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Microsoft Unveils Windows Phone Update

May 25, 2011

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Microsoft provided details about the upcoming update to its Windows Phone operating system (OS). Codenamed "Mango", Windows Phone 7.1 is the first significant update since Windows Phone 7 handsets launched in Q4 2010.
Among the improvements, Windows Phone 7.1 promises:
  • Integrated messaging layout combining SMS, Windows Messenger and Facebook chat
  • Speech-to-text and text-to-speech
  • Application multi-tasking
  • Improved browser with a mobile port of Internet Explorer 9 featuring hardware acceleration

The updated OS is expected to launch in the fall of 2011, with hardware from Nokia, Samsung, LG, HTC, Acer, Fujitsu and ZTE.

Microsoft has seen tepid demand for its first batch of Windows Phone 7 smartphones launched in Q4 2010 and needs to catch up with the competition if Microsoft wants to avoid becoming an also-ran in the mobile space.

Critically, the two current market leaders (Apple and Google) are immune to a takeover strategy sometimes employed by Microsoft to enter a market. Therefore Microsoft needs to enter the market with a new product and partner existing manufacturers, essentially competing with Android for manufacturer support.

Although Android has massive traction, Microsoft's Nokia partnership appears most promising since it is the sole partnership where the manufacturer is betting exclusively on Windows Phone for the next couple of years.
Other manufacturers are expected to maintain an OS-agnostic stance and manufacture Android handsets as well.
But the crucial challenge that remains is to market Windows Phone to consumers, whose appetite for smartphones is currently whet by Android and iOS, while Symbian and Blackberry's momentum slows. In parallel to a fast-paced competitive landscape (Apple is expected to unveil iOS 5 in June 2011), Microsoft will need to build a marketing presence and spend considerably to drive awareness and shape purchase intent. Such a strategy is miles away from its Windows and Office strongholds where the products are the de-facto standards, but more akin to its Xbox strategy, where vertically integrated players market ecosystem value propositions.

At the same time, Microsoft will have to target the mid-to-low-end of the smartphone market, where most of the growth is expected to occur.

In 2015, IHS Screen Digest expects Windows Phone to be the third biggest mobile OS behind Android and iOS and ship over 110m smartphones, an 18% market share, in most part thanks to the Nokia partnership and the latter's presence in emerging markets.

Read More > IHS Screen Digest Mobile Media Intelligence

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