Is it too late for Microsoft in the smartphone market?

Windows Phone 7 unveiled Monday as Redmond scrambles to catch up in mobile

The Internet is overflowing today with talk of Windows Phone 7, Microsoft's high-profile effort to get back into the competitive smartphone race.

No surprise, since the big marketing push began on Monday, with Microsoft CEO Steve Ballmer announcing the release of Windows Phone 7 at a press event in New York.

Get your fill of it while you can, however, because no one's really going to be talking much about Windows Phone 7 in a couple of days. But they'll still be talking about the Verizon Wireless-iPhone deal announced last Wednesday, and they'll be talking about Google's in-your-face earnings report due Thursday.

That's because people like to talk about winners, which is why you see a whole lot more being written about Facebook than MySpace.

Apple and Google, of course, are two of the big winners in the mobile OS market, upstarts that stole market share and buzz from more established mobile OS makers Research in Motion Ltd. (BlackBerry) and Symbian Foundation (Symbian platform). Microsoft, meanwhile, has seen its share of the smartphone market drop from 9.3 percent in the second quarter of 2009 to 5 percent in Q2 2010. It's in fifth place, with the nearest major rival (Apple) at 14.2 percent.

So now Microsoft is considered an also-ran in mobile, and for all of Ballmer's talk Monday about how "always delightful" and "wonderfully mine" Windows Phone 7 smartphones will be to users, first they have to get customers to buy them. That's what media campaigns are for, but Microsoft faces an uphill struggle to increase market share in any significant way. I wonder what the magic number is at Redmond. Would they consider 10 percent market share successful? Fifteen percent?

The smartphone market continues to grow (IDC forecasts a 24.5 percent increase in 2011), and the only way Microsoft can increase market share is to 1) capture a disproportionate percentage of consumers who currently don't own smartphones, and 2) steal customers from players with higher market share. On the latter item, let's rule Apple and Android out right now. That leaves Symbian and RIM.

With potential advantages over other smartphones in the enterprise (Windows Phone 7 devices reportedly can handle a lot of Microsoft business software popular with organizations), Microsoft may be able to steal BlackBerry customers. (Another reason why it might make sense for Microsoft to just go out and buy RIM.) After that, it's just marketing, marketing, marketing.

I'd be curious to hear what readers think of Microsoft's chances in the smartphone market.

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