Last Chance for Microsoft

By Reuters  |  Print this article Print

Microsoft's launch this week of its Windows Phone 7 mobile operating system, and devices that run the OS, won early accolades, but will it be enough to make a dent in Apple iPhone and Google Android's substantial lead in the smartphone market?

The new phones represent Microsoft's last chance to catch up in the smartphone market with rivals who overtook it in the past few years.

"I've been looking forward to this day for some time," said Microsoft Chief Executive Steve Ballmer, showing off the nine phone models at a launch event in New York.

Ballmer, who has admitted his company "missed a generation" with its recent unpopular phone offerings, said the new phones would eventually be available from 60 mobile operators in 30 countries.

The first phone from AT&T, priced at $200, will be available on November 8, said Ralph de la Vega, CEO of AT&T Mobility and Consumer Markets. Some phones will be available October 21 in Europe.

AT&T will give the phones ample room in its stores for promotion. "We're expecting these to be really big sellers," said Jeff Bradley, AT&T's senior vice president for Devices.

"This is a marathon, not a sprint. They are not going to change their position today or in the next month," said Michael Gartenberg, an analyst at research firm Gartner. "But they've established themselves as a credible player."

Microsoft did not give any sales forecasts for the new phones.

New Features

The new phones, which are built on the Snapdragon processor made by Qualcomm Inc, represent Microsoft's best attempt yet to introduce live connections with its other products and the Web.

Users will be able to play Xbox Live games on the phones, link to Windows Office, use the Bing search engine and download and play music through its Zune music software. TV episodes are also available for download via AT&T's U-verse service. Updates from Facebook will be incorporated into a user's contacts.

Game maker Electronic Arts Inc said it will introduce a wave of games for the new phone software this holiday season. That should boost the phone's popularity among gamers, especially the 25 million subscribers to Microsoft's Xbox Live gaming network.

Microsoft has a market share of only 5 percent in the global smartphone market, according to research firm Gartner, compared with 9 percent a year ago. Google's Android system has a 17 percent market share, jumping from only 2 percent a year ago.

Gartner expects almost 270 million smartphones to be sold worldwide this year, up 56 percent from last year.

In comparison, Gartner expects only a 19 percent increase in worldwide PC sales to 368 million units this year.

Microsoft shares closed up 2 cents at $24.59 on Nasdaq. AT&T shares rose 10 cents to $28.32 on the New York Stock Exchange.

(Reporting by Bill Rigby and Sinead Carew; Additional reporting by Paul Sandle in London; Editing by Andre Grenon, Maureen Bavdek and Richard Chang)