Monday, October 11, 2010

Microsoft readies new phone launch with AT&T

Microsoft is set to unveil a new line of phones running its Windows software on Monday, as it attempts to pull back market share from Apple Inc's iPhone and Google Inc's Android system in the fast-growing market for multi-featured 'smartphones'.

The world's largest software company is hoping that the new phones, from handset makers such as Samsung, LG and HTC, will propel it back into the mobile market, which many see as the key to the future of computing.

The new phones, initially available on AT&T's network, have already been shown off in prototype form, and are much closer in look and feel to Apple's iPhone, with colorful touch-screens and 'tiles' for easy access to e-mail, the web, music and other applications.

Some analysts say they represent Microsoft's last chance to catch up with rivals, which overtook them in the past few years. Handsets are not expected to appear in stores for a month, so their success may not be judged until the new year.

Microsoft has just a 5 percent share of the global smartphone market, according to research firm Gartner, compared with 9 percent a year ago. Google's Android system has a 17 percent market share, jumping from only 2 percent a year ago.

The market for multi-feature phones that allow users to e-mail, surf the web and play games, as well as have access to music and video is set to expand massively.

Gartner expects almost 270 million smartphones to be sold around the world this year, up 56 percent from last year.

In comparison, Gartner expects only a 19 percent increase in worldwide PC sales to 368 million units this year.

Microsoft, whose stock is trading at the same level it was eight years ago, has been struggling to find a footing in phones and mobile computing.

Its share price has fallen almost 20 percent so far this year.

Earlier this year, Microsoft yanked its Kin phone aimed at teenagers off the market less than three months after launch. There are still no signs of an imminent Windows-powered tablet device to counter Apple's hot-selling iPad.


Microsoft's new phones will have a tough job elbowing aside a revamped set of rivals. In August, Research in Motion Ltd launched its new $200 BlackBerry Torch, with a touchscreen and slide-out keyboard.

In June, Apple launched its new $200 to $300 iPhone 4, which is selling well despite some antenna problems.

A slew of similarly priced Android phones, such as Motorola Inc's Droid X and Samsung's Galaxy series are also grabbing customers.

In the long term, industry analysts are not optimistic about Microsoft's chances. They expect the smartphone market to be dominated by Symbian, the system that runs on Nokia phones, and Google's Android.

Symbian is currently the market leader, with 41 percent of the global smartphone market in the second quarter, according to Gartner, followed by RIM with 18 percent, Android with 17 percent, Apple with 14 percent and Microsoft with 5 percent.

By 2014, Gartner expects smartphone sales to have more than trebled to about 875 million units, with Nokia and Android leading the market with about 30 percent each, Apple around 15 percent, RIM around 12 percent and Microsoft around 4 percent.