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Microsoft's Windows Mobile Struggles Continue

Microsoft's top-secret 'Pink' project is on the ropes, and Microsoft partners say the company may have to come up with other ways of tapping into the lucrative consumer smartphone market.

Windows Mobile delays are causing Microsoft to fall behind in the mobile market and they're also casting the future of Microsoft's top-secret Pink touch-screen smartphone project into doubt. If Pink represents Microsoft's attempt to compete with the iPhone and consumer-focused BlackBerry models, its failure would underscore the difficulties Microsoft has had in recasting Windows Mobile as something other than a business tool.

Microsoft hasn't said anything about Pink, but sources familiar with the project say it was intended to be a combination of Windows Mobile 7-based software running on a third-party device that Verizon would launch on its network early next year. But Windows Mobile 7 has been repeatedly delayed and devices aren't expected until spring of 2010, forcing Pink engineers to use other, less advanced development tools.

But even if Pink does get scrapped, Microsoft still holds a significant portion of the smartphone market. In terms of sales to end users, Windows Mobile had 11.8 percent of the market in 2008, compared to 8.2 percent for the iPhone, 16.6 percent for BlackBerry, and 52.4 percent for Symbian, according to Gartner.

The problem for Microsoft is that the iPhone and BlackBerry both have much more momentum than Windows Mobile on the strength of their consumer appeal, something that Microsoft has yet to achieve with Windows Mobile. The BlackBerry Curve surpassed the iPhone in the consumer smartphone segment during the first quarter, according to the NPD Group.

"Although Microsoft's target market is business, they know they can't rule the world of mobility without winning over consumers," said Matt Makowicz, principal at Ambition Consulting, a Somerset, N.J.-based solution provider. "That's a lesson that Apple teaches every day with its marketing and advertising."

Microsoft insists that its Windows Mobile strategy, which centers on providing a software platform for device makers and carriers to use, offers customers the broadest range of choices, and Microsoft CEO Steve Ballmer often notes the advantages of this approach to the iPhone's proprietary architecture.

But some solution providers say Microsoft will have to adjust its approach or risk falling even further behind in the fast-moving mobile space. "Microsoft is sitting there with a wide variety of device manufacturers, but they're still losing ground," said Ken Winell, CEO of ExpertCollab, a solution provider in Florham Park, N.J.

Next: Drawbacks To The Windows Mobile Model

Microsoft's open architecture has many advantages, but it's difficult to achieve because of the investment it requires from Microsoft and its partners, says Dave Sobel, CEO of Evolve Technologies, a Fairfax, Va.-based Microsoft Gold partner. "When you try to be all things to all people, you can often get bogged down in development," he said.

The Windows Mobile situation is in some ways similar to the state of affairs in the Windows Client division during the development of Windows Vista.

Partners have observed that Microsoft is more organized under Steven Sinofsky, senior vice president for the Windows and Windows Live Engineering Group, than it was under Jim Allchin, former co-president of the Platforms & Services Division, who left the company in January 2007. And Windows 7 development has been a walk in the park compared to the difficult slog Microsoft endured with Windows Vista.

Microsoft has re-organized its Mobile Communications Business in a bid to speed up the pace of Windows Mobile development. Andy Lees was brought in last year as senior vice president, and former Microsoft Exchange executive Terry Myerson joined the group last December. In February, Microsoft moved Windows Media Center executive Joe Belfiore and Windows Home Server GM Charlie Kindel into the Windows Mobile team.

A Microsoft job posting in March offered some insight into what Microsoft hopes to achieve with Windows Mobile 7. "We aren't just building a me-too iPhone or RIM competitor; we're changing the way customers use and experience their device," the job posting read.

That's a lofty and ambitious goal, but the reality is that Verizon is looking for game-changing phones to help counteract the success of the iPhone. If Microsoft's Pink project continues to run into delays, Verizon will likely back out and look for other partners. And if Verizon does manage to land the iPhone, that would throw salt in Microsoft's wounds.

But despite Microsoft's Windows Mobile struggles, and the potential collapse of the Pink project, the reality is that the mobile business is an enormous opportunity that isn't going away any time soon. If Microsoft can start meeting its Windows Mobile timetables, and if it can somehow find a way to avoid further Windows Mobile 7 delays, the company's goal of success in the consumer smartphone market is still within reach.

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