Researcher: Windows Phone 7 will be No. 1 smartphone by 2015

Research firm predicts Microsoft’s WP7 will surpass Google Android as top smartphone OS

This story has been updated with new information.

Microsoft’s Windows Phone 7 will be the No. 1 selling smartphone OS by 2015, surpassing Google Android, according to a report by Pyramid Research released on Friday.

My gut reaction when I read this report was ... what? I like the OS, but think naming it the top selling smartphone OS worldwide in a few short years is quite a stretch. In contrast, the much more established research firm, IDC, in March forecasted WP7’s market share to reach close to 21 percent by 2015, making it second to Android’s 45.4 percent share. Today, WP7 enjoys a share of less than 10 percent.

BACKGROUND: HTC, Samsung sell nearly 20 million mobile phones in the first quarter

Given the stumbles WP7 has suffered out of the gate and the creative energy driven by Google Android and Apple iOS, it is hard for me to believe that Microsoft can rise to No. 1 status in just four years even with the Nokia bump WP7 is expected to enjoy beginning later this year. (Nokia’s success with WP7 is hardly assured.)Pyramid’s Smartphone Forecast report was written by senior analyst Stela Bokun, who is also the firm’s mobile devices practice leader. Bokun’s rationale for declaring WP7 the markeshare winner is based on a prediction that it will be a big hit in markets loving low-priced smartphones, such as Asia, but also here in the U.S.

The report explains, “Inexpensive smartphone models, particularly those from Huawei and ZTE, also will be in high demand in some of the richest Western European, Asian and North American markets. Their low price will suit shaky economic conditions in markets such as Spain, Italy, Greece and Portugal, as well as first-time smartphone buyers everywhere.” [PDF of report, but Pyramid requires registration.]  (Also see: Fire Sale on Windows Phone 7)

In March, AT&T slashed the contract price of the Samsung Focus and LG Quantum to $49.99. They were $199.99 when launched.

It’s hard to square that with the IDC numbers showing WP7 with half the market share of Android in 2015.

Update: Bokun filed a new blog post this morning responding to much of the commentary online over the weekend to her Friday report. Bokun reasserts her belief that the Nokia deal will significantly increase the market share for WP7. "Some of the main obstacles to the growth of WP to date will be removed, as Nokia helps with bringing down the price of WP smartphones. Lower price of the devices will be the crucial prerequisite for the expansion of WP models," she wrote. Bokun explains Pyramid's methodology in more detail and says that WP7 will actually begin pulling ahead of Nokia as soon as 2013, although thecompetition with Android will be "fierce." She adds that Apple iOS and RIM BlackBerry "will experience a losing streak" because both restrict the use of their operating systems to their own hardware.

Bokun in her Friday report predicted that overall smartphone market share will reach 53 percent of total mobile phone sales, up from 27 percent in 2011. No problem there, but she says overall growth will come from sales by Asian handset makers such as Huawei and ZTE.The problem there is that ZTE has already said publicly in March it will not be selling devices running WP7; so far it’s only testing them. While that could change in the future, with China-based ZTE as the world’s fifth largest handset maker, that’s a lost opportunity to sell a lot of WP7 smartphones.To be sure, four years is a long time for markets to change. If you think back four years, there was no Apple iPhone (it came out in June 2007) and there was no Google Android. BlackBerry, Palm and Windows Mobile were the market leaders. While I think Pyramid's forecast is bold, I find it hard to believe that Android will rest on its laurels and let Microsoft pass it by. 

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