Microsoft: Windows Phone May Exceed Forecasts

Microsoft Corp. (MSFT) said its Windows Phone operating system may capture more than 20 percent of the smartphone market over the next two to three years with the help of hardware manufacturers and increased marketing efforts.

Forecasts by researchers Gartner and IDC, which expects a market share of about 20 percent in 2015, are conservative, said Achim Berg, head of Windows Phone marketing, in Berlin today.

Microsoft, the world’s largest software maker, is betting that Windows Phone will retake market share lost to Apple Inc. (AAPL)’s iPhone and handsets running Google Inc. (GOOG)’s Android software. The company will start offering the enhanced “Mango” version of its operating system, with functions including better social- media offerings, for the first time in Europe on two HTC Corp. phones, set to go on sale by Oct. 1.

HTC and other partners will run advertisement campaigns for the Titan and Radar phones, and the company has joined Microsoft in training “hundreds” of salesmen worldwide to better demonstrate the product, Berg said at the IFA consumer electronics fair. Microsoft plans to build on Windows Phone’s initial success with female consumers as well as with young and first-time users to win market share, he said.

“We’re seeing an extremely positive response” to the Windows Mobile system, HTC’s President for Europe, the Middle East and Africa, Florian Seiche, said in an interview. “We’re now thinking that this year is a great time to get that momentum accelerated, to reach out to a broader group of customers.”

The Titan, which has an 8-megapixel camera with dual-led flash and a wide-angle lens, will sell for 599 euros ($855), while the Radar costs 399 euros. HTC is in talks with retailer and operators, Seiche said, adding that the phones will be broadly available in Europe.

New Functions

Microsoft, based in Redmond, Washington, announced Windows Phone in February 2010, jettisoning an earlier system called Windows Mobile. The newest version, announced in May, adds more functions such as face detection in photos, extended voice recognition for writing, and support for 15 additional European and Asian languages. Mango also lets users synchronize Microsoft Office documents with cloud versions in Microsoft’s Office 365 and SkyDrive, and improves integration with corporate directories and e-mail systems.

Nokia Oyj, the world’s biggest mobile-phone maker by volume, adopted Windows Phone 7 as its primary smartphone platform in February, saying that it will give the Finnish phone company and its developers more opportunities to produce distinctive products than Google’s Android, which was also considered. Microsoft on May 24 announced handset agreements with Acer Inc., Fujitsu Ltd. and ZTE Corp., as well as 500 features to be added in the fall release of Windows Phone 7.

‘It Takes Times’

“This is a completely new platform, it takes time,” said Berg. “It took time with Android, it took time with Apple. We have to show that we’re very capable and that we have the fastest and easiest phone.”

In April, Gartner forecast that the Android operating system will have the largest smartphone market share during the next four years, rising from 23 percent in 2010 to 49 percent in 2015. Apple’s iOS is predicted to grow from 16 percent to 17 percent, while Microsoft’s share will go from 4.2 percent in 2010 to 19.5 percent in 2015. IDC in June predicted that Microsoft may hold a 20.3 percent market share in 2015.

Windows Phone’s base of application developers will also increase following Hewlett-Packard Co. (HPQ)’s decision to stop selling devices with its WebOS software, Berg said. Hewlett- Packard said last month that it’s considering licensing or selling off WebOS, which it acquired in its purchase of Palm Inc. last year.

Third-party applications helped make Apple’s iPhone the most profitable smartphone as users flocked to a handset with a slick touch screen and an online store that has grown to more than 425,000 games and other programs. Google’s Android system, supported by dozens of manufacturers, also lured developers and became the best-selling smartphone system this year.

To contact the reporter on this story: Cornelius Rahn in Frankfurt at crahn2@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong in Berlin at kwong11@bloomberg.net