IDC thinks WP7 will soar to No. 2 by 2015. Really?

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Windows Phone 7 and Nokia have a lot of believers at market research firms. How else to explain the latest IDC smartphone forecast, which puts WP7 ahead of iOS in the number two spot by 2015, where it will trail behind Android? The research firm reiterated that it expects WP7 to soar in the coming years, something rival Gartner has also predicted.

By the latest count, WP7 will command 20.3 percent of the global smartphone market by 2015, behind Android at 43.8 percent and iOS at 16.9 percent. IDC has revised its estimates somewhat from March, giving iOS even more market share by 2015 and reducing WP7’s and Android’s shares slightly. But it still has Windows Phone 7 as the leading challenger to Android in four years. Here’s IDC’s reasoning:

Windows Phone 7/Windows Mobile will benefit from Nokia’s support, scope, and breadth within markets where Nokia has historically had a strong presence. Until Nokia begins introducing Windows Phone–powered smartphones in large volumes in 2012, Windows Phone 7/Windows Mobile will only capture a small share of the market as the release of Mango-powered smartphones are not expected to reach the market until late 2011. Nevertheless, assuming that Nokia’s transition to Windows Phone goes smoothly, the OS is expected to defend a number 2 rank and more than 20% share in 2015.

Now, I understand that research firms have to put up some kind of numbers. And IDC has backed off a little from its earlier prediction. And the fact that WP7 will support multiple manufacturing partners gives it a chance to have a lot of units on the market.

But the latest predictions show how perilous it can be to make firm forecasts in such a fast-moving market. So much of the WP7 prediction is predicated on a smooth transition for Nokia. But if anything, the latest news out of Nokia suggests that it’s anyone’s guess how well that will turn out. The company has pulled back its projections for the year and has seen the departure of its CTO. The stock is at a 13-year low. As my colleague Kevin said yesterday, the wheels have fallen off. It’s not to say that Nokia won’t find its way again. But it’s got a very challenging road ahead to make this migration to WP7 work.

Symbian sales are dropping off precipitously. And why shouldn’t they, when Nokia has signaled that it’s a dying platform? But with Nokia WP7 phones not expected to arrive in real numbers until next year, Nokia is desperately trying to hold on through the transition. The thinking by IDC appears to be that Symbian’s 20 percent market share today will migrate over to WP7 by 2015. But that’s a big if. People buy new phones every 18 months or so, and they go with what’s hot and what’s appealing. They don’t necessarily keep buying Nokia phones just because the name is on the device. And Microsoft hasn’t been able to muster much in the way of consumer adoption of of WP7 devices so far.

Windows Phone 7 is a solid operating system and will get even better with the Mango software update this fall. But it’s not enough to just have a good OS. WebOS was solid, too. You need a lot of other things to fall into place, like great carrier support. Yet, some are questioning operator support for WP7 right now. And with Android and iOS building huge ecosystems, challengers need to find ways to leap ahead.

That might still happen with Nokia and Windows Phone 7. Nokia knows hardware, and it has leeway to customize on the WP7 platform. We could see very cool things coming down the road. The game, however, seems to hinge more on software these days. Look at Apple’s latest announcement at WWDC. It’s shifting the focus away from hardware to software cycles.

The bottom line is that 2015 is a ways off. Consider how fast things have changed in just the past year. Symbian’s share went from 44.2 percent in Q1 last year to 27.4 percent a year later. It’s likely to be below IDC’s 20 percent projection by the end of this year. This is a big market — IDC says 1 billion smartphones will be shipped by 2015 — but Nokia and Microsoft have to nail their execution to ensure that they have any hope of hitting 20 percent by 2015.

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