Ballmer upbeat to analysts on Windows Phone prospects

Microsoft's mobile platform, Windows Phone 7, will become successful "with a little bit more effort, a little bit more energy," Microsoft CEO Steve Ballmer told financial analysts at the company's annual meeting with them this week. But what Ballmer laid out shows much more than a "little bit" being invested.

Microsoft released the Windows Phone operating system 10 months ago on a clutch of new phones from HTC, LG, Samsung and others. Though reviews and user experience studies cited by Microsoft were generally favorable, strong sales failed to follow.

In an October 2010 Wall Street Journal interview, Ballmer laid out Job One. "Job One here will be selling a lot of phones, and if we sell a lot of phones, good things are going to happen," he said.

OPINION: 4 reasons Windows Phone 7 will be iPhone and Android 

Ballmer admitted this week that those "good things" have not happened...yet. "We haven't sold quite as many probably as I would have hoped we would have sold in the first year," he told his audience. The analysts meeting was hosted by Microsoft in Anaheim, the site of this week's Microsoft BUILD conference, aimed at software and hardware developers. (Webcasts and transcripts are available online.) At BUILD, the company unveiled details of Windows 8 for PCs and tablets and for servers. (See "Microsoft launches Windows 8 preview.")

Despite the weak sales, Ballmer was upbeat. "And yet I think the product that we put into the market, the positive reception from the people who bought them, the enthusiasm we see from the hardware vendor community at this stage, particularly with some of the dynamics that have gone on in the last year, Google buying Motorola, our relationship with Nokia, and some of the intellectual opportunities, we see more enthusiasm," he said.

He noted the Mango release of Windows Phone 7, which is a comprehensive upgrade, is about to go live, and vendors and carriers have begun talking about the next generation of handsets that will run it, due out sometime in the coming weeks. HTC, for example, unveiled the Titan and Radar smartphones with the Mango version.

"We've turned around a fantastic second release [of Windows Phone 7] in about a year," Ballmer said. "We've got a clear road map that we're executing on that to bring additional innovations like IE9 first, DirectX to the Windows Phone platform."

The initial release of Windows Phone included an advanced "hybrid" browser created from components of IE8, and beta components from IE9. DirectX is Microsoft's cluster of technologies for advanced, multimedia, native Windows games in C++.

Earlier this year, Nokia made a strategic decision to embrace Windows Phone 7 for all future smartphone models. According to one report this week, Nokia CEO Stephen Elop, a former Microsoft executive, confirmed that the company will release its first Microsoft-based phones in some markets before year's end.

There's a lot riding on this decision for both companies, and Ballmer's remarks to analysts underlined that.

"Nokia will launch their first phone [with Windows Phone 7]," he said. "That's really important. Some people say 'is it really, why, what?' With Nokia we have a dedicated hardware partner who is all in on Windows Phone. They're working with us in exactly the way we described, to try to get into new markets, find new price points, take a look at new hardware design. They're all in on Windows. They're not doing something with Android, or blah, blah, blah, blah, blah. Boom, our innovation interests are completely aligned."

"[B]ut there's just more work for us to do as we move forward to establish Windows Phone in the market," he acknowledged.

John Cox covers wireless networking and mobile computing for Network World.


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