Why are there so few Windows Phone 7 models on the market?

Small number of handsets means little shelf space to attract buyers

This week’s news that Sprint is finally going to start selling a smartphone next month running Microsoft’s Windows Phone 7 operating system, and reports that Verizon is expected follow suit, is good news for Microsoft’s efforts to widen the distribution pipeline for the OS. But Microsoft’s product strategy strikes me as somewhat timid, given that it still has only a handful of handset models on the market, far fewer than those running Google’s Android. Why is that?

Sprint announced Thursday that it will begin selling the HTC Arrive running WP7 March 20 for $199.99, net after a rebate and with a two-year service contract. It's got a clever tilt-up screen with a physical QWERTY keyboard underneath (see photo).

HTC Arrive
The Web site WinRumors reported today that Verizon would be introducing the HTC Trophy at about the same time, but a Verizon spokeswoman declined to confirm that for me this afternoon. Verizon and Sprint were unable to introduce WP7 devices until Microsoft engineered the OS to run on their CDMA-based networks. WP7 first appeared in the U.S. last fall on the GSM networks of AT&T and T-Mobile.

When Microsoft announced which handset makers would introduce WP7 smartphones last October, only five models were named between AT&T and T-Mobile, 26 worldwide on a variety of other carriers, though many of them were duplicates of other models. The addition of the HTC Arrive and Trophy in March will bring that to 28 handsets globally, seven in the U.S. Compare that to the proliferation of handsets running Android. I checked the Web sites of the top four U.S. carriers and found that AT&T offers 9 Android devices, Sprint 10, Verizon 10 and T-Mobile 14. I didn’t count Android tablets or duplicates of the same smartphone in different colors. Also note that some identical devices are sold through multiple carriers but with different model names.

It seems to me that multiple Android phones would command a larger portion of shelf space in your average wireless store than would one or two WP7 models. Introducing new models, as Android and its handset partnersseem to do often, also keeps the brand fresh in consumers’ minds. And given the relative weakness of WP7’s initial splash in the smartphone market, any additional ways to generate buzz would help.

But Ramon Llamas isn’t too worried. The IDC analyst said in a recent interview that while Microsoft watchers like me are tracking every move associated with the rollout of WP7, it’s still relatively early in the process. For instance, the IDC report on Q4 2010 global smartphone sales noted shipments of only 1.5 million WP7 devices. For that same quarter, Apple said it sold 16.2 million iPhones. But Llamas said WP7 was only on sale for about five weeks in that quarter, not the full 12 weeks.

“Can they always have more devices? Absolutely. I can say that for just about anybody,” Llamas said. “The thing with Windows Phone 7 is that while it has legs they’re still very young legs.”

Furthermore, this first quarter of 2011 would not be the best time to introduce new WP7 devices, he added. Not only is the first quarter a traditionally slow period for device sales, this quarter belongs to Apple, which has just begun sales of the iPhone through Verizon Wireless.

“Do you really want to go up against the iPhone at Verizon when you know there’s a lot of pent up demand?” Llamas asked. Microsoft should continue rolling out the OS update that, among other things, adds a much-requested cut-and-paste functionality to the phones, he said.

And still in the offing for Microsoft is the adoption by Nokia of WP7, which should widen that pipeline further.

Copyright © 2011 IDG Communications, Inc.

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