Will iPhone 4.0 derail Microsoft's phone plans?

Windows Phone 7 still has some things in its corner, but Apple's announcement highlights the challenges of playing catch-up in the phone game.

Apple's announcements on Thursday don't spell doom for Windows Phone 7, but they sure do highlight the challenges of trying to play catch-up in the fast-moving smartphone market.

When Microsoft first started talking about Windows Phone 7 earlier this year, one of the challenges I highlighted was the fact that it was comparing its phone, which wouldn't be out until the holidays, to where Apple was at as of last year. I was sure that Apple wouldn't be standing still. Indeed, the iPhone is becoming an even fiercer competitor this summer, well before anyone will be able to buy a Windows Phone 7 device.

The biggest new feature that is coming as part of iPhone OS 4.0 is multitasking. Until now, Apple has handled multitasking in much the same way Microsoft proposes to handle it. That is, the phone's built-in applications can multitask while those from outside developers generally can't. That means you can do things like listen to music and surf the Web or check the calendar while on a phone call. But it means that two third-party programs tend not to work simultaneously.

With OS 4.0, Apple is opening this up significantly, allowing a variety of background services that will make for some interesting new combinations. The iPhone will be able to do things like have Skype running in the background, while this seems unlikely to be possible with Windows Phone 7.

That said, there are a few areas where the Windows Phone should still stand out when the first models hit the market this holiday season, even assuming Apple has released both OS 4.0 and, presumably, new iPhone models as well.

One of the areas is bringing together photos and contacts from a variety of sources. Like Palm's Pre, Microsoft is taking the approach that people have their media in lots of places and they want to access all their media in a category, regardless of where it came from. Along with that, I'd expect tight integration with social networks like Facebook, whereas Apple tends to view that as a separate "app."

Apple Steve Jobs iPhone
Apple CEO Steve Jobs unveils iPhone OS 4.0 Thursday. James Martin/CNET

The Office mobile applications could also differentiate it, though we have yet to really see that experience on the Windows Phone, so I'd withhold judgment until I see it. For the most part, people tend to want to view documents and perhaps do light editing. There are third-party tools for the iPhone, BlackBerry, and other devices, such as Documents to Go, but Microsoft does have some room to set itself apart here.

And, although Microsoft isn't allowing nearly as much hardware variety as it has in the past, we can still expect to have phones with physical keyboards in addition to touch-screen-only models, something that appears less likely to come from Apple.

An interesting issue is Apple's just-announced Game Center social network. Although this has Apple taking on what was an area Windows Phone would have had to itself with Xbox Live, this could work some to Microsoft's advantage. Its Xbox Live service already has the features Apple was talking about as well as an existing, huge community.

Meanwhile, Windows Phone 7 isn't Microsoft's only play in the phone business. The company also has an event on Monday where it and Verizon are introducing two new feature phones , code-named Turtle and Pure, aimed at the always connected messaging crowd.

Those phones, part of a long-running internal project called "Pink" can be thought of as the successor to the T-Mobile Sidekick line that Microsoft got as part of its Danger acquisition. They will be heavy on the social-networking front and also will be the first phones to be able to access the Zune music service.

Although they won't compete with the iPhone, and aren't really aiming to, the phones do allow Microsoft to potentially gain share by attacking another part of the phone business. Plus, adding scale to the Zune community could help make the Zune feature of Windows Phone more compelling.

But, these advantages aside, Microsoft's road got tougher on Thursday and not just because of the specific features Apple added to the iPhone. Cupertino showed that it is moving full-steam ahead in the mobile world and in no way resting on its laurels. And as Microsoft works to add copy and paste and other things that are missing from the first Windows Phone 7 devices, who knows what Steve Jobs and company will be doing.

 

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