With the iPhone clearly in its sights, and Android steadily becoming a strong contender for Google, the company is turning its attention to the mobile market.
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Microsoft has been producing phone operating systems since 2002, but the devices never really shouted with the kind of "love is blind" desirability that Apple experiences. Microsoft did try introducing a smartphone in the US, but pulled the plug after just 10 weeks in the market, to make way for the Windows Phone 7 operating system.
Many argue that previous generations of Windows smartphones were simply unusable. Boot-up time was poor and some users complained the operating system used to lock up, even during a phone call. This has negatively impacted its market share.
In Gartner's smartphone OS market share report for the first quarter of 2010, Android moved to the number four position, displacing Microsoft Windows Mobile for the first time. Both Android and Apple were the only two OS suppliers among the top five to increase market share year-on-year.
Microsoft has finally seen the light, at least in terms of how a smartphone operating system should function. It has been looking at the competition and is now attempting something better. Oded Ran, head of consumer marketing for Windows Phone at Microsoft UK, says: "After the iPhone and Android, we redesigned our phone business." Microsoft started trying to develop a phone for business, but not any more: "The world has changed through the consumerisation of IT. Since 2007 phones are being driven by the apps."
According to Roberta Cozza, principal research analyst at Gartner, mobile e-mail, rich messaging and social networking would drive demand for smartphones and enhanced phones that feature full qwerty hardware keyboards. "To compete in such a crowded market, manufacturers need to tightly integrate hardware, user interface and cloud and social networking services if their solutions are to appeal to users."
To this end Microsoft has integrated Windows Live into the smartphone. Users can connect to Twitter and Facebook, as well as Windows Messenger at Hotmail.
Ensuring devices are compliant is another differentiator for Microsoft. It hopes to achieve this by stipulating that Windows Phone 7 devices meet a minimum hardware specification. This means software developers creating applications can expect any Windows Phone 7 device to have GPS, a motion sensor, vicinity sensors, 256 Mbytes RAM, a five megapixel camera and a WVGA display.
Applications will be available through the Microsoft Marketplace. "We certify applications through an online portal. Apps go through various quality checks and a security check. Signing up to premium content is an opt-in process," says William Coleman, OS and mobile product manager at Microsoft.
This is new territory. Microsoft has not really had to rise to the challenge of certifying what could be millions of applications. But it is an area Microsoft knows it must win: "We want apps that will be as popular as Microsoft Office," says William Coleman.
To attract developers to the platform, Microsoft will be running Windows Phone user group meetings. The UK's first event is taking place on Wednesday 28 July in London. This is set to be the first of many. Coleman hopes to have user groups in the Midlands, Manchester or Scotland and Bristol. "It is really important for Microsoft to support grass root developers," Coleman says.
To win over the public, Windows Phone 7 has to be a great phone, otherwise it may end up in the recycle bin. Can Microsoft do it? It has managed it before with xBox, but the mobile market is very different.