating Bing and social networking sites with the mobile experience.) If the overhauled OS is to find an audience, though, Microsoft must prove that it understands how consumers want to use the web while they’re on the phone. That will be a particularly difficult hurdle for a company that has always been about software — not consumer experiences.

It’s easy to get excited after a single demonstration, of course, and Windows Mobile will surely continue to lose market share before Windows Phone 7 comes to market late this year. Meanwhile, those competing platforms will only become more so in the coming months. And while Microsoft’s move to give network operators flexibility to tweak the OS is commendable, it runs the risk of carriers damaging the platform as they put their own stamp on it. But the smartphone space is a wide-open field, and Windows Phone 7 Series indicates that Redmond might finally be getting a clue. If it can continue to execute in the coming months, Microsoft may just find itself back in the game.

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Images and video courtesy Microsoft.

39 Responses to “Windows Phone 7 Is Impressive, But 3 Challenges Remain for Microsoft”

  1. “CEO Steve Ballmer today quashed speculation that the company might make its OS freely available to developers, so the company must find other ways to attract the attention of developers who already have lots of attractive platforms on which to build their mobile apps.”

    Steve Ballmer said that Microsoft Phone OS won’t allow apps that can be installed outside of marketplace and i think that this is a big step because people don’t realize that windows mobile had apps before the iPhone. The iPhone just made it where there was one place to get them. With this move Microsoft is making all the app developers for winmo move their apps to the market place and with new tools and a new set of APIs at MIX being announced i think the marketplace will be flooded. Plus there may not be backwards compatibility but the old apps will be re engineered to go with the new OS and will look and function better.

  2. I was impressed with the eye candy yesterday but still want to see more of it in action before I get excited. I was a long time WM user, then had a Pre and now an iPhone. I do not miss WM one bit – except for certain Exchange integration (Tasks!).

    One of the first thoughts I had yesterday was of Palm last year. They came out flying last January and was the talk of the industry but by the time they delivered in June, they had lost their mojo and never really regained it – as is evident by the market share numbers we see after Q4. And 7 is not coming until the END of this year. Gives Apple and Google a hell of a lot of runway to, well, runaway. I think they still have a huge hill to climb but they did look pretty darn good yesterday at least.

    • Colin Gibbs

      Yeah, there are some dominant players on the field, ChuckO, but I think the fact that Palm’s webOS is beginning to gain modest traction with almost zero effective marketing demonstrates there’s plenty of room for anyone who can build a better mousetrap.

    • We are a couple of years into the post-iPhone era. I watched for a half decade since it was truly mind-numbing how hard it was to get apps on platforms prior to that, but make no mistake, there is so much innovation to come that your head is going to spin.

      10 months is bad, but not making the effort is perhaps worse. They will succeed to Apple’s extent, which isn’t a dominant position market-wise.

  3. From the touch screens to the zoom in/out…I still feel that Microsoft is playing catch up to Apple. I’m still waiting for them to take the leap and try something different different and go from following to leading…

    • TouchScreen? Zoom in/zoom out? You do know that Microsoft had windows Mobile on touch screen phones before Apple had the iPod? And pinch to zoom is a good feature but a small one none the less. Many browsers don’t use it and operate better than Safari like Opera mobile. Microsoft is leading not following.

  4. One other challenge Microsoft is facing is that by making such a decisive break with the past, they’re essentially starting from ground zero when it comes to the customer base (if we ignore the relatively small number of Zune owners.)

    When if comes time for current Windows Mobile users to get a new phone, Microsoft can no longer bank on familiarity. Redmond has some major PR work to do.

  5. activeinspiration

    Maybe there is a place for a closed app data phone. A lot of people don’t want to be bothered with multiple choices and learning how to use this app or that one. They simply want to continue functioning with an operating system that they are and have been familiar with. For them its about doing what they do and not learning how to do it quicker or even more effectively. I wouldn’t be surprised that these people are represented by those who don’t even know what os they are actually using.
    Bill C.

  6. The 800-gorilla pounds woke up this morning! I am an iPhone and Mac user and I have to say that MS platform is very impressive. One HUGE issue though, it is only launching in 10 months which is a long time. Nevertheless, MS is back in the game and in a strong way. If I’m Apple, I’m telling myself I should release a great iPhone OS 4.0. However, I’m keeping it cool. If I’m Google on the other hand, I’m dead scared. Android will never grab more market share after windows phone 7 is here. Finally, there’s absolutely no point talking about Palm or RIM… They’re in the grave. Basically, it’s Apple Vs. MS, like in the early age of PC. Greeeeeeaaaaat!!!!!!

