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Windows Phone handsets moved 2 million units in November and December, despite only being on America's second and fourth largest networks.
Results are rather mixed, and can be viewed either optimistically or pessimistically

There are now over 2 million Windows Phone 7 licenses delivered to OEMs, but what does that mean for Microsoft and the future of this platform?

During Android's first few months on the market it had only a few percent market share, versus Apple and Research in Motion's dominant positions in the U.S.  Now it owns half the market.

Microsoft is clearly hoping for a bit of the same magic.  The company arguably has the most innovative interface on any smartphone on the market today.  While RIM, Apple, and Google all rely on chiclet-style app grids at the heart their GUI (Google, at least, adds animated widgets to the homescreen), Windows Phone 7 offers a striking visual spectacle of animated menus, most of which are timesaving and intuitive.

Microsoft announced this week that Windows Phone 7 moved 2 million licenses in Q4 2010.  That's largely in line with what one might expect, as it indicates that Microsoft sustained the sales pace indicated by previously released figures.  The platform launched on November 8, 2010 and within six weeks (on December 20) had sold 1.5 million units.  

Some were quick to jump on the sales, largely using analysts to hack away at the platform.  Writes Bloomberg:

Microsoft Corp. said it shipped more than 2 million copies of the Windows Phone 7 operating system last quarter, as the company tried to reverse sliding smartphone market share...

The shipment figure isn’t all that rosy, said Kevin Burden, an analyst at ABI Research.

"The number shows there’s a lot of competition in this space and Windows Phone 7 is having a hard time being heard over the crowd," said Burden, who is based in Hopkinton, Massachusetts.

Microsoft defends itself.  In an interview with All Things Digital's Mobilized blog, Microsoft Senior Product Manager Greg Sullivan is quoted as saying, "We’re still in the early stages. When people use this phone, they really, really like it. One of the key ways that we’ll measure success of Windows Phone is did we ship a phone people love."

He says that the 93 percent approval rating the platform enjoys by Microsoft's accounting is proof of a successful mission.  Windows Phone 7 users we have interviewed do appear to echo this sort of positive response.  Virtually every Windows Phone 7 user we spoke to at CES (none of which worked for Microsoft or a phone carrier) spoke glowingly of the platform.

But there's a lot more to this story, both good and bad that is being largely overlooked.

First, Microsoft sales look more impressive, given that it is only currently offered on AT&T and T-Mobile in the U.S.  The good here is that sales will obviously pick up when the new platform lands on America's largest wireless network (Verizon).  The bad news is that Microsoft set a slow schedule for the Verizon and Sprint launches, with no concrete launch dates yet.

Second, like Android, Microsoft is pursuing an aggressive update schedule, which should help it.  It plans to deliver a pair of major updates this spring, which will bring customers copy/paste and multi-tasking.  These updates will "catch it up" with its competitors, so to speak.  This is definitely a positive for Microsoft, and should greatly help the platform's image.

A less than positive note, however, is the phantom data problem.  Microsoft claims the problem, in which phones transmit large amounts of data (tens to hundreds of megabytes of data daily -- or more) is limited to a "single digit" percentage of users.  Yet it has failed to act responsibly and warn users, allowing them to remove the offending program.  It has also failed to provide users with sufficient reassurances that they will not be charged with data overages.

Speculation is running wild about what the offending program may be, following Microsoft identifying it as a third party solution.  One report accuses the HTC Hub of being responsible for the phantom menace; others have accused Yahoo! Mail.  Overall, this problem and Microsoft's poor response are dual negative marks for the platform's image.

So with all this mix of good or bad, what is the outlook for the platform?  Well, ultimately Windows Phone 7 has an increasing array of handsets, and its sales aren't that bad, so we expect the platform to survive and slowly gain market share.  Still, how fast it gains market share is largely dependent on how well it delivers on platform updates and whether it chooses to start acting responsibly about its platform's data issues.

Update: Thur. 1/27/2011 2:50 p.m. -

We reached out to our Microsoft press contact for more information concerning some news networks' negative depiction of this sales data and update on the phantom data issue.  While the spokesperson did not provide us with answers to our specific questions, as requested, they did offer us a general statement.  

They emphasized the following metrics:

• Early research indicates 93% of customers worldwide are satisfied with Windows Phone 7, and 90% would recommend to others.
• Developer engagement is excellent with customers getting access to an average of 100 new apps a day and more than 6,500 apps overall on Marketplace.
• Over 2MM licenses sold to OEMs worldwide. 

And they add, "Sales are an important measure of success, but for a new platform customer satisfaction and active developer investment can be even more important leading indicators of long-term success.These early signs of satisfaction from customers and developers are reason to be bullish about the foundation for long-term success for Windows Phone 7."

We will again, try to provide an update as soon as Microsoft offers more specifics on the data usage issues that are afflicting some WP7 users.

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RE: true it lacks exposure
By Mitch101 on 1/27/2011 12:51:25 PM , Rating: 2
Microsoft will have them soon enough. The Verizon launch it should have all the bells and whistles people think are important but will probably never need to use them. Like cut and paste its on my blackberry but I never used it. If you used a Mobile 7 device the way things work you might agree cut and paste not needed but I think the majority of people who never used the device think you do.

First off all 3 phones are great. All 3 have limitations and highlights just know what your buying. I can ramble on about Droid killing battery with background multitasking or how the iPhone really doesn't have true multitasking. After Microsofts next software update its pretty much a level playing field as far as function each does things a little different from one another.

I love Microsofts interface. I love knowing how many e-mails came in since I last checked not how many unread its more intuitive. Some think its ugly I happen to love it understanding its based on road signs that provide useful information at a glance.

