Windows Phone - What does 2012 have in store?

Pros: Some of the chief positive attributes of Windows Phones have been evident from the start. Its Metro user interface, with live tiles and hubs, is engaging and sets it apart from other smartphone platforms. By all accounts, people who actually use the devices are impressed with it and tend to enjoy the experience. "Another plus is that Microsoft does tick off almost all the check boxes," Current Analysis Avi Greengart said, noting that the platform offers multitasking and other niceties, and has significant ties to the living room via its integration with Microsoft's Xbox platform. There are also extensive cloud services built into the platform. Additionally, there is a consistency to the platform that sets it apart. "If you're choosing between $50 Android phone and $50 Windows Phone phone, generally speaking a low-end Windows Phone performs almost identically to a high-end Windows Phone, whereas there's much greater variation on Android," Greengart said.

NPD Connected Intelligence analyst Ross Rubin also noted that Windows Phone has excellent developer tools and that developer evangelism is one of Microsoft's core competencies. Part of this helps explain why the Windows Phone Marketplace has been able to expand so rapidly, up to 60,000 apps by the end of January.

Cons: That said, 60,000 apps still pales next to iOS and Android, and developers don't yet consider it as much of a priority as those platforms. This connects to the chicken-or-egg scenario that plagued webOS: Developers are not targeting the platform because there aren't enough customers, and there aren't enough customers in part because shoppers are more interested in all the apps available through iOS and Android. Essentially, it boils down to awareness. "Right now consumers are really walking into the store and looking for iOS and Android, and Microsoft has not broken through the clutter and convinced consumers that their product is worthy of consideration," Greengart said.

Another potential drag on Windows Phone is the pace of Microsoft's updates. Android supported LTE long before Windows Phone, which may have given Android the edge in late 2011 handset sales in the United States. Microsoft likely is planning fresh updates to the platform. But the question remains: Will those updates be enough? "Can Microsoft learn to be nimble enough to let it do what it needs to do?" Morgan asked.     

Challenges ahead: The key challenge for Windows Phone in 2012 is two-fold: Microsoft must maintain and grow its relationship with lead vendor Nokia while at the same time encouraging other smartphone vendors to build Windows Phone devices.

On Nokia, both Microsoft and Nokia need to feed off each other to build momentum for the platform and for each other's long-term success. Both companies will need to aggressively and effectively market and promote Windows Phone to consumers and to retail sales representatives who interact with consumers if they want the platform to break through into the popular consciousness. Nokia CEO Stephen Elop said last month that the company is carefully monitoring how its rollout of its Lumia Windows Phones is being received, particularly in the U.S. market. Those lessons will undoubtedly come in handy as AT&T prepares to launch the LTE-capable Lumia 900. Either way, Microsoft is going to have to rev up the carrier support for the platform if it wants to compete.

Separately, Microsoft must maintain the support of its other licensees. Nokia said in the fourth quarter it received a $250 million payment from Microsoft for using Windows Phone, the first quarterly "platform support payment" Microsoft will make to Nokia. The payments will eventually total in the billions of dollars.  "What degree of enthusiasm will we see given the first among equals relationship Nokia has with Microsoft?" Rubin said. 

Windows Phone - What does 2012 have in store?
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