Microsoft needs to translate Windows Phone buzz into sales

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LAS VEGAS--The buzz around Microsoft's (NASDAQ:MSFT) Windows Phone has been palpable here at the Consumer Electronics Show. The platform received a glowing appraisal in the New York Times shortly before the show started and is even getting meta-buzz from Wired. One financial analyst estimates Nokia (NYSE:NOK), Microsoft's strategic partner, could sell 37 million Windows Phones this year

The key challenge for both Microsoft and Nokia is to turn this buzz around devices like Nokia's Lumia 710 for T-Mobile and the Lumia 900 for AT&T Mobility (NYSE:T)  into concrete sales. It's an enormous task, and the companies know it. But without a sustained marketing push, the platform will flounder and with it Nokia's hopes for a smartphone future. It's not as much about building up the platform as it is about sales and execution.

I believe the executives involved understand the challenges they face. Chris Weber, Nokia's president of North America, told me that the two things that keep him up at night are how the company will make consumers understand that it has a unique and differentiated product and how it will execute on the retail level. Weber said a key message is that Windows Phone is trying to be a happy medium between Google's (NASDAQ:GOOG) Android and Apple's (NASDAQ:AAPL) iOS.

"I think what Windows is trying to do is take the best of both of those worlds," he said. "A highly curated and controlled environment with iPhone, and the ability to do anything you want on the other end with Android. We think there's a place in between. And I think it's about a seamless integrated experience."

I think it's a potentially strong sales pitch, but it's also difficult to distill down to 30 seconds. Microsoft and Nokia need to crack that marketing message if they want to succeed, and then deliver it through multiple channels (and hopefully with a growing list of carriers).

Windows Phone evangelists, from Microsoft CEO Steve Ballmer and Nokia CEO Stephen Elop on down, like to argue that Windows Phone, with its live tiles and hubs, breaks though the sea of applications on Android and iOS devices. But one big problem is that a lot of people have become accustomed to experiencing a smartphone that way and seem to enjoy it. The key issue is raising awareness of why Windows Phone is different and why that's important.

Aaron Woodman, director of Microsoft's mobile communication business, told me it is not just an awareness issue. He said the company needs to focus on four things: building a quality product ("People will forgive us for not selling billions and billions of phones, but nobody will forgive us for building a sub-par product," he said); finding a way to have carriers and handset makers work together to push the platform at the retail level; conducting better marketing; and leveraging the power of Windows as a brand to make it relevant in phones by making Windows Phone more familiar, something the company will try to do as it pushes Windows 8, which uses the same Metro UI as the mobile platform.

It's an interlocking set of challenges, and nobody at Microsoft or Nokia is under any illusions about what lies ahead. I'm glad--finally--that Windows Phone is getting LTE. I'm glad that Nokia seems to be getting U.S. carrier support that will be sustained. Woodman said that Nokia's devices will be devices people will aspire to buy, and that will help the platform and other Windows Phone licensees as a whole.

I hope they succeed, because I think that there are lots of people outside of Apple and Google that would like to see a strong third platform emerge (while we all wait for Research In Motion's (NASDAQ:RIMM) BlackBerry 10 to arrive.) But no one should kid themselves about the challenges Microsoft and Nokia face with breaking through on Windows Phone. --Phil

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