Analysts debate Windows Phone 7 chances

Microsoft has officially launched its Windows Phone 7 platform, but now comes the real trick: selling it to consumers. Two of the company's high-profile partners for the platform--AT&T Mobility (NYSE:T) and Taiwanese smartphone maker HTC--said they are committed to making sure it is a success.

Click here to watch Microsoft’s full Windows Phone 7 press conference.Microsoft, of course, faces an uphill battle as it seeks to compete against Apple's (NASDAQ:AAPL) iOS and Google's Android platform, both of which have established growing positions in the smartphone market. According to research firm Gartner, Android had 17.2 percent of the smartphone market in the second quarter, and Apple had 14.2 percent. Windows Mobile captured 5 percent of the market, down from 9.3 percent in the second quarter of 2009.

"We are the first to admit that Microsoft is fighting for third place, not first or even second, at this point; but we believe this is a key step toward rebuilding confidence in their ability to innovate in mobile," Wells Fargo analyst Jason Maynard said in a research note. "This isn't going to move the market share needle in the short term."

Still, Microsoft's allies were undaunted. AT&T is going to put its marketing muscle behind the platform, and will have a dedicated Windows Phone area in its 2,300 retails stores. "Take everything you knew about Windows Mobile 6.5 and call it mobile history. This is the mobile future," Michael Woodward, vice president for AT&T's consumer mobile device portfolio, told the Seattle Times. "We're going to treat this completely differently."

AT&T will debut the Samsung Focus Nov. 8 for $199.99, and will launch the Windows Phone 7-powered HTC Surround and LG Quantum in the following weeks. The phones will join AT&T's crowded smartphone lineup. The operator also is the exclusive carrier for the iPhone and is pushing Research In Motion's (NASDAQ:RIMM) BlackBerry Torch.

T-Mobile USA also will push Microsoft's Windows Phone 7, and pledged to launch two phones, the HTC HD7 and Dell Venue Pro, for the holiday shopping season.

"This is Microsoft's last chance to be a major player in the smartphone market," industry analyst Jack Gold told Reuters, laying out the stakes. "Microsoft will be required to undertake a massive consumer education campaign if it wants to stand a chance of differentiating itself from iPhone and Android, which have far greater market presence."

Some sounded a more downbeat note. "Unfortunately, in the ultra competitive world of smartphones, we believe that the strong momentum and carrier support of the iPhone and Android phones will not allow Microsoft's revised efforts in the mobile space to gain meaningful traction," wrote TownHall Investment Research. "If WP7 is not destined for prime time in consumers' minds, it is hard to get too excited about Microsoft or even derivative plays on the new handsets."

HTC, meanwhile, is hoping the success it has found with Google's Android platform will carry it forward as it releases a handful of Windows Phone devices. The company, which got started as maker of Windows Mobile phones, released five different Windows Phone 7 models. HTC CEO Peter Chou said Microsoft "has a lot of value, so the industry should definitely not underestimate them."

HTC recorded record sales in its third quarter, largely on the back of Android. Chou praised Windows Phone, however, and said Microsoft, its operator partners and the handset vendors involved in the platform have all cooperated well. During a press briefing in Taipei ahead of the launch of Windows Phone, Chou said that advertising costs for Windows Phone will be shared by carriers, handset makers and Microsoft.

"We Chinese really value partnership, and we have been partners with Microsoft for many years and this relationship is valuable," Chou said, according to IDG News Service. Chou said Microsoft brings a lot to the table, including its software capabilities and marketing reach.

For more:
- see this Seattle Times article
- see this Reuters article
- see this Bloomberg article
- see this IntoMobile post

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