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Windows Phone 7 Still Too Little, Too Late

Microsoft sends PR hounds after Gary Krakow when he says Microsoft shouldn't bother with Windows Phone 7.

REDMOND, Wash. (TheStreet) -- Earlier this month I reported on Microsoft's (MSFT) - Get Report upcoming Windows Phone 7 operating system. In a video I suggested that with Apple's (AAPL) - Get Report iOS4, Google's (GOOG) - Get Report Android, Research in Motion's (RIMM) Blackberry, H-P/Palm's (PALM) WebOS and Nokia's (NOK) - Get Report Symbian/Maemo/MeeGo platforms, it might be time for Microsoft to concentrate on other, possibly more financially rewarding items.

It took about a week or so for Microsoft to respond to my video report. Not directly, mind you, but through its PR firm, Waggener Edstrom. I received this point-by-point response:

Thanks for your piece on Windows Phone 7. There's been a lot of interest in the platform since it was announced at Mobile World Congress, and I think you bring up some good points that are applicable to any company competing for a slice of the smartphone market. To answer your question "should Microsoft bother," the answer is a resounding yes. The smartphone race is just now starting to heat up, and there is a huge market of smartphone intenders out there looking to make the jump from their feature phone to a more powerful device. Here are a few stats that back this up:

The world's mobile worker population will pass the one billion mark this year and grow to nearly 1.2 billion people - more than a third of the world's workforce - by 2013 (IDC).

Demand for Smartphones that play as hard as they work is opening up new market opportunities, with IDC projecting 31% growth in demand for converged mobile devices in 2010 (FY) and another 22% in 2011 (FY).

A lot of interesting numbers to think about. The question is not whether people want to buy smartphones - we know they do - it's whether people want to buy Microsoft smartphones. Just a short time ago, Windows Mobile devices were very good sellers. They were the alternative devices to BlackBerries if your company didn't want to buy into RIM's BlackBerry e-mail forwarding system.

But times -- and the buying public's tastes -- have changed. The Apple iPhone 4 is on the market and so are more than a dozen Google Android phones. What has Microsoft been doing in the past 3-plus years with its smartphone platform? The answer is not enough - and nothing in a timely manner.

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Even though Microsoft is well aware of the fact that the smartphone marketplace has changed over the past three years, the company believes it's still in a good position to make a strong comeback:

There is a ton of competition in the smartphone market right now, but Microsoft is well positioned for success for a number of factors. These include:

Choice - Consumers using Windows Phone 7 will have a wide array of choices when it comes to both their service provider and the hardware they use.

Integrated Experiences - Microsoft is uniquely positioned to deliver deep integration with other Microsoft services including Xbox LIVE, SharePoint, Zune, and of course Exchange.

Design - Microsoft takes a fundamentally different approach to phone software. Smart design begins with a new, holistic design system that informs every aspect of the phone, from its visually appealing layout and motion to its function and hardware integration. On the Start screen, dynamically updated "live tiles" show users real-time content directly, breaking the mold of static icons that serve as an intermediate step on the way to an application.

Apps - Microsoft is providing developers with the tools they need to create great applications and games based on the Silverlight and XNA platforms. In an "apps as a feature" world, this means consumers can expect great new experiences from independent software vendors and Microsoft should see a strong application trajectory that will drives sales of Windows Phone 7.

At this point, I'm not sure I agree. With a gazillion or so iPhones, Androids and BlackBerries being sold every day, waiting until the third or fourth quarter of this year for Microsoft's answer is just plain too little too late.

The note was a very controlled, well-researched answer to the points brought up in my video. But it changes nothing. It's almost July and we're still waiting for details on the big "revolutionary" smartphone from Microsoft. The one that will make consumers think twice before buying one of today's super popular models.

Time will tell who is right and who spent hundreds of millions on a re-worked mobile operating system that few customers will care about or embrace.