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Microsoft Revamps Mobile Strategy with Windows Phone 7

Looking to defy critics who say that its days are numbered in the rapidly growing smart phone market, Microsoft  Monday launched an ambitious new mobile platform that is a major departure from its existing Windows Mobile offering.

CEO Steve Ballmer outlined Microsoft's forthcoming Windows Phone 7 Series at the Mobile World Congress in Barcelona. The new platform effectively scraps Windows Mobile 6.x with a completely revamped user interface (incorporating the company's Metro UI that is the basis of Zune and Windows Media Center) and more tightly defined integration with devices and networks.

Microsoft said smart phones based on Windows Phone 7 will be available in time for the holiday season from Dell, Garmin-Asus, HTC Corp., Hewlett-Packard Co., LG Electronics, Samsung, Sony-Ericsson and Toshiba and will be offered by most major carriers. The new OS will be tied to chip sets from Qualcomm Inc., which is working closely with Microsoft to define software and hardware interfaces to avoid inconsistencies in performance that have plagued Windows Mobile to date.

While companies such as Apple and Research in Motion manufacture their respective iPhone and BlackBerry devices and therefore control all aspects of hardware and software design, Microsoft, by comparison, exerts minimal control over devices based on Windows Mobile. The new strategy aims to provide the best of what Apple and RIM offer in terms of control over the hardware, while allowing developers and OEMs to have broader options. All Windows Phone Series 7 devices must be touch-enabled, support GPS and have a specified screen size, Microsoft said. Keyboards are optional.

Andrew Lees, senior VP of Microsoft's mobile communications business, described that move as an unprecedented change in the way the company works with its partners in the mobile market. "We have a minimum hardware specification that all of the OEMs will follow when they are developing their phones," Lees said on a separate call with financial analysts today. "This is a very comprehensive and detailed effort."

Lees said his team decided two years ago it had to embark on a revamp of its mobile strategy. "We basically left no stone unturned," he said. "We examined all of our options open to us, everything from the role of services to the role of the software on the phone, even contemplating whether we should build phones ourselves."

The new Windows Phone 7 Series interface is based on what Microsoft calls Smart design. It brings together applications, data and services. Like Windows 7 for PCs, Windows Phone 7 will be capacitive touch-enabled.

Windows Phone 7 Series devices will have three buttons: Start, which brings up "tiles" that provide a glance of commonly-used features on the phone; Search, letting users find content on the phone or on the Web using Bing; and Back, allowing one to revert to the last task. Windows Phone 7 Series also will sport Microsoft's Zune-based Hubs, which include Productivity, Pictures, Music and Video, Games and People.

The latter integrates various services such as Web mail services and social networks. The intent is to consolidate contacts and content into a common interface. So for example, contacts from various services and apps such as Facebook, Gmail and Outlook are all accessible from one interface.

Devices based on Windows Phone 7 Series will also feature a new version of Internet Explorer and will provide an interface to business apps such as Exchange, Office 2010, SharePoint, while also offering personal applications such as its Zune HD and access to its Xbox Live service.

"I think we really have a unique opportunity if we bring that together in the right way, if we understand and recognize and the difference between the phone and the PC, with the new user interface," Ballmer said. "I am enthusiastic about the direction we are headed. It's a big step."

Joe Belfiore, vice president for Windows Phone, demonstrated the new platform, focusing on its ability to aggregate content from disparate sources, highlighting a model that's different from rivals.

"We're trying to take this rich capability of stuff out on the Web and applications and bring them together in a design that's smart, that prioritizes around the things that are most important for each individual user, so the phone becomes a unique and intimate reflection of who they are," Belfiore said.

Directions on Microsoft analyst Matt Rosoff described Windows Phone 7 Series as a radical departure for Microsoft in terms of UI design, while also bringing something different to the mobile market. "They're not creating an iPhone clone, they are early trying to do something entirely different," Rosoff said.

One thing that makes it different, Rosoff pointed out, is the fact that it is not a model centered on applications. "I particularly like the way they are not focusing so much on apps. It's not so much about an icon that opens an application, then you do something and then close the application," he said. "They are trying to integrate third-party functions right into the phone and interface. I think it’s a good idea, a lot of it will depend on how it's implemented and the specifics."

Observers have been waiting for some time to hear how Microsoft would address the mobile market.  At the Professional Developers Conference back in November, company officials started playing up its  "three screens and a cloud" theme acknowledging smart phones as a rapidly emerging alternative to PCs for accessing and exchanging information.

Ballmer acknowledged that the initial release of Windows Phone 7 will not support Adobe's Flash. "We have no objections to Adobe Flash support but it in V1 there will be no support," he said. It was also unclear what role Microsoft's Silverlight technology will play in the new platform but observers believe information on that will come to light next month at Microsoft's Mix 10 conference in Las Vegas.

The launch of Windows Phone 7 Series comes as many have wondered whether Microsoft could become a factor in the mobile marketplace amid its declining market share. Indeed while observers said they were surprised and impressed by the progress Microsoft has made, but it remains to be seen to what level Microsoft will succeed.

"They’ve shown today that they are in the game but this was a controlled demo," said Andrew Brust, director of new technology at twentysix New York. "We have to see how things come out. It has to be stable, work very well and deliver on the partner integration they talked about."

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