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Microsoft plans to finally catch up to Google and Apple

In a market where the consumer is always looking for the next biggest and best thing, Microsoft Corp. (MSFT) made the questionable decision to forgo the most cutting edge hardware for its first generation of Windows Phone 7 smartphones.  

I. Microsoft Looks Ready to Finally Cave to Market Demands for Faster Hardware

In an interview with All Thing Digital, Windows Phone unit chief Andy Lees defended the decision.  Referring to the WP7 handsets' lack of LTE (which is featured on a handful of phones [1][2] with Google Inc.'s (GOOG) rival Android OS), he states, "The first LTE phones were big and big (users) of the battery, and I think it’s possible to do it in a way that is far more efficient, and that's what we will be doing."

As for Microsoft decision to solely support single-core handsets and limited the processor selection to Qualcomm, Inc.'s (QCOM) system-on-a-chip (SoC) processors, "They're all single core, but I suspect that they will be faster in usage than any dual-core phone that you put against it, and that’s the point."

To be fair, Microsoft is sort of correct on both counts.  LTE is battery hungry and even Verizon Communications, Inc.'s (VZ) leading network only covers about half of Americans.  And when it comes to the dual-core chips found on the iPhone by Apple,  Inc. (AAPL) and most Android smartphones, typically the dual-core processor is underutilized by all but the most demanding applications.  

Further, dual core SoCs are more power hungry.  And last, but not least Android dual-core smartphones take a small processing hit to run apps on a Java VM, versus WP7's C#/XNA implementation (although this performance hit has lessened with the arrival of just-in-time Dalvik compilation, and with developers adjusting to writing more efficient Java code).

That said, the more powerful hardware has given Android and, to a lesser extent, Apple smartphones a powerful psychological advantage.  After all, an LTE dual-core smartphone sounds a lot slicker than a single-core, 3G-limited model.

Droid Bionic ad
LTE modems and dual-core processors have given Android smartphones a psychological edge, something Microsoft miscalculated, with its "less is more" mentality. [Source: Best Buy]

Even Microsoft seems to be waking up to this fact that customers want big.  Mr. Lees comments, "So, I think that what our strategy is is to put things in place that allow us to leapfrog, and I think that’s how we've gone from worse browser to the best browser, and I think the same is true with hardware."

Microsoft says dual-core Windows Phone handsets are coming either this year or next.  And while he did not explicitly state it, it sounds like LTE remains a possibility in the near future as well.

II. "Windows Phone 8" in the Works

Despite relatively abysmal sales, Mr. Lees is optimistic about Windows Phone 7, insisting it suceeded in its goal of establishing itself as a serious competitor.  He comments, "We're not making specific predictions but I think that our momentum is going to build.  Our first (release) was about mindshare, and really getting the credibility, and I think (Mango) is really about starting to build unit volume and market share."

Microsoft is sticking behind Finland's Nokia, Oyj. (HEL:NOK1V).  Nokia is rather peculiar in that it announced early this year that it would be switching all its lineup to Windows Phone, yet has thus far been far slower than other Windows Phone partners to release hardware, leaving its global lineup in jeopardy.
Nokia Sea Ray
Nokia has yet to release a single Windows Phone 7 handset. [Source: TechNet]

But Mr. Lees, when asked to compare the Nokia relationship to the recent cross-licensing agreement with Samsung Electronics Comp., Ltd. (SEO 005930), showed some love for Nokia, commenting, "I think that the agreement that we have with Nokia, it’s obviously a particularly special one, they’re exclusive to us, and we have a very, very deep partnership, and I think that Samsung is not quite as deep a dependence as the Nokia one, but it’s certainly in that vein."

And Mr. Lees also dropped a tidbit that a new major release of Windows Phone was in the works (Windows Phone 8, presumably), though he wouldn't say when it might arrive.  He comments, "Pace is just incredibly important.  If your pace is too short, then the magnitude of what you can deliver gets limited because of the time it takes to do all of the testing required to ship at very, very high quality. Having said that, what you don’t want to do is just have huge, great long release times where you’re out of the market."

Source: All Things Digital

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And what is an exclusive contract worth?
By drycrust3 on 10/10/2011 11:15:05 AM , Rating: 1
Nokia has yet to release a single Windows Phone 7 handset.

