There is a lot of talk going around Google, Apple and Nokia when it comes to their mobile strategies. As interesting as this all is it does raise a question – what about Microsoft? Microsoft is dominant when it comes to computer operating systems but their mobile OS strategy has always been lacking. Now it seems that the company has managed to get their act together. Windows Phone 7 seems to be refreshing, exciting and modern, exactly what the company needs. But is this enough? Paul Thurrot asks if Windows Phone 7 is too big to fail? After what happened to General Motor it is safe to say that there is no such thing as “too big to fail”. Yet, the question Thurrot asks is interesting. Though it might need to be rephrased. The question that really needs to be asked is whether Microsoft understands that Windows Phone 7 cannot fail? Windows Phone 7 is too big for Microsoft to let it fail. I’m confident that Microsoft understands the seriousness of its current situation at the mobile market (especially after Kin).

Microsoft’s mobile strategy rests heavily upon cloud computing. Stephen Elop mentioned, while still with Microsoft, that cloud computing is the future. Ross Rubin, an analyst, says that “Microsoft’s activities in the cloud are really key in terms of its competition versus Apple and of course Google”. I couldn’t agree more. However, successful cloud computing strategy doesn’t automatically guarantee any kind of success with their mobile strategy. Yet, they can’t achieve one without the other. Microsoft is taking cloud computing seriously. In fiscal 2010, Microsoft invested $8.7 billion in research and development, with most of that devoted to cloud technologies. Today, roughly 70 percent of Microsoft’s 40,000 engineers work on cloud-related products and services, and in fiscal 2011 that number will grow to nearly 90 percent. It is interesting to see what the increase of mostly free cloud services will do to the company’s margins.

So how is Windows Phone 7 doing? Goldman Sachs technology analyst Sarah Friar estimates that Windows Phone 7 would never exceed single digit market share in 2011. “Developers are reporting sales and download figures for their games and apps, and most have been woefully small.” Microsoft itself reported that 1.5 million Windows Phone 7 devices have been sold in the first six weeks.

Current market situation

Total handsets Top 6 for 2010
1 Nokia 32%
2 Samsung 21%
3 LG 9%
4-5-6 very close race between Apple, RIM and ZTE about 4% each

Smartphones Top 6 for 2010
1 Nokia 35%
2-3 very close race between RIM and Apple, about 15% each
4 Samsung 9%
5 HTC 6%
6 Motorola 5%

Smartphone OS’s Top 6 for 2010
1 Nokia Symbian 39%
2 Google Android 21%
3-4 very close race between RIM/Blackberry and Apple iOS, about 15% each
5 Microsoft Windows Mobile and Phone 7 4%
6 Samsung Bada 2%
Data from Tomi Ahonen’s Phone Book 2010

At a recent Worldwide Partner Conference, Microsoft CEO Steve Ballmer acknowledged that the company had missed the boat, saying “On the phone side we missed a generation with Windows Mobile.” It is evident that Microsoft’s mobile situation is not easy. They are notably behind and most of their former glory has been eaten up by competitors. Most notably by Apple who has gained most of its market share at the expense of Windows Mobile and Palm (not Symbian). Yet, Microsoft has done impressive things before; Windows 7 after Vista and the remarkable Xbox 360. I can’t stress the importance of Windows Phone 7 enough, but gladly I don’t have to. I have all the confidence on Microsoft to do their very best when it comes to Windows Phone 7. Whether this is enough remains to be seen.