Microsoft Launches Phone 7

Microsoft officially launched its new mobile operating system called Phone 7 at a press event in New York today. A complete replacement for the earlier Windows Mobile, the new operating system will soon be supported on devices made by Dell, HTC, LG, and Samsung. Those devices should be on the market for the holiday buying season and will be marketed by carriers around the world including AT&T and T-Mobile in the US and Telus in Canada.

While the mobile operating system market has been exploding with the introduction of Apple’s iOS and Google’s Android, Microsoft’s share has been in decline (See Table 1). The important thing to recognize is that while the legacy Windows Mobile has been a virtual no-show in the consumer space, it does have an established role in the enterprise. Mobile computers like the Motorola/Symbian product line used it almost exclusively. Microsoft also provides a very serviceable mobile client for the Office Communications Server unified communications offering whose name was recently changed to "Lync."

However, the enterprise market apparently isn’t in Microsoft’s sights with Phone 7. When asked about support for a “Lync client” for Phone 7 during the analyst’s call on the morning of the announcement, the moderator felt compelled to spell it out and Paul Bryan, Senior Director of Product Management proceeded to mis-identify "Lync" as an API. Neither seemed to recognize it was actually a Microsoft product.

Unlike Windows Mobile, Lync is a successful Microsoft product, and one that landed them in Gartner’s Magic Quadrant for unified communications; somehow I don’t see that as a likely outcome for Phone 7. At the STC Conference in Dallas earlier this month, Microsoft Voice Solution Specialist Chris Jennings noted that they intend to have a Lync client for the iPhone and BlackBerry platforms this year, and Phone 7 support sometime next year. So it does appear that Microsoft has prioritized their support plans in a coordinated fashion.

Conclusion

In pursuing the consumer market, Phone 7 will be facing blistering competition from the likes of Apple’s iOS and Android, and being this late to the party their window of opportunity may already have passed. Winning is often a matter of knowing which fights to pick, and RIM may have been a better target. Leveraging their advantage in Lync cold have provided an enterprise foothold for Phone 7, but that strategy does not seem to be high on their list.

Despite their dominant position in the enterprise, a leading UC platform, and the potential to reshape the communications business, Microsoft seems to be fixated on the idea of pushing into the consumer market. Reporting on Goldman Sachs’ decision to downgrade Microsoft’s stock from “buy” to “neutral,” Todd Bishop quoted Goldman analyst Susan Friar criticizing Microsoft's attempt to play in both the consumer and enterprise market as a "foot in both camps" strategy that prevents the company from focusing on one business. 

Regardless of the outcome for Phone 7, Microsoft’s dominant position in the UC market is undeniable. Hopefully the Lync crew will keep their eye on the target and not get distracted by the company’s consumer folly.