Microsoft's Mobile HurdlesMicrosoft's second foray into the smartphone market also poses big challenges, like luring application developers onto its OS. Microsoft may be the 800-pound gorilla in desktop software, but Apple is undoubtedly the King Kong of mobile apps. Apple has more than 150,000 applications in its App Store, some 3 billion of which have been downloaded to iPhones and iPods. A Microsoft spokeswoman explained that at Mobile World Congress the company announced the availability of over 1,245 applications in Windows Marketplace for Mobile, more than five times the number it offered when Marketplace launched in October 2009. "Additionally, over 1,325 software vendors are registered to deliver applications for work and play in Windows Marketplace," she added, in an email to TheStreet. "Popular culture moves constantly, so the ability to have an enormous amount of developing applications is very important," Ken Denman, the CEO of telecom software specialist Openwave ( OPW), said to TheStreet. "Clearly Apple has a lead -- they have done the most with mobile applications." Microsoft is on a mission to stake its own claim in this space. Earlier this week, at its MIX10 developers' conference, Microsoft unveiled Windows Phone Marketplace, an enhanced version of its first app marketplace, specifically aimed at developers building applications and games for Phone 7. Microsoft will keep 30% of the revenue from Phone 7 applications, with 70% going to the publisher. (This revenue split is not without precedent; Apple keeps 30% of the revenue from applications sold on its App Store.) Northeast Securities' Kumar believes that Microsoft could push this envelope, luring more developers onto its OS. "If Microsoft is more magnanimous in terms of the economic split, there's no reason they can't get more support from the ecosystem," he said. The other big challenge for Microsoft is forging deals with phone manufacturers, although a slew of companies like HTC and Dell ( DELL) are already signed up as Phone 7 partners. "In contrast with previous releases of Windows Mobile, which Microsoft licensed to any and all comers, the company is dictating rigid minimum specs for 7 Series devices," said Needham & Company analyst Wolf. "
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