The software giant's next version of its mobile phone operating system has much to overcome as it prepares to compete with Apple and Android in the holiday season.
The next version of the Windows Phone operating system, code-named Mango, got heaps of praise today, as embargoes lifted for reviewers to comment on a technical preview of the code they tested. But for Microsoft, there's plenty of heavy lifting left to do.
After nearly a week of testing Mango, CNET's own Bonnie Cha and Jessica Dolcourt write that "Mango is a satisfying upgrade from the original Windows Phone OS, and one that brings the platform closer to the competition."
Others were more effusive. Gizmodo's Matt Buchanan wrote "It feels alive. Everything bounces. Everything swoops. Everything flips. Every single action is lushly animated. It just doesn't sweat the details--blood was spilled." WinRumors' Tom Warren wrote "Microsoft's next-generation Windows Phone operating system is slick, full of features and addresses the needs of consumers and businesses every step of the way."
Give Microsoft credit for getting over that hurdle. But the company, which has failed to gain significant traction in mobile phones for more than a decade and has had a handful of missteps with Windows Phone 7, still needs to convince carriers to sell and push its new devices.
It needs to explain to potential customers why the new Windows Phone paradigm--a visual shift that sometimes weaves two different applications together, such as the browser and Yelp when a user searches for a restaurant--is better than the more familiar one-app-at-a-time approach. And, most important, it has to figure out a way to convince users that its thin marketplace--18,000 applications compared with more than 500,000 on iTunes--has the apps that users most want.
Because the fact is that Microsoft is late to the smartphone party. It launched Windows Phone 7 last October. While there's still plenty of growth to be had, Microsoft has the huge disadvantage of badly trailing two market leaders who continue to innovate and add new applications to their marketplaces. To displace those rivals, Microsoft can't merely be as good. It needs to be better, and a lot better to convince consumers to try its technology.
"All of the nice features don't mean anything if Microsoft can't tell the right story," Gartner analyst Michael Gartenberg. "There is a lot of opportunity here for Microsoft. But can they execute against that?"
Start with the new approach to mobile phones. It's not just multiple apps running at once. Microsoft has created dynamic tiles, application icons that include data that can update in real time. Instead of an icon of an airline's app, for example, Mango will offer those airlines the change to notify travelers if their flights are running late right on the tile on the home screen on the phone.
"Microsoft has to articulate why different is better," Gartenberg said.
The company needs to win over more developers too. Right now, it has many of the table stakes apps that it needs to succeed. But for many users, the iPhone still offers a better experience because iTunes includes so many little-used apps that are specific to individual needs.
And Microsoft needs to convince carriers that Windows Phone devices are worthy competition. Often carriers direct customers to rival smartphones.
"This is totally anecdotal but I went into two stores and was told, 'You don't want that (Windows Phone) and was steered to Apple and Android devices," Gartenberg said.
It may be anecdotal, but clearly, his experience is not uncommon. It's prevalent enough that a former Microsoft MVP, an independent technical expert who works with Microsoft, set up a Web site, called wptattletale.com, where consumers can snitch on a retailer that coxes users away from Windows Phones. As Gartenberg points out, Apple and Android have no need for such sites.
The biggest challenge Mango will face, though is that Microsoft's rivals aren't standing still. Mango is likely to launch this fall, in time for the holidays. Most analysts expect Apple to debut the iPhone 5 in September. And there's little doubt that a raft of new Android device will be ready for the holidays.
To its credit, Microsoft recognizes the mountain of challenges in front of it and says it's focused on a long-term strategy.
"It takes time," Windows Phone senior product manager Greg Sullivan said. "This is a new platform. It's been eight months since it launched in the U.S."
The company is working with carriers now, trying to educate them about its different approach. It's creating training programs for the sales staff in retail stores, and providing devices for those sales representatives to use. Microsoft is pushing hard with developers to get the latest and best applications available for Mango. It knows it can't catch up with the number of iTunes apps anytime soon. So it's focused on bringing the most relevant apps to its marketplace and making sure they work better on Windows Phones than on other platforms.
"It's a challenge, but it's a challenge we're confident we'll meet," Sullivan said.
Some analysts view Microsoft'sFebruary agreement with Nokia as the key to its turn-around. The giant Finnish handset maker will soon begin rolling out devices that run made exclusively for Windows Phone.
"The key thing that sets apart Mango from the previous launch of Windows Phone is that it will be on Nokia devices," said Ross Rubin, an analyst with NPD Group. "Mango phones will be the basis for Nokia's first entrée into the market since its deal with Microsoft. And it has the potential to deliver to a lot of volume for Microsoft."
Nokia is still the No. 1 handset maker in the world. And if Microsoft and Nokia execute well, this could provide a boon to Microsoft in the future. But there are still significant barriers. For one, Nokia has become nearly non-existent in the U.S. The company has said for years that it is working on devices for the U.S. market, but it's never come up with anything that could be heavily marketed by any U.S. carrier.
"Nokia has no market share in the U.S.," said Roger Entner, founder and analyst at Recon Analytics. "And getting it from nothing to something is going to be difficult with all the competition. Also globally, some parts of the world are not adopting smartphones as quickly as they have in the U.S. and parts of Europe. And the global market is where Nokia is strongest."
Indeed, making headway in the U.S. market could be one of Microsoft's toughest challenge in its strategy. In the U.S. market, which is the most advanced market in terms of smartphones, Microsoft will need strong support in terms of marketing, store placement, and retail sales to make the Windows Phone brand a success.
Much of the success of Google Android in the U.S. market stems directly from its relationship with Verizon Wireless. Verizon was looking for an alternative to the Apple iPhone, which at the time was exclusively sold by AT&T. Verizon found that alternative in the Motorola Droid brand of devices as well as Android phones from HTC and other makers.
All four major wireless operators In the U.S. are selling Windows Phones today, but some are likely to push the new Mango phones more aggressively than others. Verizon Wireless, the largest wireless operator in the U.S., is unlikely to make a big push for Windows Phone and Mango. In February, Verizon Communications CTO Tony Melone said he wasn't in any hurry to make Microsoft a major partner in the handset department. Verizon partnered with Microsoft to release the Kin, which was not a success.
That said, perceptions can change. On a recent visit to New York City, Jo Harlow, executive vice president at Nokia, said the company will release CDMA versions of its devices, which could mean that the new Mango Windows Phones released in the U.S. may find a home on either Verizon Wireless or Sprint Nextel.
Where Microsoft is likely to find the strongest support for its new Mango Windows Phone devices is on AT&T's network. AT&T already has a relationship with hardware maker Nokia. And the company is already selling more versions of Windows Phone 7 devices than any other U.S. operator.
It was also a launch partner for the first Windows Phone 7 devices. And now that the iPhone is no longer selling exclusively on AT&T's network, the carrier is looking to diversify and offer more phones. The big question is whether AT&T or Verizon will spend the same effort and marketing budget on Windows Phone devices as they do on Google Android phones.
"In the smartphone market, you can not underestimate the important role of the carrier," Rubin said. "Wireless operators walk a fine line between having an overwhelming number of operating systems versus offering some degree of choice and having some leverage over suppliers."
Correction, June 22 at 8:55 a.m. PT: The title of the creator of the wptattletale.com site was incorrect. He is a former Microsoft MVP (most valuable professional).