Microsoft aims to spread Windows Phone to Tier 2 U.S. carriers

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LAS VEGAS--Microsoft (NASDAQ:MSFT) thinks it's very important to bring its Windows Phone 8 platform to Tier 2 U.S. carriers, a strategy that helped Google's (NASDAQ:GOOG) Android platform gain significant market share, according to a Windows Phone executive.

In an interview here at the 2013 Consumer Electronics Show, Greg Sullivan, Microsoft's senior product manager of Windows Phone, said that the company is working to spread Windows Phone to smaller operators, like Leap Wireless' (NASDAQ:LEAP) Cricket and MetroPCS (NYSE:PCS), though he declined to say when that would happen. "We have teams of folks that are working with literally all of the mobile operates to help pair them with OEMs and deliver phone-operator pairings that meet specific needs," he said.

Sullivan said that getting Verizon Wireless (NYSE:VZ) to throw its support behind Windows Phone in the fourth quarter was a major step for the platform. While he said he could not speak for the carriers, he acknowledged that there may still be some reticence on the part of smaller carriers to commit to the platform, which lags behind Android and Apple's (NASDAQ:AAPL) iOS in market share. Sprint Nextel (NYSE:S), which has also taken a wait-and-see approach on Windows Phone, said Monday it will launch Windows Phone devices from HTC and Samsung Electronics by the summer. U.S. Cellular (NYSE:USM) has also voiced support for Windows Phone 8, and has launched one Windows Phone 7.5 phone, the ZTE Render, last fall.

The Windows Phone 8 push comes as Microsoft is working to build its library of apps for the platform and gain traction in the market. Though the platform has often been praised by analysts and reviewers for its simplicity, integration with Windows and design, it has yet to catch fire with consumers. According to research firm Gartner, Microsoft captured 2.4 percent of the global smartphone market in the third quarter of 2012, up from 1.5 percent in the year-ago period.

Still, Sullivan said that Microsoft knew when it reset its mobile strategy in 2010 that "this was going to be a long-term investment for us." He said there is no one factor that will spark Microsoft to get more momentum in the market, and some things have needed to happen in sequence. He added that the company needed to build a unique software platform, get developer support, pair the software with top-notch hardware and secure more carrier support.

Microsoft has made progress in all of those areas, he said, noting that Windows Phone now boasts 125,000 apps and that app submission have increased 40 percent since Windows Phone 8 was released this fall. Now, he said, Microsoft is working to tie its mobile platform more directly to Windows 8. 

Sullivan said that the two platforms use the same user interface, which will help familiarize customers with both. However, he said that once they see concrete examples of how the platforms are integrated they will be even more enthused. He gave the example of a user starting a document on a Windows 8 tablet or PC and then, via cloud syncing from SkyDrive, being able to edit that document on their phone. "The phone synthesized multiple channels of information and didn't ask me to do any work at all," he said. "That's [the] key idea. The phone should do more of the work for me."

Microsoft is also refining its marketing message with Windows 8, Sullivan said. In the past, Microsoft farmed out the marketing to carrier and hardware partners. While Sullivan said Microsoft is grateful to have such dependable partners--including Nokia (NYSE:NOK) and Huawei, which just announced its first Windows Phone, the Ascend W1--he said Microsoft has decided to do more direct marketing in addition to working with partners. 

With Windows Phone 8, Microsoft has honed in making sure consumers understand that the key differentiators for Windows Phone are its live tiles, which update with information, messages and notifications that are important to the individual user, as well as the fact the phones can be personalized much more than iPhones and Android phones. Some commercials have used actor Will Arnett and football player Cam Newton to demonstrate this. "One of the things we've learned frankly is there is value in focusing one key differentiator that implies a whole bunch of other goodness, but that is clearly valuable and unique and something that no one else has," he said. Once that idea is in place on consumers' minds, he said, Microsoft and its partners can focus on what makes each device unique, with things like Nokia's augmented reality City Lens service or HTC's Beats audio technology. 

"There has been a strong and concerted focus on this narrow area," he said. "But it's intentional because we clearly wanted to put a stake in the ground that there's a better way to do a smartphone."

For more:
- see this PhoneScoop article

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Correction, Jan. 31, 2013: This article originally incorrectly stated that U.S. Cellular had not launched Windows Phones. The company has launched the ZTE Render.

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