BARCELONA, Spain--Microsoft (NASDAQ:MSFT) feels like it is getting enough financial and marketing support from its key operator partners for Windows Phone 8 and is working to build on those relationships to drive more sales, according to a Microsoft executive.
The comments are notable in light of the lack of traction Windows Phone has gained so far in the overall smartphone market. Top executives from wireless carriers have said repeatedly over the last year and a half--if not longer--that they want to see a strong third smartphone platform challenge the dominance of Google's (NASDAQ:GOOG) Android platform and Apple's (NASDAQ:AAPL) iOS, which combined to power 91.1 percent of all 227.8 million smartphones shipped during the fourth quarter of 2012, IDC said.
Despite that, in an interview with FierceWireless here at the Mobile World Congress trade show, Eddie O'Brien, Microsoft's global vice president of sales and marketing for its operator channel, said Microsoft is getting all of the support it needs from its operator partners. Microsoft has developed a model with "reference operators" across what it calls the "top 50 accounts" worldwide, and is working with two lead carrier partners in specific markets to market its Windows Phones. In the United States, those carriers are Verizon Wireless (NYSE:VZ) and AT&T Mobility (NYSE:T).
"The reference operators we're working with are matching us," O'Brien said. "They're investing heavily on Windows Phone." He said that in Mexico with América Móvil, Windows Phones make up a "massive double-digit number of their smartphone base." He also said Windows Phone has gained double-digit share in markets like Finland (home to partner Nokia (NYSE:NOK)), Poland and the United Arab Emirates, and that Microsoft has also received strong support in Western Europe from operators like Vodafone and France Telecom Orange.
Yet so far all that support has not translated into large market share gains. Research firm Gartner reported that Microsoft captured 3 percent of the global smartphone market in the fourth quarter of 2012, up from 1.8 percent in the year-ago period. IDC reported similar numbers, giving Microsoft 2.6 percent of the global smartphone market in the fourth quarter, up from 1.5 percent in the fourth quarter of 2011.
O'Brien acknowledged that the platform's market share is still low, but said Windows Phone is in a "world of different place from a year ago." A year ago, he said, many operators were questioning why they should invest in Windows Phone, he said. Now, they're hashing out which Windows Phone devices to buy and what their selling price should be. Further, he said Windows Phone has surpassed BlackBerry (NASDAQ:BBRY) in market share in 24 countries. O'Brien said Microsoft has a real opportunity to compete in emerging markets like China, India, Indonesia, Thailand and Turkey, where there is low smartphone penetration overall and relatively low iPhone penetration.
Still, O'Brien said Microsoft has a long way to go, especially in coordinating and honing its marketing messages. He noted that carriers have their messages, primarily about their network speeds and data; OEMs have their message about the unique features of their devices; and Microsoft has its message, which is about the unified user interface and experience between Windows Phone 8 and Windows 8 tablets and PCs. That unified experience will allow a consumer to start a Microsoft Office document or Xbox Live game at home and pick it up on their phone via cloud syncing.
O'Brien said unifying and coordinating all of that marketing is still difficult. "Today we're not fully there," he said. "There's a lot of work to do align those messages." He said Microsoft has seen its Windows Phone brand awareness and intent to purchase metrics shoot up, and that as its brand and the idea of the unified Windows experience becomes more prevalent, it will leverage its assets like Office, Xbox and Skype to sell its story.
A big opportunity and challenge for Microsoft is at the retail point of sale, especially in carrier stores. O'Brien said Microsoft recently performed a test, and compared two similar retail locations but added Windows 8 tablets to one and not the other. In the store with the tablets, there were 72 percent more Windows Phone 8 sales. He said his "dream" is to be able to have an Xbox display, Windows 8 tablets, Microsoft's Surface tablet and Windows Phones in carrier retail stores to get the unified message across. O'Brien noted that likely won't happen, but he said carriers want to help.
"I am communicating that they want to tell the story," he said. "They're saying, 'We want to tell the Microsoft story.'"
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