HTC, Nokia see bright future for Windows Phone adoption

BARCELONA, Spain--Top executives from HTC and Nokia (NYSE:NOK) said they remained confident that Microsoft's (NASDAQ:MSFT) Windows Phone platform can achieve parity with Google's (NASDAQ:GOOG) Android and Apple's (NASDAQ:AAPL) iOS over the next few years.

Nokia's Stephen Elop, right, captures HTC's Peter Chou, left, telling a story during a keynote discussion.

During a keynote appearance here at the Mobile World Congress trade show, HTC CEO Peter Chou said "we believe Windows Phone will be one of the very strong operating system ecosystems in the market." He was asked directly by Rutberg analyst Rajeev Chand, who was moderating the session, whether Windows Phone will be on the same level as Android and iOS in three or five years. "I'm not a fortune teller," Chou replied, eliciting laughter from the audience.

"We would like to nurture this ecosystem," he said. "I believe it will catch up." Microsoft captured just 1.9 percent of the smartphone market in the fourth quarter, according to Gartner, compared with Android's 51 percent and iOS' 24 percent.

Chand asked Chou about Microsoft giving a $250 million payment to Nokia in the fourth quarter for using Windows Phone--part of Microsoft's unique deal with Nokia--and wondered if that relationship worried HTC. "We are excited to see this Microsoft-Nokia partnership. We are not a selfish or close-minded company," Chou said. "It's good to have another player in this space."

Chand pressed Nokia CEO Stephen Elop on the company's sales of its Lumia-branded Windows Phones, noting that Samsung has sold 20 million Samsung Galaxy S II units in 10 months while Nokia has only sold 1 million Lumia devices through the end of January. Elop said that the comparison is unfair since Nokia is not building around an established brand the way Samsung has. Elop said Nokia will continue to refine how it targets consumers based on feedback, but noted that the company has introduced four Lumia models a year after committing to Windows Phone. Elop also noted that at last year's Mobile World Congress there were just 6,000 apps for Windows Phone and that today there are 65,000. "When we think about expectations going forward, it is that people see a consistent pattern of breathtaking innovation," he said.

Elop also said Nokia will focus intently on getting retail sales representatives to introduce Windows Phone and Lumia to first-time smartphone buyers or people who might want to switch. The goal is to show people something new, noting that people are "familiar with the static grid of icons that Apple invented and Android continued to invent, or however you want to put it." Still, Elop said he is confident Windows Phone will be the third largest ecosystem and made his stated target clear: "Our No. 1 focus is competing with Android."

The conversation, which included foursquare CEO Dennis Dennis Crowley, also turned to Facebook. Chand asked whether Facebook, which has 425 million mobile users, could realistically become a smartphone ecosystem in and of itself. Facebook announced earlier this week that it will partner with mobile operators across the globe to introduce streamlined billing practices enabling users to charge mobile Web application transactions to their monthly wireless bill. Facebook will also spearhead the W3C Mobile Web Platform Community Group, a consortium of mobile and electronics industry powers that will, according to Facebook CTO Bret Taylor, "author, evangelize and prioritize HTML5 and mobile web standards."

Crowley said he was not that concerned about Facebook eclipsing more established smartphone ecosystems. "I don't see a ton of people building Facebook for mobile apps," he said.

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