A scenario where Windows Phone 7 could prevail

Xbox may be the key to driving WP7 handset sales

Microsoft has been unable to boast hot sales of smartphones running its new Windows Phone 7 operating system, prompting comparisons to the Kin debacle of 2010. But a new analysis of the initiative bodes well for WP7 and Microsoft in due time. Randall Stross, a Silicon Valley author and professor of business at San Jose (Calif.) State University, lays out the scenario on how WP7 will succeed in a column in Sunday’s New York Times.

I’ve already chronicled the WP7 saga here, noting recently the fire sale prices of some devices at carriers and my irritation at having to sign up on Windows Live to do just about anything on a WP7 phone (the consensus of commentors: “Well, duh! Of course you have to sign up for Windows Live! Were you born yesterday?”)

Stross says one of the keys to WP7’s success may actually be Windows Live. WP7 will benefit from the success of Microsoft’s Xbox Live, which has acquired 30 million subscribers (who log in with their Windows Live account). As smartphones evolve from being a tool for workers into a passion for consumers, Xbox will drive more WP7 sales, while integration with Microsoft Office will become less important.

And the Windows Phone 7 developer community is growing. Microsoft last weeke trumpeted the news that there have been 1.5 million downloads of WP7 developer tools (although Network World's John Cox notes there are only 36,000 registered WP7 developers, just 2.5 percent of the total downloads, and only a third of those have actually published apps.)

Nonetheless, already 11,500 apps line the shelves of Microsoft’s app Marketplace. Between November when WP7 was introduced in the U.S., and the end of 2010, Marketplace had accumulated an inventory of 5,000 apps, a milestone reached three times as fast as Google’s Android, Stross wrote, citing an IDC analyst. And while 11,000 apps is a pittance compared to Apple’s iPhone and its 350,000 apps, just 1,000 apps is all you need to satisfy most users. “If a platform attracts the thousand-most-popular apps, then it provides almost anything a reasonable person would want to do with a smartphone,” Thomas R. Eisenmann, a professor at the Harvard Business School, is quoted as saying.

I’ve been saying for a long time that after a point, Apple having 35 times more apps than another platform means little if there are, say, 1,000 alarm clock apps. How many do you need?

Most encouraging for Microsoft in driving adoption is its deal with Nokia to replace its Symbian OS with WP7. Stross cites a recently released IDC forecast that says that by 2015, WP7 will be the second biggest smartphone OS globally with a 20.9 percent market share, behind Google Android’s 45.4 percent share but ahead of third place Apple iOS’s 15.3 percent. I bet that fact won’t make it into any Steve Jobs keynote.

Of course a lot of things could happen between now and 2015 and I’m still disappointed in Microsoft using Windows, not WP7, as its OS for tablet computers, although this article explains why that has to be.

We in the technology media will still keep the pressure on Microsoft to give us straight answers about how WP7 is doing. But if the scenario Stross describes prevails, Microsoft will, despite the doubters, have a path to success.

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Copyright © 2011 IDG Communications, Inc.

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