Can Windows Phone 7 Break The Consumer Market?

Micorosft’s Ballmer has been sounding off about Windows Phone 7, but will it really pose a threat to Android’s or the iPhone’s market share, asks Nicholas Kolakowski

On Monday – exactly one week before Microsoft launches Windows Phone 7 – at a high-profile New York event, CEO Steve Ballmer sounded off to The Wall Street Journal about the upcoming smartphones. The interview covered many of the usual talking points: Ballmer repeated his mea culpa for Microsoft’s mobile market share slide, emphasised the role of manufacturing partners in the release (instead of his company following Google down the Nexus One route), and suggested the smartphone market is still relatively young and subject to change.

One interesting part: Ballmer defending Microsoft’s decision to charge a license fee for Windows Phone 7 software – by attacking Google’s decision to give Android to manufacturers for (ostensibly) free.

“Android has a patent fee,” Ballmer told the Journal. “It’s not like Android’s free. You do have to license patents. HTC’s signed a license with us, and you’re going to see license fees clearly for Android as well as for Windows.”

[Interestingly, at an event in London on Tuesday, Ballmer said patent law ought to be reformed. “On balance, I think the patent system today helps, and yet I think patent reform should be taken up,” he said. “Two of the biggest generators of patents – the pharmaceutical business and the IT business – neither industry existed when modern patent law was written.” – Editor]

Will Windows Phone 7 succeed?

Ballmer also defended Windows Phone 7’s chances in a consumer market where the Apple iPhone dominates and Android has made great gains in market share over the past few quarters:

“The fact that things have been pretty dynamic means that they’re probably still pretty dynamic,” Ballmer reportedly said. “There’s no doubt that things have changed quickly, and at least in my undergraduate degree in math, that’s called an existence proof. We know it’s possible, we’ll see what happens.”

But even with that turbulence, will Windows Phone 7 succeed in the marketplace? As with last year’s run-up to the launch of Windows 7, Ballmer seems determined to lower expectations a little bit:

“I don’t make forecasts. It’s partially how many we can get made. It’s partially how much we can – can not only build a great product, but how does the word of mouth work, how effective is the advertising that we’ll do?”

Playing it safe

Microsoft’s initial ad campaign seems determined to play it safe, with 30-second spots devoted mostly to showing how Windows Phone 7’s streamlined interface can supposedly simplify your life. That may sell devices to some people, particularly those plunging into the smartphone market for the first time, but overall the ads (at least in my opinion) lack the creative “oomph” that might compel the more technologically addicted to take a second look.

Personally, I like Windows Phone 7’s look and feel, at least for the few minutes I’ve had to play with it – Microsoft has been reluctant to send me a pre-release device. If Deutsche Bank analyst Jonathan Goldberg’s August prediction is correct and Microsoft spends $400 million (or more) on the accompanying ad campaign, then I think the platform can make short-term gains. Longer term, though, I have a hard time seeing how Microsoft can create the conditions necessary to surpass Android’s or the iPhone’s market share – unless either of those two platforms makes some sort of catastrophic mistake.