    • And, shockingly Apple has repeated its actions with developers. I would love nothing more than to build my next project on a Windows Phone tablet rather than an iPod. I doubt I can get a bunch of resources to replace Macs and purchase dev tools though, if they are available.

      Apple has absolutely infuriated me. And as I have written, I believe that inter-networked applications will surpass aggregator apps like iTunes.

  7. “CEO Steve Ballmer today quashed speculation that the company might make its OS freely available to developers, so the company must find other ways to attract the attention of developers who already have lots of attractive platforms on which to build their mobile apps.”

    That makes no sense and is not what Ballmer said. He said he wouldn’t make it free to phone manufacturers. What does that have to do with developers? If it’s a compelling platform that has users, developers will produce apps. The development technology hasn’t been announced yet, but the chances are it’s .Net & XAML, so any .Net dev can jump on board, probably for free with Visual Studio Express.

  8. Ken Jackson

    Ed, I think you make good points. I do think with phones, technology brings an audience. Palm had a great chance to make a big move, but blew it with their SDK (coming out late and then developers feeling like they were left behind). If there’s one thing MS gets is development. Even currently on the mobile platform, their appdev story is the best — it’s just the OS 10 years out of date.

    Now with WPSS, I think we’ll see them be a instant hit. And I think their developer ecosystem will provide them the follow through to be a full-fledged success.

    IMO, this is turning into a two horse race… MS vs Google… what else is new :-)

  9. As much as I love Apple and the iPhone, there is no comparison between development tools for the two platforms. Microsoft started in the tools business, had to compete hard with a number of other determined vendors, and emerged triumphant. The Microsoft toolset is just plain better. However, there’s no ignoring the fact that many of the small developers most interested in developing mobile applications are lifelong Mac users with only cursory exposure to Visual Studio. For these developers, the only conceivable option is to either build iPhone apps or web applications, unless there is overwhelming device adoption of Win7 phones and the size of the opportunity can overcome the inertia of user preference. Microsoft knows better than anyone that the apps go where the users are, not vice versa. Apple knew this as well with the original iPhone launch. The platform vendor’s ultimate job is to deliver a market, not techology. That’s what we have to see if Microsoft has a strategy to achieve.

      • If they staff the store with more than a half-dozen contact people, it wouldn’t be difficult to surpass Apple. Assumptions are easy to make right now as nobody knows what policies Microsoft will enact, but I guarantee you that they are reading this stuff, and all of the comments that have been made regarding the iPhone approval process.

        I am a lifelong Apple user, but am not an apologist, particularly when I have been burned by Apple. If Microsoft allows alternate stores to their more authoritative version, they will succeed.

      • Microsoft has made it easier with their latest update to get apps approved and plus they don’t attack app developers for mentioning “Android” and they don’t reject apps that duplicate functionality in the OS apps. Apple App store is known to have one of the worst review policies because they reject over little ridiculous stuff.

  10. I’m sorry, but the Forrester research results are just laughable. People believing their WinMo Phones are made by Nokia? Ridiculous.

    I think that people who want a serious combination of PDA and phone have no other choice than WinMo devices. And I for one (long-time WinMo user, even from PDA, i.e. no phone times) could definitely do without an app store of any sort. I’d rather continue to buy directly from the developers or from dedicated web stores that do no bind me to the OS manufacturer.

    • Yes, it is lauaghable, but true. Non techies are not too concerned about who the manufacture of the phone is and same goes for the OS. Some people assume the maufacture and the OS are same. BTW, have you heard of RIM? 36M subscribers for people who are serious about a PDA + phone. Enterprise workers ARE consumers, meaning that the consumer experience effects the enterprise worker. Consumers are enjoying the access to app stores and over the next 12 to 24 months you will see enterprise workers demanding access to app stores as well.

  11. With respect to point three, I believe we will find that the mobile web is application based rather than simply browser based. On my iPhone, just about every web interaction is encased within an application or widget-like framework. This affects the store functionality, and Microsoft could very easily one up Apple.

    Apple has not allowed plenty of applications. Personally, I am spending my morning digging for contacts at Microsoft for a project. While Apple has great products and tools, Microsoft is the sole competitor with equivalent, and perhaps even better tools. A metrics enabled sales platform, tied to tools, with an authoritative yet permissive policy will attract developers and customers.

    Android din’t enable developers to the extent required, and if Microsoft provides a reasonable set of APIs all of those apps that we are waiting to build for Android could find their way over to Windows Mobile. It is about developers and selling. Actively looking for a platform outside of Apple, they may very well repeat the PC scenario.