Microsoft in Deep Mobile Trouble

Microsoft's Windows Phone mobile OS is well reviewed but it isn't really moving. According to comScore's latest data, the platform continues to lose share vs. rivals. And the big bet and tie-up with Nokia that was announced last month won't have the opportunity to bear fruit for many months still. There are rumors that a Nokia-built Windows Phone won't be out until October. That's quite a long time to wait in this market. 

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Bloomberg is now reporting that Microsoft is paying Nokia "more than $1 billion to promote and develop Windows-based handsets as part of their smartphone software agreement." That's a chunk of change to keep Nokia away from Google.

We won't know how competitive these "Nokisoft" phones are until they hit the market -- though the mock-ups look nice. However, as mentioned, consumers don't seem to be flocking to existing Windows Phone handsets. So absent some compelling new features and marketing campaign it's not clear that simply having Nokia build them will help all that much. 

Separately other reports indicate that there won't be a Microsoft tablet (notwithstanding the Windows 7 HP entrant) out until basically August or September of 2012: 

Microsoft Corp., the world’s largest software maker, won’t release a competitor to Apple Inc. and Google Inc.’s tablet operating systems until the 2012 back-to- school season, people with knowledge of the plans said.

I've argued that the company should adapt Windows Phones OS for the tablet rather than trying to modify the PC OS. Waiting until Q3 of next year to put out its 1.0 tablet means a longer wait for a truly competitive product. Xoom is already toast vs. iPad2 and Samsung is rethinking its pricing plans.

Regardless of how many tablets you think will sell this year (30 million?) they do appear to be eating into PC sales. According to the Wall Street Journal

Today Gartner Inc., a tech research shop, reduced its forecast for 2011 and 2012 personal computer shipments. The firm said the popularity of other devices, such as the Apple iPad, will cut into sales fro traditional PCs.

Here's Forrester's view: 

It's quite possible that Microsoft, if slow development cycles continue, will effectively be shut out of much more than a minority share in the smartphone and tablet segments. However an irony here is that Android OEMs might turn to Windows as a hedge against Android dependency and being reduced to "commodity producers" of the Google devices.

See related: Microsoft Is Said to Pay Nokia More Than $1 Billion in Deal.