Microsoft's Big Risk As Ballmer Departs: Windows Phone

Microsoft's long-time CEO Steve Ballmer announced Friday that he plans to retire within the next 12 months. That's good news for Microsoft, which needs a new pair of eyes overseeing the company's transformation. Microsoft needs to be sure, however, that it doesn't lose focus on its current products and projects, including Windows Phone 8. In fact, now is the time to push ahead even faster.

Microsoft's board of directors has formed a special committee to search for a new CEO. There's no word from the board yet if it will focus its search internally or externally. The news comes after Windows head Steven Sinofsky was forced out late last year and an internal reorganization was announced earlier this summer. Julie Larson-Green, a 20-year veteran with Microsoft, was put in charge of all hardware devices, games, music, and entertainment in July. Her position puts her in the center of Microsoft's plan to become a "devices and services" company moving forward. Windows Phone falls under her purview.

It's common for companies to put things on hold when they're undergoing leadership changes. Progress can freeze in anticipation of the changes often brought about when a new CEO comes on board. The Windows Phone team can't let this happen for two big reasons: Apple and Google.

[ What's Apple's strategy to combat Android? Read Apple's iPhone Battle Plan: 6 Factors. ]

Apple is prepared to release a brand-new version of iOS, the operating system behind its popular iPhone smartphone and iPad tablet, next month. The OS has been completely overhauled with a new look and includes hundreds of new features.

Similarly, Google is expected to reveal a new version of Android no later than October or November. Android 5.0 Key Lime Pie will mark another visual evolution of the platform as it continues to gain new features at a dizzying pace.

In contrast, Microsoft hasn't released a major new version of Windows Phone since October 2012. Windows Phone 8 arrived just in time for the holiday shopping season last year. WP8 was itself a significant overhaul of the company's mobile platform. It was rewritten from the ground up to share its base code with Windows 8 and Windows RT. That effort has paid off by making it easier for developers to target all three platforms at once. The only kink in the plan is that Windows 8 didn't get the reception Microsoft hoped. The company is rushing a new version of Windows to market to solve some of the biggest gripes around Win8. The problem? Windows Phone 8.1 won't arrive until sometime in 2014.

Microsoft had been on a nice yearly update schedule with Windows Phone, releasing Windows Phone 7.0 in fall 2010, Windows Phone 7.5 in fall 2011, and Windows Phone 8 in fall 2012. The yearly update cycle has become not only expected, but necessary. From the start, Windows Phone has lagged Android and iOS as far as features are concerned. The delay of Windows Phone 8.1's arrival by even a few months gives Apple and Google an advantage.

Microsoft can't let its CEO search push WP8.1's arrival back any further.

There are some specific things Microsoft needs to address with an updated version of Windows Phone. On the hardware side, it would be helpful if Windows Phone devices could support full HD displays. Currently WP8 is limited to three screen resolutions: 800 x 480, 1280 x 720, and 1280 x 768. Many of the best competing devices, such as the HTC One and Samsung Galaxy S4, have full high-definition displays pushing 1920 x 1080 pixels.

Same goes for processor support. WP8 allows only for two-core processors, while many of the leading Android phones are jumping to four and in some cases eight cores. (Not that Windows Phone has much of a performance problem; it is very light on its feet.) This could help WP's gaming cred.

In terms of software, Windows Phone would benefit from more customization features. Android devices are highly customizable thanks to myriad home screens, widgets and launchers. Though users can arrange their Windows Phone Start screen however they wish, it's still fairly restrictive. Opening up some of the design elements and allowing for a more flexible approach could give Windows Phone more appeal to consumers.

Microsoft's hardware partners, including its biggest ally Nokia, have complained about the app situation. There are fewer than 200,000 apps available to Windows Phones, and Nokia believes more apps would help the platform. At this point it's not clear what Microsoft can do to entice developers to write for Windows Phone, other than boost its market share.

Microsoft is currently pushing out a nice, though minor, update to Windows Phone, referred to as GDR2. The GDR2 update improves the performance of Internet Explorer, Xbox Music and Skype, and it adds several apps. Details about the next update are mostly unknown.

At the end of the day, Microsoft absolutely cannot afford to slow down the pace of development for its Windows Phone platform.