By Bill Rigby and Sinead Carew
SEATTLE/NEW YORK - Microsoft Corp's last-ditch attempt to
reclaim its prominence in the smartphone market won favorable early
reviews on Monday, but it may come too late to claw back customers
from Apple Inc and Google Inc.
The world's largest software company, along with network
carriers and handset makers, is planning to spend more than $100
million on marketing the phones, which analysts said could compete
with Apple's iPhone, but that may be a struggle.
"We are the first to admit that Microsoft is fighting for third
place, not first or even second, at this point; but we believe this
is a key step toward rebuilding confidence in their ability to
innovate in mobile," Wells Fargo analyst Jason Maynard said in a
research note.
"This isn't going to move the market share needle in the short
term."
"They have phones with slide-out keyboards, larger screens, high
definition outlets -- all features that the iPhone does not have,"
said Ross Rubin, a consumer electronics analyst at retail research
firm NPD Group. "That should help Microsoft's competitive position.
There will always be a segment of customers that seek out the
newest devices."
The line-up of nine new phones from Samsung Electronics Co Ltd,
LG Electronics Inc, HTC Corp and Dell Inc will start to appear in
stores later this month in Europe, and in November in the United
States on AT&T Inc's network.
The handsets are much closer in look and feel to Apple's iPhone
than earlier Windows phones, with colorful touch-screens and "live
tiles" on the starting screen for quick access to email, the Web,
music and exclusively, games on the Xbox system.
"The user interface is quite innovative because it takes
advantage of those precious few seconds when eyes hit the glass and
actually gives you something useful," said Al Hilwa at research
firm IDC. "It will probably be copied by other platforms over
time."
Microsoft said the launch will be backed by heavy television
advertising in the run-up to the holiday shopping season, as it
looks to vault itself back into the market.
"This is Microsoft's last chance to be a major player in the
smartphone market," said analyst Jack Gold of J.Gold Associates.
"Microsoft will be required to undertake a massive consumer
education campaign if it wants to stand a chance of differentiating
itself from iPhone and Android, which have far greater market
presence."
British actor and writer Stephen Fry, an outspoken fan of Apple
products, praised the phones on stage at a launch event in
London.
"When I got one of these my first feeling was it's fun to play
with. I have felt enormous pleasure using this phone," said Fry,
who was invited, but not paid, to speak at the event. "Yes, I love
Apple, but I'm not a monotheist. I want biodiversity in this market
and all of us that love it should welcome that too."
LAST CHANCE
The new phones represent Microsoft's last chance to catch up in
the smartphone market with rivals who overtook it in the past few
years.
"I've been looking forward to this day for some time," said
Microsoft Chief Executive Steve Ballmer, showing off the nine phone
models at a launch event in New York.
Ballmer, who has admitted his company "missed a generation" with
its recent unpopular phone offerings, said the new phones would
eventually be available from 60 mobile operators in 30
countries.
The first phone from AT&T, priced at $200, will be available
on November 8, said Ralph de la Vega, CEO of AT&T Mobility and
Consumer Markets. Some phones will be available October 21 in
Europe.
AT&T will give the phones ample room in its stores for
promotion. "We're expecting these to be really big sellers," said
Jeff Bradley, AT&T's senior vice president for Devices.
"This is a marathon, not a sprint. They are not going to change
their position today or in the next month," said Michael
Gartenberg, an analyst at research firm Gartner. "But they've
established themselves as a credible player."
Microsoft did not give any sales forecasts for the new
phones.
NEW FEATURES
The new phones, which are built on the Snapdragon processor made
by Qualcomm Inc, represent Microsoft's best attempt yet to
introduce live connections with its other products and the Web.
Users will be able to play Xbox Live games on the phones, link
to Windows Office, use the Bing search engine and download and play
music through its Zune music software. TV episodes are also
available for download via AT&T's U-verse service. Updates from
Facebook will be incorporated into a user's contacts.
Game maker Electronic Arts Inc said it will introduce a wave of
games for the new phone software this holiday season. That should
boost the phone's popularity among gamers, especially the 25
million subscribers to Microsoft's Xbox Live gaming network.
Microsoft has a market share of only 5 percent in 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.
Gartner expects almost 270 million smartphones to be sold
worldwide 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 shares closed up 2 cents at $24.59 on Nasdaq. AT&T
shares rose 10 cents to $28.32 on the New York Stock Exchange.