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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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By robinthakur on 1/28/2011 6:33:28 AM , Rating: 3
I'm surprised that the original article didn't pick up on this to be honest. How many people do you know that has actually bought and kept a Windows phone? This shoudl tell you all you need to know about how well it's doing. Whilst things might be different in the US, in the UK, I saw one for the first time on the tube the other day, and it's been out since December. I'm into phone technology so I would notice them around, but the only place i've seen them are in adverts, whereas by contrast 99% of people seem to have an iPhone.

I honestly think that most people seem to still associate them with the old Samsung Omnia's and HTC HD's i.e. an compromised experience which paled compared to everything since the iPhone in 2007. This assumes that they even know Microsoft makes phones still, which most people don't. By contrast, everybody and their dog knows what Kinect is, so I would say that it is a failure to market properly given MS's stated claims about its popularity with users (presumably outside of Redmond...)

I think it trades too heavily on its OS appearance being different, when that isn't really a killer feature anymore (it's been done). Most people don't like such radical change in the way they use a device. Faced with something not intuitive a great majority of people just give up on it...unfortunately.


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