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Why everyone’s wrong about Windows Phone 7

Blog heavyweight Robert Scoble has recently blogged in response to Charlie Kindel’s recent interview comments, stating the reason WP7 hasn’t taken off is purely because of apps and app developers, and the market for WP7 is closed and the platform has no chance to survive.  Kindel, if you haven’t already read, believes that Microsoft’s use of quality control and wrangling in the OEM’s and carriers is the reason the OS hasn’t taken off.

First, some reality needs to settle in.  Despite the obvious reasons why not, quite a few Android phones are considered “smartphones” for reasons that are beyond most people.  I’m not talking about your Optimus V, your Atrix 2, or any of the other high-end premium phones.  I’m referring to the horrid Optimus U (“Micro”) and other phones that are hobbled, barely functional feature phones with a touchscreen.  These are as much smartphones as a jacked-up Honda Civic is a performance car because it can do the 0-60 kinda-sorta fast.  Stick an iPhone, any Galaxy S or S II phone, or any Windows Phone next to one of those budget LG Android phones or the junk they sell you at Boost Mobile and the difference is as clear as day.

Despite that rant, “smartphone” penetration in the USA is either 35% or 44%, depending on who you ask and what, exactly, qualifies as a smartphone.  So, we’ll play the numbers and hazard a guess of 40%, realistically, but it could go either way.  This leaves right around 60% of the US market still in the market for a smartphone, and if you factor in all the cheap smartphones, old smartphones, and upgrade-every-year smartphones, the number just gets higher for how many people are going to buy a new smartphone in the next few years.  This market is far from closed, and when you go outside this country, the numbers for smartphone penetration just get lower and lower.  You’ll notice the bottom of the list includes the biggest potential markets in the world, India and China, countries that mobile giant Nokia has a decent but tenuous grasp on.  Can they retain their hold?  Possibly.

In short:  The market is wide the hell open for everything.  This is anything but a two-horse race, and it’s anything but finished.

So what does Microsoft have to offer?  Well, besides stubbornness and a war chest most companies would dream of having, they have Windows 8 and the XBox.  Does this effect WP7?  That depends on how three questions are answered:

1.  Are people willing to accept Metro as the “default” interface?

2.  Will Windows 8 tablets take off as they are expected to?

3.  Are the benefits of the Windows ecosystem worth investing into?

These are questions we cannot answer yet, or even pretend to, because there is simply no way of knowing.  The Metro UI right now is weird and alien and icky, but if Windows 8 takes off and people warm up to it (Live tiles are sweet, I have to say), then Metro becomes the “default” and other systems that don’t look like it are stored in the “old” or “other” categories, a bleak place that WM6.5 and WP7 are currently inhabiting.  Windows 8 tablets are supposed to be the next generation in tablet computing, and they are currently bragging about laptop functionality in a slate form factor.  If this comes to fruition, and the tablets are hot sellers, then we could see Windows Phone take off along with it.

There are a lot of “ifs” floating around WP7.  Marketshare numbers from Microsoft are nonexistant, which gives the distinct impression that they are not very good at all.  Nokia is still bleeding marketshare, but it has the name and the distribution channels that could elevate WP7 to a higher level if Tango can live up to its promise of WinPho functionality aimed at the cheap seats.  If the Marketplace can continue to grow and thrive as it has (And snatch up those lingering apps people are bleating over), then the obligatory negative of limited apps that is put in every WP7 review will become a non-factor.  If Apollo can up the game with higher-end phones, then that becomes a non-factor.  If Microsoft can keep its updating system as smooth and silky as they have if they manage to wrangle up that penetration they want (In other words, instead of a few million they’d be updating tens of millions), then that will keep people happy.

In every “WP7 am doomed” article I read, there is an obligatory mention of the failures of Bing, Kin, and Zune.  Bing is easy:  It’s still growing.  It’s nipping away at Google’s marketshare by the month, albeit slowly.

The Zune did not fail.  The hardware was discontinued, but the software and ecosystem contribution is all Microsoft cares about.  Look, it’s simple:  The portable MP3 player market is not an essential market to own (Even iPod sales have been declining steadily over the last few years), but the still-emerging smartphone market is.  Why waste time, effort, and energy on a product nobody wants in a market that will not decide the future of your company?  Microsoft might as well try to infiltrate the digital camera market.  Much like a hermit crab, Zune lives on in a different shell and from what I understand it’s second only to iTunes as an online entertainment marketplace.

The Kin.  The Kin was representative of Microsoft trying to latch on to current trends.  As of April 2010, the dumbphone market eclipsed the smartphone market (And our friends at Gartner predicted that smartphone sales would slow during 2010) and MS, knowing nothing about the market, launched the Kin:  A Facebook powered feature phone released in the shadow of the iPhone without the power, the name, or the backing.  It was a stupid, stupid move and with the way WP7 looks it appears Microsoft learned their lesson.

Why isn’t WP7 latching on?  It’s been a year.  It’s following growth trends that Apple and Google set with their own releases, both in market share and app counts.  It’s got itself quite a bit of good press, a solid foundation, and a rabidly loyal fanbase.  Despite the doom and gloom that others predict, the thing has a fighting chance.

If you were wondering where the part was where I predict WP7’s marketshare or even tell you that is definitely going to succeed, then just go smack yourself.  This is all speculation, and with the way the tech world works I’m not dumb enough to try and predict it.  I can only give a guess on what would need to happen for WP7 to succeed, and it’s equally likely that it could succeed without any of the above factors coming into play or be dead by next year.