X-Box Live integration if you own an X-Box this is a nice perk not available on any other device.

Full Microsoft office ability. I cant live without this. Nobody does Microsoft Office better than Microsoft.

Microsoft exchange integration. Apple has to use Microsoft Active sync or Good technology. Good is ok good for security but otherwise the gui is lame. Active sync Apple will never get full active sync functionality like Mobile 7. Forget Droid here its a bad idea.

Sharepoint integration. I like having something more than just read functionality on my device.

Silverlight (If you tried it you like it) its not popular but on sites that use it effectively it pops.

Flexible Hardware Options the iPhone hardware is great but doesn't work for everyone.

Flash a lot of people want it I could live without it. No Flash for you Apple.

I think Microsoft internet browser is by far better than droid and just edges out iPhone. Every droid I used seems choppy. Could be manufacturers lame holding back os releases too.

Soon enough the Microsoft Mobile 7 device will have everything all the other smartphones have after all its just software and Microsoft is a software company. After that Microsoft will leverage its base of Gaming and Business apps that the others dont have any market penetration on.

I think droid was a great idea but its becoming fragmented like linux gets too many options and too few standards.

Apple is a great product no doubt but Steves closed mind of controlling everything keeps him out of giving consumers the full experience.

I will mention Blackberry I'm thinking they are a lost cause and continue to keep throwing stuff at the wall hoping something sticks. They've been reliable and security top notch but falling behind in user interface. Storm is lousy because a lot of BB apps wont work on it they have to be rewritten.

I believe Microsoft has the long term winner.

RE: true it lacks exposure
By Luticus on 1/27/11, Rating: 0
RE: true it lacks exposure
By nolisi on 1/27/2011 4:45:37 PM , Rating: 2
lack certain obvious things that should be there.

All the platforms lack certain obvious things....

Apple lacks storage expandibility. Also lacks a physical keyboard. Lacks software kin to swype to make the virtual keyboard easy to deal with.Flash isn't there. Is stuck on CDMA/3G.

Microsoft lacks all of the abov + multitasking/copy paste.

Android lacks... well, I'm not sure. Android has all of the above. Android has a media store, can deal with Office docs and exchange integration, but could do all three a little better. The biggest issue with Android is that it doesn't have a solid centralized management platform like MS (exchange/comm server) or Apple, which most consumers don't really need.

RE: true it lacks exposure
By bodar on 1/27/2011 6:51:08 PM , Rating: 2
I agree that Android is still lacking in certain areas, which can tarnish an otherwise great experience, but I think you could pick a better target than "can't change the number of home screens".

- Pretty 3rd party launchers like Launcher Pro, Zeam and ADW can set the number of home screens.

- Nothing says that you have to ever leave the main home screen if you don't want to use the others. You never have to leave the main screen. It's not really hurting anything by having empty home screens with no icons or widgets, so I'm having trouble imagining why you'd care. It would be nice if we could customize that, yeah, but it's hardly a big deal.

Personally, even if I cut out my widgets, I would be hard pressed to fit everything on a single 4x4 home screen, despite using Smart Shortcuts for icon folders. I don't like opening my app drawer unless it's a rarely used app.

Now if you want to talk about things like carriers interfering with device updates and disabling features or the sad state of the Market, that's a different story. I still love my EVO despite its shortcomings though.

RE: true it lacks exposure
By Da W on 1/27/2011 1:44:02 PM , Rating: 2
Silverlight and flash are not implemented yet.

Explorer is slow as hell but is GPU accelerated so the image looks nice and is not choppy.

It HAS some form of multitasking with the home and back button.

Office is not usable enough on such a small screen. Onenote is ok with vocal notes. But i wonder how much time my phone would take to crunch my large database that my desktop takes 2 minutes to calculate.

You can swap your flash card, but WP7 configures it to act as internal memory. I don't mind it. I don't want to swap flash cards on my phone all the time, i want to sync it over wi-fi. And next year once 32GB microSD card are cheap enough, i'll just remove my 16GB one and reformat the phone.

I think down the road WP7 has a better shot at the business community than Apple or Droids. The iPhone is seen as a toy, imagine a boss paying a toy for their employees. Android looks too complex for the average baby-boomer.

Blackberry is cheap though and does just what a boss needs: getting e-mails. I don't think they will die.

Yet Microsoft has to do better with their upgrades.
-Copy and paste: coming
-Multitasking 3rd party apps: coming
-Tethering: coming
-CDMA: coming
-Silverlight: coming
-Explorer 9:coming
-Encrypted e-mails: coming
-Improved bing map with turn by turn direction: coming
and it goes on and on... I'd also like a 3rd home screen where you can configure your long list of apps in folders, like the windows start menu.

Concluding thought: HTC surround with a zune pass and bluetooth audio is the best music player, period!

RE: true it lacks exposure
By Mitch101 on 1/27/2011 2:03:26 PM , Rating: 2
Should have specified Im waiting for Verizon and by then it will be in there.

I think the memory card for a windows phone 7 is brilliant. You make one device and decide how much memory it should have and while there is a drawback if you want more memory down the road it makes much more sense than to make multiple devices with varying memory and if you want to upgrade to more memory you have to sell your current device and buy a new one.

Office is pretty good I would have liked more out of one note. It will shine when Microsoft comes out with their pad.

WP7 is the blackberry and corporate device the iPhone wants to be and Blackberry requires a number of servers/licenses/Support agreement. Version 5 even more than the previous. Cut a lot of cost by going Mobile 7.

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