Ballmer settles Windows 7 v. Phone 7 question

Tablets will run Windows 7, but Microsoft CEO still vague on Phone 7 sales

The other day I asked why Microsoft doesn’t use the Windows Phone 7 operating system for coming tablet computers instead of the desktop-based Windows 7 OS. Apple and Google have migrated their smartphone OSes to tablets and Phone 7 could use the added exposure, I reasoned. In his keynote address last night at the 2011 Consumer Electronics Show in Las Vegas, Microsoft CEO Steve Ballmer basically said that ship has sailed. Microsoft-based tablets will run Windows 7.

Tablet computers demonstrated by Ballmer and other colleagues who joined him onstage at CES, run Windows 7. Mike Angiulo, a corporate vice president on Microsoft’s Windows team, revealed a new Asus Tablet PC that includes Microsoft Touch capacitive touch screen technology, a required feature of tablet computing. Furthermore, Angiulo and Ballmer noted that Windows 8, the successor to Windows 7, will run on x86 and ARM processor platforms, the latter predominant in the mobile space.

So Windows Phone 7 will stay limited to the smartphone and will have to survive in that highly competitive market without the tablet sales channel option. So be it. But in his keynote, Ballmer again withheld any specific sales figures, lending further credence to the belief that Phone 7 sales are less than stellar.

“Nine out of every 10 Windows Phone customers at AT&T tell us they'd recommend the product, the phone, to others,” said Ballmer. That’s gotta be heartening, but it doesn’t tell us how many they’ve sold.

I walked into my local AT&T Mobility store the other day to see the Phone 7-powered Samsung Focus and LG Quantum already marked down to $99.99, with a two-year service contract, from $199.99 when they were introduced in November. Only the HTC Surround still sells at that original price. Device markdowns aren’t unheard of, but if they were selling well, there’d be no reason to reduce the price. To be fair to Microsoft, though, Economics 101 tells you that reducing the price usually achieves the goal of increasing unit sales.

The closest Microsoft has come to providing a specific sales figure was in a blog post Dec. 21 by Achim Berg, corporate vice president for Microsoft’s mobile communications business and marketing group, who said 1.5 million Phone 7 devices had been sold by device manufacturers in the first six weeks they were on the market. He did not elaborate on how many of them are still sitting in the storerooms of carriers and retailers.

Ballmer confirmed last night what has widely been reported that an update the Phone 7 will be issued sometime in the next few months that will add copy and paste functionality and offer significant performance improvements when loading or switching between applications. And sometime in the first half of 2011, Phone 7 devices will be available through CDMA-based carriers Verizon and Sprint in the U.S., which should expand the sales channel.

If Microsoft is going to continue to be vague about Phone 7 sales -- in marked contrast to their boasting of Xbox Live members (30 million), Kinect buyers (8 million) and Windows 7 market share (20 percent of PCs connected to the Internet) -- we’ll have to wait for independent sales figures. Research firms such as IDC should be publishing reports, perhaps by the end of January, on smartphone sales for the fourth quarter of 2010. Although Phone 7 was on sale only two of those three months, it will give us more information about the success of Phone 7 than we’ve heard from Microsoft.

Copyright © 2011 IDG Communications, Inc.

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