[Correction: This story, first published at 11:34 a.m. on February 17, 2011, incorrectly reported that Sprint supported Windows Phone 7 when the platform first released in 2010 and that Verizon would not be supporting the platform.]
Microsoft (NASDAQ:MSFT) unveiled its Windows Phone 7 last October with a broad swatch of support. It was coming in handsets from HTC, Dell (NASDAQ:DELL), LG, and Samsung among others, with T-Mobile USA and supporting AT&T (NYSE:T) phones releasing in November, with Sprint (NYSE:S) set to follow in spring 2011, providing the networks.
Microsoft claimed success in the middle of December with 1.5 million Windows Phone 7 handsets sold inside of six weeks, but research firm NPD Group burst the bubble two weeks ago, reporting that Microsoft captured only 2% of the U.S. market (by mobile software) last quarter — and that buy-one-get-one promotions through T-Mobile and AT&T had failed to ignite any consumer interest in the platform.
Microsoft is now getting aggressive. The biggest development was last week’s partnership with Nokia (NYSE:NOK), which some pundits saw as a desperate move by Nokia, but in reality Microsoft spent “billions,” according to a Seattle times report to convince Nokia to replace its own software with Windows.
It won’t be enough. The consumer interest in Windows Phone 7′s broad suite of features just doesn’t exist. What does the company need to do to make Windows Phone 7 a major player? Here are five ideas:
Xbox, Kinect, and Windows Phone 7
Microsoft recently showed off a version of a game from the company’s popular Kinect handsfree video game control that had a player deflecting dodgeballs on a television that a second player was throwing via a Windows Phone 7 handset. It was just a demonstration rather than something that can actually be done, but Windows Phone 7′s connection to Microsoft’s gaming business is its single greatest asset, and the company must exploit it now. Xbox Live (the company’s paid subscription-based online gaming network) integration into the software is a start. Microsoft should offer free-to-download, microtransaction-supported software that users access through both the phone and on the Xbox 360 to really take advantage of the opportunity
Take a Page From Hewlett-Packard
Hewlett-Packard’s (NASDAQ:HPQ), new TouchPad tablet PC has at least one strategy in place that will give it a leg up against competitors — exclusive publishing deals. Microsoft has an opportunity to take advantage of the negative press surrounding Apple’s (NASDAQ:AAPL) subscription policies and foster exclusive-content relationships with publishers and booksellers. Find those publishers unhappy with the idea of paying Apple a 30% cut of subscription sales, and get them on the platform ASAP.
More Apps Now
It may seem like a no-brainer that Microsoft needs to bost its library of apps as quickly as possible, but it bears repeating. Microsoft boasted this week that it hosts 8,000 apps via its Windows phone stor.e Consumers could never fit all those apps on a single handheld, but they value quantity more than quality. Subsidizing app development for the phone by offering in-house assistance in porting apps from Android and Apple devices would be a good start as would be offering credits to users. Microsoft would be wise to begin offering Zune and Marketplace credits to new Windows Phone owners as a way to fuel new adoption.
Pandora Radio
Apple’s iTunes is projected to control more than 70% of the digital music business by the end of March. The next battleground will be what platforms offer the best cloud-based, streaming music services. Microsoft can wipe away the failures of the past (like the subscription-based Zune Pass service) by offering a variety of music options on Windows Phone 7. Pandora Radio is an excellent place to start to just be competitive with other platforms. Many web businesses like social network Foursquare had their services ready for Windows Phone 7 at release thanks to Microsoft subsidies. Pandora was left out in the cold and, based on Twitter comments made by the Internet radio service last December, Windows Phone Pandora isn’t coming soon.
Verizon
It’s absurd that Windows Phone 7 was not on Verizon’s(NYSE:VZ) network at release. In a Tuesday interview with PC World, Verizon CTO Tony Malone said that his company doesn’t have much faith Windows Phone 7. “I don’t envision us using Microsoft,” said Malone. “I would never say never but it’s not something we’re entertaining right now.” It’s essential that Microsoft change Verizon’s mind. If the platform is going to have a shot of competing with Android, iPhone, and even Research In Motion’s (NASDAQ:RIMM) BlackBerry, it needs the support and confidence of the leading mobile provider in the U.S. when the first Verizon Windowns Phone 7 handsets hit this spring, plain and simple.
At the time of publication, Anthony John Agnello did not own a position in any of the stocks named here.
