Microsoft's Windows 7 Phone Revealed

Microsoft has made little headway in reclaiming its lost smartphone market share in the six months since the debut of Windows Phone 7. According to Gartner's latest numbers, Microsoft sold only 1.6 million Windows Phone 7 devices during the first quarter of the year, leaving it just ahead of HP's anemic webOS numbers (categorized by Gartner as "other"), but behind every other major platform.

Microsoft has fumbled through the early months of 2011 with Windows Phone 7, which has seen delayed system updates, software glitches, and problems arising from the long-delayed updates. Microsoft is prepared to make a major WP7-based announcement on Tuesday, May 24, that will hopefully set it in a more positive direction.

Gartner believes that Microsoft's new partnership with Nokia will go a long way toward boosting WP7's market share in the quarters to come. It thinks Microsoft's "ecosystem" approach--creating the platform, handsets, applications, developer relations, etc.--is the right direction for the company to take.

"Every time a user downloads a native app to their smartphone or puts their data into a platform's cloud service, they are committing to a particular ecosystem and reducing the chances of switching to a new platform. This is a clear advantage for the current stronger ecosystem owners Apple and Google," Roberta Cozza, principal research analyst at Gartner, wrote in a report. "As well as putting their devices in the context of a broader ecosystem, manufacturers must start to see their smartphones as part of a computing continuum."

Microsoft has done well to foster an ecosystem around Windows Phone 7. Its app store has more than 16,000 applications, and its WP7 devices integrate well with both business and consumer email, browsing, and productivity uses.

Nokia, Microsoft's new partner, sold a whopping 107.6 million handsets during the first quarter, which represents a 5.5% drop compared to the year-ago quarter. Nokia's Symbian platform held onto the number two spot in smartphone rankings globally, with 27.6 million smartphones shipped and 27.4% of the market. Symbian's hold on the smartphone market has dropped precipitously as consumers move to newer platforms such as Android and Apple's iOS. It will fall further as it shifts to Microsoft's WP7 platform.

"This will precipitate a competitors' rush to capture Symbian's market share in the midtier," Cozza said.

One interesting trend spotted by Gartner concerns mid-tier smartphones. A number of manufacturers, including HTC, LG, Motorola, and Samsung, have flooded the market with inexpensive smartphones (mostly based on Android), and this has shifted the smartphone users down market for the first time.

Smartphones in total took 23.6% of all phone sales globally during the first quarter, a huge 85% increase over the previous year. "This share could have been even higher, but manufacturers announced a number of high-profile devices during the first quarter of 2011 that would not ship until the second quarter of 2011," said Cozza. "We believe some consumers delayed their purchases to wait for these models."

Cozza is speaking mainly about the first wave of Long Term Evolution smartphones announced by HTC, LG, Motorola, and Samsung at the Consumer Electronics Show in January. The four 4G smartphones shown there by Verizon Wireless--its first 4G smartphones--surely caused many would-be smartphone buyers to wait until they are available.

The first of these handsets, the Droid Thunderbolt, only reached the market in mid March, so its impact on first quarter numbers was minimal. The Samsung Droid Charge will hit the street on May 26.

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