Nokia was relying on Microsoft to supply them with an OS that will give them an edge over their competitors, and every day that decision looks more and more like a bad decision. Sales have dropped through the floor as customers flock to competitors' products.
I think there must be a lot of angry people at Nokia, ruing the $1B Microsoft offered them.
As I see it, they have two options, one of which is to continue waiting for Microsoft.

RE: And what is an exclusive contract worth?
By inighthawki on 10/10/2011 11:41:27 AM , Rating: 5
The operating system is very solid, and you would know that if you've used it. It is not Microsoft's fault that Nokia just hasn't released a phone yet.

RE: And what is an exclusive contract worth?
By Reclaimer77 on 10/10/2011 12:21:22 PM , Rating: 2
Yeah I agree. The only real problem with Windows Mobile is that it's not on any phone that people give a damn about.

RE: And what is an exclusive contract worth?
By OoklaTheMok on 10/10/2011 2:23:36 PM , Rating: 5
The only real problem is that you still associate Windows Phone with Windows Mobile, and unfortunately so do others.

When I show my Windows Phone to those who currently have Android phones, they wished they had a Windows Phone. With Mango (WP 7.5), the choice between them is that Windows Phone is the clear winner.

RE: And what is an exclusive contract worth?
By Reclaimer77 on 10/10/2011 4:49:18 PM , Rating: 2
The only real problem is that you still associate Windows Phone with Windows Mobile, and unfortunately so do others.

Umm no, it was merely a figure of speech. I wasn't "associating" anything with anything.

Mango is great, I agree. Now let's get it on a cutting edge phone, that's all I'm saying. Because that's what is driving platforms right now. Does Android advertise how great it is? Not really, they push the phones themselves. The masses don't care about the OS.

By tayb on 10/10/2011 5:41:52 PM , Rating: 2
He wasn't talking specifically about you. That was obvious...

His point was that people here "Windows Phone" and they imagine Windows Mobile. People know that Windows Mobile sucks. They already have that preconceived notion. Microsoft really needs to beat that out of peoples brains because they have a real winner on their hands with Windows Phonw 7. It is truly a great OS.

By V-Money on 10/11/2011 12:26:55 AM , Rating: 2
There's more to it than that. Before I had my nexus one, I bought a palm treo pro with win6, and I hated that phone. Because of that I made the switch to android, and I never looked backed. It has more to do with timing, I've used win 7 and its nice, and I love my zune, but I can't justify switching now when android has always been good to me. Say what you want, but I've never really had issues with my phone and I like my cyanogen modded phone, plus all of the widgets and apps I use I already have.

By Paj on 10/11/2011 5:42:08 AM , Rating: 2
I Disagree. The average consumer (outside of certain business type clients) probably doesnt even know Microsoft makes a phone, either now or in the past. They wouldnt know anything about Windows Mobile, which was from the era when smartphones were far less ubiquitous than they are now.

The main obstacle Windows Phone faces is one of marketing - its sucks, plain and simple. Outside of a brief TV campaign when it was released, you never saw it promoted anywhere, at least in the UK. Advertising in press, outdoor or online focuses on BB, Android or iOS. Instore advertising hardly mentions WP7 at all.

RE: And what is an exclusive contract worth?
By mcnabney on 10/10/11, Rating: 0
By inighthawki on 10/10/2011 2:57:43 PM , Rating: 3
Whose surprised? Only you seem to be to think that Microsoft is holding back Nokia. Microsoft has released hardware specs that are fully capable of running EVERYTHING on the platform at full speed. There is little need to actually have any better. My windows phone can load almost every app in under 2 seconds, most near instantly, and the performance is flawless on almost everything.

By nikon133 on 10/10/2011 5:02:42 PM , Rating: 4
I'd say Nokia sales are going down because they don't have any W7 phone out yet, not because they decided to move to W7...

By DFranch on 10/10/2011 6:17:09 PM , Rating: 3
Nokia was foolish to announce they were switching to WP7 6+ months before they would have phones available. That was suicide. It would be like announcing the price of the xbox360 was dropping to $49 for x-mas, in march. who's going to buy one in the meantime? They would have been much better off waiting until they had a few WP7 phone's available, then announcing the switch.

"You can bet that Sony built a long-term business plan about being successful in Japan and that business plan is crumbling." -- Peter Moore, 24 hours before his Microsoft resignation

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